TR EMERITUS

I refer to the 17 Jun 2014 Straits Times letter “Don’t take good govt for granted” by Mr Eugene Tan. Mr Tan ridiculed Ms Catherine Lim for her silence on Singapore’s supposed near top ranking in Gallup’s 2013 Most Emotional Society survey when in the previous year Ms Lim attributed Singapore’s bottommost ranking in the 2012 edition of the same survey to authoritarian government policies. Mr Tan is wrong. Singapore came in 67th of 143 nations in the 2013 survey, putting Singapore at the 47th percentile, hardly the so called “appearing near the top of the list” as claimed by Mr Tan. Let’s repeat this to Mr Tan: 67th of 143 is far from, not near the top. • Singapore came in 67th out of 143 countries in the "positive experience" index in the latest survey, which was carried out last year. The findings were released yesterday. In the 2011 study, it was the least positive of 148 countries - its worst ranking since 2007, when it first took part in the study. [Straits Times, Method behind the survey, 1 Oct 2013] Mr Tan contrasted PAP’s low percentage votes of 61% and 65% respectively during the non-crisis years of 1992 and 1997 with its high percentage votes of 75.3% during the crisis year of 2001 to show that when it comes to the crunch, people trust PAP. The following table shows that 2001 was the only year when a crisis year was also an election year. Hence, Mr Tan’s theory that crisis years means good election years for PAP has a miserable sample size of just one only, hardly sufficient for making anything out of. Year PAP election vote percentage PAP leader Year Recession events 1968 86.7% Lee Kuan Yew 1972 70.4% Lee Kuan Yew 1976 74.1% Lee Kuan Yew 1980 77.7% Lee Kuan Yew 1984 64.8% Lee Kuan Yew Lee Kuan Yew 1985 Singapore's first ever recession 1988 63.2% Lee Kuan Yew 1991 61.0% Goh Chok Tong 1997 65.0% Goh Chok Tong Goh Chok Tong 1998 Asian Financial Crisis 2001 75.3% Goh Chok Tong 2001 Sept 11 Terrorist attacks 2006 66.6% Lee Hsien Loong Lee Hsien Loong 2009 Global Financial Crisis 2011 60.1% Lee Hsien Loong While having the cheek to wax lyrical about the need to avoid sampling bias when quoting the opinion poll taken before the 1948 United States presidential election, Mr Tan ended up making a statement out of a sample size of just one only. Does Mr Tan not realize that using a sample size of just 1 is hardly any better than using biased samples? Thank you Ng Kok Lim Straits Times, Don’t take good govt for granted, 17 Jun 2014, Eugene Tan I am not sure how Ms Catherine Lim would know how most Singaporeans feel about the Government ("Govt refutes author's claims over public trust"; June 14). It was not too long ago that Ms Lim told the BBC that Singaporeans' lack of emotions was due to "authoritarian" government policies. The following year, Singapore appeared near the top of the list. There was no comment from Ms Lim. It is critical that we do not extrapolate one's own opinion to encompass a wider population. There is the danger of a biased sample reinforced by a confirmation bias. The classic case of such a faulty methodology is an opinion poll taken before the 1948 United States presidential election. It showed Mr Harry Truman's rival leading by an insurmountable margin. The survey was done via telephone, a luxury item at the time. Mr Truman won the election. Ms Lim's claim that the Government does not care about regaining the trust of the people is astonishing as it clearly flies in the face of the many policies that have been and are being implemented since the 2011 election. Indeed, over a few months, both the Prime Minister and Deputy Prime Minister Tharman Shanmugaratnam have spoken about the importance of trust between the Government and the people. The Government cannot be led by opinion polls. Not doing what the people want is not the same as not wanting to gain the trust of the people. We need strong leadership, especially for a country as vulnerable as Singapore. It may be fashionable to be seen as anti-government, but when it comes to the crunch, the present government is the one people trust. Take the election figures. In the 1992 election, the People's Action Party secured 61 per cent of the votes cast, less than what it won in 2011 (62 per cent). In 1997, it won 65 per cent, less than two-thirds of the votes. In 1998, the Asian financial crisis took its toll. In September 2001, the Twin Towers came down in the US. In November that year, the PAP returned to power with 75.3 per cent of the votes. Singaporeans know who to trust in difficult times. The danger is we may take a good and trustworthy government for granted.  Read More →

[Article first appeared in http://geraldgiam.sg on 22/06/14] NCMP Gerald Giam During the debate in Parliament on 27 May 2014 on the President’s address, I made a speech in which I criticised the Government for not taking on sufficient risks on behalf of the people, but had instead passed many risks to them. I cited the increasing of the CPF Minimum Sum, the raising of the CPF drawdown age, and the high capital adequacy ratio of the MediShield insurance scheme as examples. PAP MP Janil Puthucheary took issue with my remark that MediShield was “collecting a lot more in premiums than it is paying out in claims”. He suggested — without mentioning me by name — that this was an example of “intellectual dishonesty” and “sound-bite politics”, paraphrasing what I said as, “Medical insurance premiums are higher than the pay-outs”. He left out my phrase “a lot more”, which gave the impression that I thought MediShield should be making a loss by collecting less in premiums than it pays out in claims. I immediately clarified that “I never said or suggested