McClaughry: Singapore is a useful health care model

By John McClaughry

Health care is again moving to center stage in this election year. A year ago the Trump administration released a respectable report (“Reforming America’s Healthcare System Through Choice and Competition”) but neither Democrats nor Republicans have shown much interest in it since no major legislation can pass both House and Senate. Accordingly the Trump Administration has been confined to making changes in insurance and tax regulations, and proposing price controls to reduce pharmaceutical costs (which the 2018 plan rejected.)

On the Democratic side, Sen. Bernie Sanders has championed “Medicare for All,” which on close inspection translates to “Medicare for Nobody”; Sen. Elizabeth Warren has floundered trying to clarify her version of universal coverage; Pete Buttigeig is promoting a government insurance company as a “public option”; former VP Joe Biden promises to expand and improve Obamacare; and Michael Bloomberg is running ads telling us that he worked wonders in health care as Mayor of New York.

John McClaughry

John McClaughry is vice president of the Ethan Allen Institute.

One key Sanders talking point is “the U.S. is the only country in the developed world without a government-run universal health care coverage.” There is certainly something to be learned from examining health care policies in such countries as the Netherlands, France, Switzerland, Japan and Sweden, plus the problem-plagued Canadian and British models. But by far the most interesting and successful model is Singapore.

In 1955, 10 years before this city-state became independent, its British colonial masters instituted the Central Provident Fund. Every Singaporean is required to pay 20% of wages, matched by the employer, into the fund. This is the equivalent of the U.S payroll taxes for Social Security and Medicare (15.3%), plus the cost of the employer’s medical plan, plus a large contribution into the employee’s HSA, HRA, FSA, or 401(k).

Unlike the U.S. payroll taxes that become government property, the employee can use the funds he or she contributed into the CPF to buy retirement income annuities, family Health Savings Accounts (Medisave), catastrophic health insurance premiums (Medishield), home purchase down payments, and certain educational benefits. The government also pays for a safety net program called Medifund.

As William Haseltine (Brookings Institution, 2013) has noted, “the government has always made clear that a welfare system or an entitlement mentality has no place in Singapore. The need for ‘individual responsibility’ and ‘self-reliance’ on the part of the citizenry in all personal matters, including health care, has always been an integral factor in the country’s achievements.” Individuals self-pay 65% of Singapore’s health costs, and the government spends only 4% of its GDP on health care, compared to 8% in the U.S.

As for quality, Singapore has outstanding modern doctors and medical facilities and is a very competitive medical tourism destination for foreigners. Its government puts heavy emphasis on health education and wellness. Its providers offer transparent pricing, and compete on the basis of price and quality. About 80% of primary care is provided by private sector doctors and clinics. One can buy private insurance like Medigap.

The CPF is a forced savings plan. One’s CPF account can’t be used to buy that new pickup truck or take a vacation. But it’s designed to assure that every Singaporean provides for a modest retirement income stream, the means to access an adequate level of health care, and a down payment on a home.

In an Australian interview, Dr. Phua Kai Hong, a scholar at National University of Singapore, listed as crucial components “the creation of incentives for responsible behavior and the efficient delivery of services; the discouragement of overconsumption through cost sharing; the regulation of hospital beds, doctors, and the use of high cost medical technology; the promotion of personal responsibility; targeted government subsidies; and the injection of competition through a mix of public and private-sector providers.”

Critics have long marshalled many objections to considering a Singapore model for the U.S. Singapore is entirely urban (5.3 million people, on half the acreage of Lamoille County). Many Americans want somebody else to pay for all the health care they want. Americans won’t like forced savings any more than they like taxes. Americans increasingly lack the supportive family and social structure evident in Singapore. Singaporeans accept paternalistic controls because they trust their government far more than Americans ever will.

These are all valid points, but there are certainly steps the U.S. could take in Singapore’s direction. One is the expansion of first-party medical payments through Health Savings Accounts, coupled with catastrophic insurance. Another is spurring informed consumer choice, provider competition, and price transparency (all advocated in the 2018 Trump report).

Above all, improving affordable health care depends on reinvigorating the principles of personal and family responsibility. The U.S. has a lot of ground to make up.

John McClaughry is vice president of the Ethan Allen Institute.

Images courtesy of Public domain and John McClaughry

9 thoughts on “McClaughry: Singapore is a useful health care model

  1. Politicians use the murky VAT in the rest of the world to game our understanding of healthcare costs. All or vast majority of countries outside of US have aVAT aka Value Added Tax – that is used for social and public programs – however it is much higher than our sales tax and is added on virtually all financial transactions at point of sale. And there may be additional taxes added to a base tax rate.
    Canada is 5%-15% with different rates for different provinces:
    Across EU and other European countries it is much higher:–gst-and-sales-tax-guide-2019—rates
    The Swedish audience plant at a Sanders event in 2016 who said in response to a query by him healthcare was ‘basically free’…uh huh. Their VAT is 25% lol.

