Alberto Mingardi  

Healthcare... The return of the Singapore model

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Last week, in one of his Undercover economist columns, Tim Harford asked

If the US healthcare system is financially incontinent and the UK system is reliant on a centralised and philosophically troubling cost-benefit analysis, is there some other better way?

He answered in the affirmative, pointing to Singapore.
The aim of the country's healthcare system is to get patients to face some of the costs of their own treatment. Healthcare is part-nationalised and subsidised in some degree. Individual citizens have a compulsory savings account to build up a nest egg for medical expenses, and there's an insurance programme to deal with the most expensive treatments. But, broadly, the idea is that you have money in a healthcare account, and it's up to you to decide how you want to spend it.

I think Hartford deserves credit for having undelined that part of the problem with healthcare lies in it being typically relying on third-party payment systems. The Singapore system gets praised both by conservatives (see for example John Goodman here), and by liberals (see for example Matt Yglesias here). The former emphasize the success of health savings accounts, the latter consider the system a model from a regulatory standpoint. The liberal viewpoint, which downplays the importance of medical savings accounts, appears to be dominant in more scholarly research on the subject, too.
It is interesting, however, that despite the frequent praise it elicits, the Singaporean system is never really taken as a point of reference in the debate in the West. Is it so because you cannot point to a successful Asian country as a model, if you aim to be a successful politician? Or is it because we tend to dismiss the success of small countries? Or because we tend to be suspicious of autocracies, no matter how successful, such as Lee Kuan Yew's?


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COMMENTS (6 to date)
Brent writes:

First, as I understand it, Singapore has some issues, too, and they are making some changes currently. Second, a lot of people do seem to think it is too small and unique in its political culture to be a good test case for the US. Third, I tend to think it's also a problem of the politics (and real practical problems) of transitioning away from the status quo.

ZC writes:

Singapore isn't talked about as a point of reference in discussions on healthcare financing in the West, because it's not quite the idealized system many paint it to be (take a gander at Singaporeans discussing the issue themselves for proof http://www.todayonline.com/voicestoday/voicestoday-asks-fairer-healthcare-system-what-does-it-mean-singaporeans). And, the factors that allow the country to maintain what is reportedly a financially efficient, relatively high-functioning healthcare system are totally untenable in the West.

1. Will we ever deny care here? Making everyone have 'skin in the game' is great in theory, but if the default is that everyone must be treated without regard to ability to pay, then there is no risk to not having skin in the game. Do you think the US would ever be comfortable with letting people die at the doors of hospitals because they can't afford care? If not, any talk of patients facing some of the costs of their expenses is a laughable sham, because 'society' is ultimately going to be on the hook through these costs in the form of taxation or other redistributionist policy.

2. Will we ever enforce a strict penal code with the harshness and zeal of Singapore? By criminalized everything and dishing out punishments with alacrity, Singapore has enforced societal standards which substantially reduce activities which result in high healthcare expenditures. For example, the rate of drug use is far less than that for the US. Costs attributable to illicit drug use in the US easily run into the hundred of billions of dollars annually...the majority of which are incurred by people with limited, if any, ability to pay.

3. Will we exclude foreigners from subsidized care? Singapore has. Illegal immigrants consume billions in medical resources annually in the US.

I'm not saying we should or shouldn't exclude people for healthcare they can't afford, that's a more complicated philosophical issue. My point is that pie-in-the sky theoretical discussions on idealized healthcare financing schemes often ignore fundamental realities. Talk of 'patients being exposed to costs' and economic analysis on how patients might make more fiscally prudent healthcare spending choices are purely academic as long as there is no effective means/will to enforce no pay/no play. Otherwise, the discussion is simply about who is going to get stuck with the bill for those who can't or won't pay.

sam writes:

Cost comparisons between the Singaporean system and American system are not meaningful because the denominators are different.

Specifically, one system has cost per Singaporean, and the other has cost per American.

The behavioral differences between Singaporeans and Americans in general, and Singaporeans and Americans on government health programs to be specific, are so enormous as to swamp any possible effects of the system.

Take a look at the obesity, drug usage, and illegitimacy rates of the America, and compare it with those of Singapore (or another referenced country in the article, Norway). With these sorts of inputs, there is no economically sustainable system that will produce outputs for them.

The only way to get Singaporean or Norwegian results in America is to fill America with Singaporeans or Norwegians.

Brent writes:

First, as I understand it, Singapore has some issues, too, and they are making some changes currently. Second, a lot of people do seem to think it is too small and unique in its political culture to be a good test case for the US. Third, I tend to think it's also a problem of the politics (and real practical problems) of transitioning away from the status quo.

Joel Aaron Freeman writes:

I would love for us to get in the habit of broadening our comparisons. The policy comparisons that I have seen tend to include the U.S., Canada, and the E.U, and that's pretty much it. Occasionally, and ONLY OCCASIONALLY, is Japan included. But that's it.

There are a lot of other interesting experiments to study, many of them successful. Can we add in Taiwan, Estonia, Israel, the UAE, and New Zealand? What can we learn from New Zealand when it comes to health insurance, or any other policy dilemma?

Jacob A. Geller writes:

Maybe Americans just want to use health care reform as a political cudgel for basically selfish reasons. Maybe they're not really interested in highlighting good public policy. Maybe this is as true for intelligent bloggers as it is for bona fide morons.

Bryan's "rational irrationality" comes to mind here -- why become learned in intwrnational comparative health policy (and thereby discover Singapore's system) when you could just say "Conservatives have no alternative!" or "Obamacare is a job-killer!" for the n-thousandth time? The latter two options accomplish your goal -- which is to feel smug -- at much lower cost than doing serious policy analysis.

Too cynical?

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