Give how badly we’ve managed to botch up health care here in the United States, you’d probably be surprised to find out that another country—Singapore—has used forgotten American ideas to build the world’s greatest healthcare system.
As the political debate over health care reform heats up again, it is important to understand both what Singapore has built as well as the fact that everything that it has accomplished has been shown to work just as well here in the United States, too.
Singapore is the only country in the world that can boast of being in the top five in infant mortality, life expectancy, and maternal mortality. Better yet, when Business Week compared countries on 21 different healthcare metrics, Singapore stood out as the world’s healthiest country.
By contrast, the U.S. health care system delivers mediocre results while spending more than any other nation on health care. The United States ranks 41st in life expectancy, 55th in infant mortality, and 49th in maternal mortality while spending nearly 18 percent of GDP on health care.
By contrast, other developed nations deliver much better results while spending between 9 and 12 percent of GDP. So getting our 18 percent of GDP down to the typical 9 to 12 percent would be a major accomplishment.
But the fact remains that Singapore is managing to deliver the world’s very best health outcomes for just 4.7 percent of GDP—or less than half of what Canada, Japan, and the United Kingdom are spending.
How does Singapore do it? By empowering consumers and fostering competition.
The most fundamental way to empower consumers is by providing real health security. So Singapore provides true universal access as well as coverage for preexisting conditions. Singapore then builds on that by making sure that everyone—rich and poor, young and old—has money to pay for access to the same doctors and the same facilities.
This is done by ensuring plentiful contributions into health savings accounts and by providing a high-deductible health insurance plan that people can actually afford—not only the premiums, but the deductibles and copays, too.
Providing people with adequate health savings balances and universal high-deductible health insurance transforms people into empowered consumers. The government then provides them with price-comparison data as well as provider-performance data so people can comparison shop both on price and quality. The result is the world’s most competitive healthcare market—one in which providers have to deliver on both quality and price if they are going to survive.
The results are startling. Major surgeries cost 62 to 92 percent less in Singapore. As just one example, a heart-bypass surgery that would cost $130,000 in the United States costs just $18,000 in Singapore. Overall, Singapore spends 72 percent less per person on health care than the United States and between 46 and 57 percent less than Canada, Japan, France, and the United Kingdom.
If we could cut our health care spending down to Singapore’s level, we would have annual savings of about 12.2 percent of GDP, or about $2.1 trillion per year.
That’s such a huge amount of money that we could balance the federal budget, bring Medicare and Medicaid into long-run actuarial balance, and still have over $1 trillion per year left over to spend on other crucial national priorities such as infrastructure, education, and national defense.
A key point is that everything that Singapore has accomplished has already been shown to work here in the United States. Whole Foods Markets has a wildly popular Singapore-style health care plan that was approved by its unions. And the State of Indiana proved that Singapore-style health insurance works for both middle-class government employees as well as indigent Medicaid recipients.
Local control also creates flexibility and strength in addition to slashing red tape and administrative costs. By empowering individuals to choose and by forcing providers to compete, the healthcare system becomes bottom-up rather than top-down.
That bottom-up perspective is important for policymakers looking for solutions. The decentralization that comes from empowering individuals will allow our healthcare system to cope with the size and diversity of United States far better than the central planning and rigid rules embraced by our current system.
We the People is the basis of our Constitution. It should also be the basis for totally reforming our healthcare system. We can provide the highest quality, lowest-cost healthcare in the world if we only get out of our own way and trust ordinary Americans to make wise decisions for themselves and their families.
Sean Masaki Flynn, Ph.D. teaches economics and finance at Scripps College in Claremont, California. He is best known for writing the international best seller Economics for Dummies (Wiley) and for being one of the coauthors, along with Campbell McConnell and Stanley Brue, of the world’s best selling economics textbook, Economics: Principles, Problems and Policies (McGraw-Hill).