    And there are countries which charge for healthcare in addition to the VAT. Universal Health Care only means that everyone is covered – there are differing models:
    However one thing is for sure there are often long waits and some things are simply not covered. Ppl with means come to the US or other countries, negotiate and pay with cold hard cash.
    Best Countries for Health Care:

  2. The aforementioned European health systems, Switzerland, Singapore, and Germany (not mentioned), are prime examples of the state caring for it’s citizens. They have no special interest entities involved which are money sponges or leeches that run up costs while putting money in their pockets with no value added. Germany is a state funded health system using taxpayers dollars. But, it’s efficient and last I knew it runs in the black. Singapore’s system was highly efficient with almost no wait time for any service, but it ran in the red (info was from two years ago). The point is, if the state wants good health care for it’s people it has to make good choices in how it invests taxpayers money. For example, Germany will pay all tuitions in medical school for a citizens to become a doctor, surgeon, radiologist, etc., providing the student agrees to practice in Germany and accept the pay rate the state pays. And that rate isn’t shabby. It looks like VT lawmakers don’t know enough about the health care industry, so when things don’t go right their solution is to throw more money at the problem and hire someone else to handle it. They have better things to do. Regardless of how they do it, it is good for a citizen to know that whatever happens to their health, they can go get treatment without the added worry of being put in the poor house by a program that is burdened with co-pays, first amount limits, lifetime maximums, and not covered procedures.

  3. A healthcare provider owned and operated billing and collecting system can save a huge amount of the operating costs and can be expanded to be a procurement entity that can further reduce costs by the increased buying power. This can be even further expanded to be a less expensive insurance operation.
    Add to that an effective tort reform system and the health costs will go down significantly.

  4. With our aging population (especially in Vermont), the current system is “unsustainable.” At some point it will collapse — Vermont has increased administrative overhead tremendously through OneCareVermont, but this is bureaucratic fiddling that is proving yet again that larger government is not the solution but a problem. The question is how bad it will get before some of these proposes cost-saving solutions will be implemented.

    • OneCare is not only about bureaucracy. Have you seen anything Meg Hansen is doing to expose OneCare? Ive been following her reports for years with VHCF. Now she is showing even more courage by running against VT Bolsheviks. Why are you dividing conservatives? Aren’t the RINOs Scott and Benning enough? Now you have made your own new subparty to add more divisions in VTGOP?

      Is your candidate better than Ms. Hansen in character, record of fighting Bolsheviks, policy education, exposing single payer and OneCare? Is your candidate better shot of winning against Socialist Timmy? 

      We need young voices. We need strong women. Too bad your ego is more important. This is why we can never win. Last year, it was infighting of gun groups. This year, John Klar’s arrogance. Vermont has no chance.

      • FYI: There was no infighting of gun groups …ya quack like a Dem sir. Mirror mirror much? Name calling is deeply offensive – who’s the arrogant one here? I will not vote for your friend Comrade Phil – he is not an option – and has more Dem supporters than conservatives and a traitor who lost his base on a Gunsense plant – phony supposed child ‘gun threat’ and closet Dem who cannot be trusted period.

        Tho once a strong supporter Phil Scott has turned out to be another big government fraud and has plenty of company in our our state known for hard workers and honest ppl including many politicians.

        Our state has fallen further than it did under Shummy – another traitor. Bond rating is down – another expense. School system has been destroyed and are currently paying ppl to move here as residents leave our state in droves. We need ppl like John Klar – conservative voices and strong ppl – men and women – young and old, not virtue signalling identity politicians, who are not afraid to stand up to the deeply dishonest Democrat Party in VT.

        John Klar 2020!

    • Good point John. One big difference in the European’s/Asian models and VT’s is population density. VT’s population isn’t as big as many of their cities much less individual countries. Zurich (metro) has 1.8 million population. Switzerland is 15,443 sq. mi. In size but has a population of 8.5 million. That’s 1.6 times larger in real estate, with over 13 times the population in the Green Mountains. Switzerland also has a lot of high tech industry that pays high wages. All of this provides a healthy tax base. Singapore, Germany, Sweden, and the Netherlands all have thriving economies and large tax base. VT has neither. Seth Hough makes a point in his comment about how partisanship can throw a wrench in the works. Maybe that’s why One Care is in control of the state health care system. The two parties couldn’t come together and do it, so it was easier to let One Care handle it. Irregardless, One Care is a paltry attempt next to these European models. There have been hundreds of comments in the last couple of months (between True North and VTDigger) saying that, all the damage control legislation will be ineffective if first the economy, which depends on an abundance of good paying employment ($18/hr and up) isn’t attracted to VT. All a good economy can do is fund better health care. Health care costs are what they are. When One Care gets done cutting doctors reimbursements all they have done is put more doctors out of business or made them go where they can afford to work. That shrinks availability of good services. Right now, that is a huge problem in VT.

  5. The Democrats want a healthcare system paid for by upper income folks, as they did with Obamacare.

    Money was from Medicare to the states so they could spend on that state’s invention of Medicaid, i.e., provide money to all the folks who ”need all the free help they can get”

    That approach gets the Democrats a lot of votes, and it is even more fun if they can stick the additional costs to high income folks, because they have too much anyway.

    The work ethic and self-responsibility of folks in Singapore is afar cry from Bernie Sanders style Socialism

    The Dutch universal care system is competitive.
    It has been emulated by several European countries, because it get good outcomes at low cost per person per year

  6. John, No matter how many ways the universal health care proposals are sliced, it comes down to one fundamental truth, “THEY’RE ANIT NO SUCH THING AS A FREE LUNCH”.

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