It’s always worth exploring how health care works in other countries, if for no other reason than that models in other countries give us the chance to see how some of the approaches discussed by American reformers might pan out. What do the experiences of Germany and Netherlands tell us about the possibility of a better mixed public-private system in the United States? How is China’s health care system a cautionary tale of market forces gone wild? The answer to these questions can add to—or detract from—the appeal of certain health care strategies in the U.S.
It’s hard to imagine a country that could provide a more valuable example than Singapore. The Southeast Asian city-state is widely regarded as a health care superstar, especially when compared to the United States. Life expectancy at birth in the U.S. is 78 years; in Singapore, it’s 82 years. The Singaporean infant mortality rate is a mere 2.3 deaths per 1,000 live births, versus 6.4 in the U.S. As some have noted, these trends persist despite the fact that the U.S. has far more caregivers: 2.6 physicians per 1,000 people, compared with 1.4 physicians in Singapore. The United States has 9.4 nurses per 1,000 people; Singapore, just 4.2. Last—but certainly not least—is the issue of spending: the U.S. spends almost 16 percent of its GDP on health care, while Singapore spends a mere 3.7 percent.
For reformers eager to cite examples proving that their health care ideals are a formula for success, Singapore offers a powerful case study. Its population is healthy, its system isn’t overloaded by medical professionals, and health care spending doesn’t gobble up a huge chunk of its economy.
So how does Singapore do it?
A Consumerist Utopia?
At first glance, Singapore’s health care system seems to have all the
trappings of consumer-driven medicine, which emphasizes the need to
shift medical expenses directly onto patients through higher co-pays
and deductibles. Eighty-five percent of Singaporeans have health
coverage through Medisave, a national health savings account (HSA)
program introduced in 1984. Like the HSAs found in the U.S.,
Medisave accounts are tax-free, earn interest, and become part of one’s
estate after death. Accountholders can take money out of the account
only to pay for approved categories of medical treatments like
hospitalization, surgery, and radiotherapy.
In addition to Medisave, people can pay extra for optional catastrophic
insurance called MediShield. MediShield helps to cover the care
associated with prolonged illnesses, which can get very pricey in the
context of Singapore’s high-deductible and high co-pay system of
insurance.
An element of consumer choice is also evident in Singapore’s
hospitalization practices—even though 80 percent of hospital care in
the country is delivered by publicly-owned hospitals. In these public
hospitals, patients can choose different classes of ward accommodation
ranging from 1-bedded room to an open dormitory with 8 or more beds.
Patients in the 1-2 bedded rooms pay the full cost for their stay,
whereas patients in other ward classes enjoy subsidies from the
government ranging from 20 percent of the cost for the 4-bedded rooms
to 80 percent of the cost for the open dormitories. The Ministry of
Health also has a web-page
that lists the costs for a wide set of conditions and procedures to
inform patients about likely medical expenses once hospitalized.
Paying for care through savings accounts and imbuing hospitalization
and medical services with consumer choice—if we were to stop here, it
would seem that Singapore represents a validation that efficient,
sustainable health care depends on consumer-driven medicine. Or would
it?
First, the sustainability of Medisave has a lot to do with some very
distinct features of Singapore’s society. The country is relatively
young: only around 8 percent of the population is over 65 years old,
versus 13 percent in the U.S. Most European nations are even older.
A younger population that needs less care is more amenable to
consumer-driven medicine. It’s the older people who suffer more when
forced to pay medical costs out-of-pocket or out-of-savings, because
they need more care. So more old people means more people needing care
that exceeds their ability to pay, which results either in more
government aid or more sick people—both of which drive up health care
costs.
Second, Singapore’s economy has been something of a juggernaut. The
country’s GDP is growing at a rate of 7-8 percent per year—almost as
fast as the Indian economy. By contrast, in the U.S. GDP is growing by
only about 2-3 percent annually. When an economy grows this rapidly, it
generally means that many people have more money. Thus many can afford
higher co-pays and deductibles. Perhaps more importantly, the growth of
the Singapore’s economy has actually outpaced increases in health care
inflation, something that is definitively not the case in the U.S.
So even if the Medisave model of HSAs was to be carried over into the
U.S., its success is far from guaranteed, since its ability to function
is part and parcel of Singapore itself. But that’s not the whole story.
More important than saying Medisave wouldn’t work in the U.S. is noting
that health savings accounts are not the key to Singapore’s
high-performance health care. Far from it: Singapore’s health care
success isn’t due to consumer-driven medicine, but rather to government
intervention.