that health insurance pay-outs should be more than the premiums collected. But for a social health insurance scheme which is what MediShield Life should be, the premiums collected do not need to be so much more.” In any case, these are not simply sound-bites, but facts. Between 2001 and 2013, based on CPF Board Annual Reports, MediShield collected $3.704 billion in premiums but paid out $2.190 billion in claims — a difference of $1.514 billion. I leave it to Singaporeans to assess whether or not they consider $1.5 billion to be “a lot more” in premiums than pay-outs. Dr Puthucheary also questioned the validity of my comparison between MediShield and Obamacare, the US Affordable Care Act, which requires all Americans to buy health insurance and mandates commercial insurers to take on more risks on behalf of their policyholders. He said that “we are talking about a public social insurance and he is comparing it with a private, for-profit environment in the United States”. In fact, Obamacare served to illustrate my point that even profit-oriented health insurers in the US are required to take on more risks on behalf of their policyholders than our MediShield, which is a social health insurance scheme. I pointed out that Obamacare mandates a loss ratio of at least 80-85%, and that insurers who do not meet this minimum must now issue rebates to policyholders. (Loss ratio = [claims paid-out] / [premiums collected] x 100%. The higher the loss ratio, the more risk on the insurer.) MediShield’s loss ratio between 2001 and 2012 had been, on average over this period, 63% (59% if year 2013 is included). It dropped from 75% in 2012 to to a historical low of 43% in 2013. The latter figure was revealed in the latest CPF Annual Report released on 6 June (after the Parliament sitting). It is likely due to the higher premiums collected as a result of the premium hike last year. On his last point, about what if the “supposition that we could increase pay-outs is wrong”. He cited a “worst case scenario is that our public healthcare financing becomes insolvent and we are unable to support the healthcare needs of a generation possibly.” Increasing the loss ratio to 80-85% is not going to make public healthcare financing “insolvent”. That is clearly a hyperbole (an accusation he made about me). But more importantly, wouldn’t it be better for a government to take on more risks, so as to prevent individual citizens from suffering financial ruin due to high healthcare costs? The PAP MP’s argument that it is okay for the Government to “save more” (by collecting more premiums than necessary) but disastrous for it to pay out more, proved the central point in my speech: That the Government is reluctant to take on more risks on behalf of Singaporeans. The MediShield Life Review Committee is expected to submit its full report to the Government this week. I hope the Committee can prove me wrong, and that the Government will show that it is willing to take on significantly more risks on behalf of its citizens. If not, this will certainly not the last time I will be raising this issue. This is the transcript of the full exchange in Parliament: ——————————- Mdm Speaker: Mr Gerald Giam. Mr Gerald Giam Yean Song: Thank you, Madam, I just want to clarify a point that Dr Janil said in his speech earlier on. I never said or suggested that health insurance pay-outs should be more than the premiums collected. But for a social health insurance scheme which is what MediShield Life should be, the premiums collected do not need to be so much more. As a point of comparison, the US Affordable Care Act, the new ObamaCare, mandates that a minimum loss ratio of between 80% and 85%. Ours is, on average, 63% over the last 11 years, and it was 75% in 2012. So, the US Affordable Care Act mandates that the minimum loss ratio should be between 80% and 85% and that insurers who do not spend 80-85% of their premiums in healthcare costs must now issue rebates to consumers. And these are all commercial insurers. These are not social health insurers. Mdm Speaker: Dr Puthucheary. Dr Janil Puthucheary: Thank you, Madam. Mr Giam brings up some very good points. And if I could take them in reverse order. Firstly, we are talking about a public social insurance and he is comparing it with a private, for-profit environment in the United States. So I do not think his comparison is valid. Secondly, I am loath to use the United States as the be-all and end-all for a model of where our healthcare system should evolve to. Even the policy-makers and office holders in the United States would readily admit that the short-term electoral outlook significantly constrains their ability to take a long-term strategic vision for the healthcare system of their nation. But lastly, I would like to make one point, which is that what if he is wrong? What if Mr Giam’s supposition that we could increase pay-outs is wrong? And we should compare that to what if the current situation is the wrong decision? If the current situation where, as he puts it, the pay-outs are far less than the premiums collected, that is the wrong decision. We save a little bit too much. If he is wrong, and we pay out more, if we pay out more and he is wrong, what is the worst case scenario? The worst case scenario is that our public healthcare financing becomes insolvent and we are unable to support the healthcare needs of a generation possibly. This has happened in many other countries. The intellectually honest thing to do is to compare risks versus risks, benefits versus benefits, and worst-case scenarios against worst-case scenarios – not to cherry-pick the benefits of your proposal against the potential risks