Vox’s Ezra Klein explains how Singapore’s universal health care system works. Conservatives, including the American Enterprise Institute, suggest that it is a model for the US because it relies in part on people spending their own savings for care. But, the system relies heavily on the Singaporean government to control health care prices and the delivery of care. What can the US learn from Singapore’s health system?
Back in 2000, the World Health Organization ranked Singapore’s health system 6th in the world on quality and ranked the US system 37th. Singapore’s infant mortality rate is half the infant mortality rate in the U.S. And, people in Singapore live two to three years longer than Americans. Moreover, per person annual health care costs in 2014 were $2,752 as compared to $9,403 in the US.
Singapore differs from the US in many other ways. First, it is a small country of six million people, significantly smaller than New York City. Second, there are no powerful commercial health care stakeholders in Singapore. Third, the government controls the prices and the types of care people get.
Perhaps, the biggest distinction between the US and Singapore is that the Singaporean government recognizes that “free-market health care” has its limitations. So, the government controls several major elements of the health care system.
In addition to health care prices and the delivery of care, Singapore offers citizens five-tiers of health care services, with different costs for each tier. Tier A gives you the most deluxe care, including a private hospital room and your choice of doctor. You pay for that care entirely on your own. Tier C care, in contrast, gives you more basic care, with no choice of doctor, and the government finances as much as 80 percent of your care.
Singapore does not really treat health care like any other commodity, as some suggest. When it comes to routine care, people pay for it out of the equivalent of a health savings account, called a Medisave Account. But, unlike with commodities, Singapore requires all workers up to age 55 to put 20 percent of their earnings in health savings accounts, through a payroll contribution. And, unlike health savings accounts in the US, contributions to Medisave Accounts are not optional.
Singapore’s payroll contribution structure is similar to what we have for Medicare and Social Security, but it requires far more of a contribution from workers. And, their employers must match that money with another 17 percent of their earnings, more than twice what the US requires from employers as their match for Medicare and Social Security. It’s hard to imagine the US Congress requiring individuals to put away that much of their earnings for their health and security, let alone such large employer contributions.
Of the money required to be put away, the government allocates a portion for housing and education and insurance for disability-related expenses, a portion for retirement expenses and financial investments, and a portion, the Medisave Account, for routine medical expenses and government-approved insurance.
Between 8 and 10.5 percent of earnings go to the Medisave Account, based on a person’s income and age. The government caps the account at $52,000. The government must approve how that money is spent on routine care, including which drugs it pays for, keeping costs down.
And, Singaporeans are automatically enrolled in a second catastrophic insurance plan, Medishield Life. Medishield Life covers most of the cost of lower-tier catastrophic care. It kicks in once people pay their deductible—between $1,500 and $3,000—and coinsurance, between 3 percent and 20 percent of the cost.
While you can opt out of Medishield Life, most Singaporeans have it to protect themselves from financial risk. It is very reasonably priced based on age, from $16 a month to $68 a month. And, it pays for up to $100,000 a year of care with no lifetime limit.
Unlike the US, Singapore actually provides medical treatment directly to most of its citizens, which, in combination with rate-setting, keeps costs down. The government actually decides which services to subsidize. Unless Congress were to step in and regulate costs and care, as Singapore’s government does, $100,000 a year would not begin to cover most cancer, stroke or heart treatments in the US. Many Americans with critical health needs would go without needed care if the US adopted the Singaporean system
Medifund is yet another insurance program that serves as a safety net, for people of modest means who deplete their Medisave accounts and their Medishield Life coverage. The amount of coverage varies by region and by the individual and his or her family’s financial situation and needs. Hospital boards have discretion. But, the total pool of money available each year is limited to the earnings on a $3 billion government endowment.
It’s possible that conservatives and liberals in Congress could unite around universal catastrophic coverage in the US and an insurance-free form of paying for routine care. But, as in Singapore, unless that coverage came with government rate-setting and large subsidies for people of modest means, it’s hard to imagine that critical care would be affordable for most people.
Here’s more from Just Care:
- No projected increase in 2018 standard Medicare premium, but many people may still face higher premiums
- Social Security benefits should rise in 2018, but checks may not
- Medicare Open Enrollment: Consider changing health plans
- Trump’s budget director prepared to gut Social Security
- Senate Republicans propose to slash billions from Medicare