Thursday, October 24, 2013

Why Conservatives Like the Singaporean Health Care System?

Matt Yglesias asks what USA conservatives like about Singapore's health care system. He makes a few points:

"— Singapore has "multiple tiers of protection to ensure that no Singaporean is denied access to basic healthcare because of affordability issues."
— "The first tier of protection is provided by heavy Government subsidies of up to 80% of the total bill in acute public hospital wards, which all Singaporeans can access."
— "The second tier of protection is provided by Medisave, a compulsory individual medical savings account scheme ... Singaporeans and their employers contribute a part of the monthly wages into the account to save up for their future medical needs."
— As best I can tell, these Medisave accounts are deposited into the Central Provident Fund, a government-run investment pool, rather than constituting private savings as we would understand them.
— "The third level of protection is provided by MediShield, a low cost catastrophic medical insurance scheme" supplemented if like by private insurance called Integrated Shield plans and "Singaporeans must subscribe to the basic MediShield product before they can purchase the add-on private Integrated Shield Plans."
— "Finally, Medifund is a medical endowment fund set up by the Government to act as the ultimate safety net for needy Singaporean patients who cannot afford to pay their medical bills despite heavy subsidies, Medisave and MediShield.""

Many liberals have argued Singapore's system is not very market oriented. That's true when looking at the system by itself. However, comparing Singapore's system to the health care systems of other developed nations makes the system look much more market oriented relative to these other systems. 
The Singaporean system has a much higher share of its health care spending coming from private sources than other developed nations (including the USA). Indeed, it has an unusually high proportion of its spending coming from the private sector and an unusually cheap health care system. Another feature is the extent to which Singapore's system is financed by out of pocket expenditures. Out of pocket just means that the patients pay the providers directly instead of paying through a third party (like the government or a private insurance company). Over half of health care spending in Singapore is out of pocket. That compares to about 10-20% in most other developed nations (again this includes the USA).
Still, the Singaporean system does have universal coverage, lots of forced savings, lots of public hospitals, and price controls. So, it is hardly a free market paradise. Of course, neither is the USA system (even in its pre ACA form).
Debating the extent to which Singapore's system is "market oriented" seems a bit redundant to me. It is a very market oriented system in some ways (the way they pay for health care) and a fairly socialized system in others (the way they provide and regulate health care). What is clear is that the Singaporean system does not utilize third party payment systems for non emergency medical expenses to anywhere near the same extent that other health care systems do.
That is to say that they treat medical insurance like any other type of insurance. If you have a medical catastrophe, insurance is their to protect you. For routine expenses, on the other hand, individuals generally pay their own way (even if it is through a forced savings account). This gets rid of the incentive to overutilize medical coverage that exists in other nations. 
Replacing the USA system with the Singaporean system would not be practical as the Singaporean system is tailored for their particular society. That is a society which is smaller, wealthier, and healthier than us. It is also a society that has much lower taxes than us, less debt than us, and a welfare state that relies heavily on non socialized mechanisms to finance itself.
Still, Singapore, I would argue, is evidence that moving towards a system with catastrophic health insurance with individuals covering their own routine expenses (perhaps through health savings accounts) would be a smart move. We can, for example, reform public health programs to move in this direction and change tax laws to encourage more health savings accounts. 
Conservatives tend to be more favorable to these sort of proposals than liberals (who often would rather have comprehensive, universal public health care), and that is why some conservatives praise the system. It's less about the big government versus small government argument in health care, and more about the catastrophic insurance versus comprehensive coverage argument that is less publicized but very real.

By the way, here is an excellent overview of the Singaporean system.
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