of the proposal in front of you. Thank you, Madam, for your indulgence. Mr Gerald Giam Yean Song: Madam, I am glad he made that clarification. In fact, I cited ObamaCare precisely because of the US health system and the trouble that it is in today, and the fact that it is a commercial insurance scheme rather than a social insurance scheme. In fact, a social insurance scheme should have a much higher loss ratio than a commercial insurance scheme because commercial insurance wants to make money, whereas the Government is not in the business of making money. In fact, MediShield is supposed to be a not-for-profit insurance scheme. Secondly, he asked about the grave scenario if pay-outs become more than the premiums collected. Now, in the case of medical insurance, it is relatively easy to be able to project what are the likely pay-outs to be and compared to, let us, say, earthquake insurance or something that has a much low frequency compared to health insurance, where you are able to see the trend and the cost of medical expenses over the years and be able to project what the pay-outs should be. So, the question is: if it comes to the point where, because of the miscalculations, we aim for a 90% or 80% medical loss ratio but, for some reason, there is SARS that year or something like that happens, then we have a situation where the Government would have to step in to subsidise a bit more of the cost and the premiums can rise behind the increase in cost, not before you know that the costs are going to increase, then you raise the premiums. Mdm Speaker: Dr Puthucheary. Dr Janil Puthucheary: Madam, because we are talking about a social public good, it is therefore incumbent that we take a longer term, prudent approach, past one electoral cycle. I am glad that Mr Giam feels that medical expenditure is predictable. I and my professional colleagues would completely disagree. There is a lot of uncertainty about how costs will rise. Myself and my brothers and sisters in the healthcare profession are part of that problem because we keep researching and coming up with all kinds of ways to spend the Health Minister’s money. Lastly, the example of SARS is a great example. It is precisely because of the prudent, conservative, risk-averse approach that we take on a day-to-day basis that when something like SARS comes along, the Government is able to step in and do what needs to be done. Mdm Speaker: Minister Gan Kim Yong. ——————————– Source: Singapore Parliament Reports (Hansard) Gerald Giam Non-constituency Member of Parliament [Source]: Gerald Giam's blog (http://geraldgiam.sg).  Read More →

BT reported today (24 Jun) that the number of properties put up for auction by mortgagees has hit a new high in current Q2 (Apr-Jun 2014). A mortgagee sale occurs when the borrower has stopped making loan payments to the mortgagee or lender and the mortgagee has no choice but to auction off the pledged property so as to recover back its loan. The trend is seen gaining momentum due to rising supply of homes, weaker rental market and the new total debt servicing ratio (TDSR) framework set by MAS. Property consultant, Colliers International, has reported that in this present quarter, there are already 42 mortgagee sale properties which have been put up for auction. This is already more than previous years' whole-year figures: 2011 - 39 properties 2012 - 24 properties 2013 - 32 properties 2014 Q1 - 22 properties 2014 Q2 - 42 properties (present) The present Q2 figure is already almost doubled of last quarter's and the combined first-half tally of 64 for this year is already doubled that of the whole of last year. At present rate, the number of mortgagee sales for this year will likely be 4 times that of last year. Auctioneers said this reflects the difficulty that financially stretched borrowers face in securing buyers for their properties especially since the implementation of the TDSR framework. The TDSR framework was mandated by MAS in June last year to ensure that borrowers do not become over-leveraged. It’s a standard that applies to property loans granted by all financial institutions in Singapore. TDSR calculates the percentage of the borrower's income that can go into servicing loan. At present, MAS mandates that a person's housing loan repayments, after adding all other repayment obligations (e.g., student loans, credit card debts, car loans, personal loans, etc.) cannot exceed 60% of the borrower's income. Since a borrower who exceeded the TDSR can't find buyers for his property, the financial institution has to step in to repossess the property and auction it off. The trend is expected to gain momentum as the rising supply of private homes will make it even harder for borrowers to find buyers themselves, resulting in more properties ending up as mortgagee sales. Furthermore, the reduced inflow of expats into Singapore is shrinking the pool of potential tenants, hitting rental incomes and hurting owners' ability to service their property loans. Under a "forced selling" situation, a mortgagee sale property will tend to fetch lower prices. A property consultant said that due to the exuberance at private housing launches in the past few years, many buyers bought uncompleted properties "off plan" with the non-savvy ending up with units that have undesirable orientation or layout. Such owners now face difficulty finding buyers and tenants. Another consultant advised that those having problems servicing loans to be realistic as it is a buyer's market today. She said that potential buyers would now be anticipating price corrections. They will not be sticking to the last transacted price in the project some time ago.  Read More →