Financing Long-Term Services and Supports: Ideas From Singapore

• Published in: The Milbank quarterly 2017-06, Vol.95 (2), p.358-407
• Main Authors: GRAHAM, WAN CHEN KANG, BILGER, MARCEL
• Format: Article
• Language: English
• Subjects: Adequacy; aging; Central government; Charities; Costs; Direct payments; Disability recipients; Donations; Enrollments; Financial services; Financing; Geriatrics; Governance; Government grants; Government spending; Grants; Health insurance; Housing; Housing policy; Income; Insurance; Insurance agents & brokers; Insurance coverage; Long term care insurance; Long term health care; Long-term care; long‐term care financing; long‐term services and support; Low income groups; Management; Mass media; Medical personnel; Older people; Original Investigation; Original Investigations; People with disabilities; Personal expenditure; Philanthropy; Policies; Premiums; Public finance; Reforms; Residents; Reviews; Subsidies; Support services; Underwriting; Websites
• ISSN: 0887-378X; 1468-0009
• DOI: 10.1111/1468-0009.12264

Context: Financing long-term services and supports (LTSS) for the elderly is a pressing issue in the United States with reforms of long-term care insurance (LTCI) presently being explored. Singapore, with 65% of residents aged 40 to 83 covered by basic LTCI, including 22% with supplementary LTCI plans, has the highest voluntary LTCI rate in the world. This article contributes to the discourse by presenting the case of LTSS financing in Singapore. Methods: We first reviewed Singapore's LTSS policies through a comprehensive search of academic papers, governmental reports, parliamentary debate transcripts, print media, and official websites of LTSS providers. We then estimated the LTSS financing mix, conducted an in-depth analysis of the main policies, and illustrated the financial protection they procure for the elderly using realistic hypothetical scenarios. Findings: The main principles governing Singapore's LTSS policies are shared responsibility for long-term care financing, targeted assistance for the poor, centralized governance and administration, separation from other income and housing policies, and limited intergenerational cross-subsidizing. We estimate the financing mix to consist of out-of-pocket spending (40%), government spending (42%), long-term care insurance (9%), and charitable donations (9%). Assuming a monthly LTSS bill of US$1,545 to US$2,575, between 11% and 19% of LTSS expense is offset by LTCI for severely disabled individuals with basic coverage. Overall, 63% of care recipients are eligible for public subsidies that amount to 20% to 80% of their expenses. Conclusions: The high take-up of voluntary LTCI in Singapore is explained by the high prevalence of plans offering partial coverage, medical underwriting, early automatic enrollment, direct debit of insurance premiums, and defined cash benefits. We recommend setting the coverage of voluntary long-term care insurance plans at levels that maximize the population's total contribution by striking the right balance between coverage adequacy and take-up rate while targeting subsidies to low-income individuals.