The Role of Government
Even Medisave isn’t entirely consistent with the vision of American
consumer-driven reformers: savings are compulsory. Every citizen gets
40 percent of his or her income deducted by Singapore’s Central
Provident fund, which distributes the money for programs like
retirement funds and Medisave. When all is said and done, the
government deducts between 6.5 and 8.5 percent of workers’ pre-tax
income to be re-directed to their Medisave account, with the percentage
varying according to age.
In other words, the Singaporean government mandates savings and funds
those savings by re-distributing compulsory contributions. This helps
to maintain a relatively stable level of savings that you wouldn’t get
in a save-only-what-you-want HSA system like the one advocates push for
in the U.S.
Yet the real kicker here is that, when it comes to accounting for
Singapore’s efficient health care system, Medisave is beside the point.
In fact, according to William Hsiao, a Professor of Economics at the
Harvard School of Public Health, Medisave has failed
to contain health care costs in Singapore: since Medisave was
introduced in 1984, the rate health care spending per capita increased
from 11 percent to 13 percent a year after the program’s introduction.
By 1993, Singapore’s government was starting to feel the fiscal pinch
and began to notice that, even with Medisave, many citizens were unable
to afford the care they needed. That year the government formed
Medifund, an endowment fund to help poor, indigent patients pay their
medical bills. According
to Singapore’s Ministry of Health, the Medifund endowment was S$1.6
billion this year and 98 percent of patients who apply for Medifund aid
are approved.
1993 also saw a paradigm shift that became the real engine behind
Singapore’s health care system: regulation of supply-side medicine.
Consumer-driven strategies like HSAs are all about adjusting the demand
of care. In theory, when you pay for more of your care directly, the
amount of care you desire and consume changes, because people are more
frugal with their own money. In contrast, supply-side interventions
look to regulate the amount and kind of medical resources that are
available.
Singapore’s government introduced a number of these reforms in the
1990s, all of which have gone a long way toward controlling health care
costs. One such change has been a restriction on how fast new, unproven
technology can be introduced into government hospitals Before this
reform, notes Hsiao, “hospitals competed…by offering the latest
technology and expensive equipment, which appeared to be demanded by
physicians and accepted by the public as an indicator of quality.”
Unfortunately, “once the new technology was put to use, it produced a
higher cost inflation rate in medical services.” Sound familiar?
The government also put price caps on all services and procedures
delivered in public hospitals, which provide 80 percent of hospital
care in Singapore. These caps apply not only to procedures like
surgery, but also to ward stays. So while patients are in fact able to
choose between types of accommodations for a price, those prices are
fixed by the government (except in the case of private hospitals, which
can charge whatever they want). Further, beginning in 2009,
subsidization for hospital stays will no longer be a universal
privilege. The government will introduce a means-testing program to make sure that only poorer citizens who need subsidization actually receive it.
Singapore’s government also put hospitals on a budget, setting a
predetermined amount to be given to hospitals each year, so that they
would not have a blank check to provide an open-ended number of
treatments and hospital stays. Similarly, the government set a limit on
the number of beds a hospital could have, to make sure that patient
volume was managed efficiently.
One of the most noteworthy changes that the government instituted was a
set of reforms aimed at streamlining Singapore’s mostly-private
physician workforce. In the late 1990s, the Ministry of Health noticed
that “countries with more doctors tend to spend more on health care”
and took steps to make sure that Singapore was not supporting more
physicians than it needed.
According to Michael Barr, an Australian historian who specializes in Singapore, the government instituted controls
on the number of medical graduates produced by local universities and
reduced the number of overseas medical schools whose degrees were
recognized in Singapore from 176 to 28. . It also set a limit on the
proportion of the physician workforce that could be specialists at any
given time (40 percent).
Over-Treatment Is the Key
All of these supply-side measures are aimed at reducing the risk of
over-treatment. Singapore has made it a point to guard against a glut
of expensive technology, high-volume care, too-long hospital stays, and
an excess of physicians and specialists. These reforms helped Singapore
reduce its per capita health care spending from 1997 to 2001 by 13
percent—even as the United States increased its per capita health
spending by 24 percent over this same period. Today Singapore spends
one-seventh what the U.S. does per capita on health care.
These numbers owe little to HSAs. As the Canadian Medical Association Journal has put
it, “Singapore’s MSA program itself has contributed less to cost
control than the more recently introduced supply-side tactics” Hsiao
also notes that “the well-executed Medisave scheme in Singapore could
not contain costs, so it is unlikely that such a scheme could do so
here.” And Barr eloquently concludes that while HSAs are an
institutionally distinctive feature of Singaporean health care, “the
practical and spiritual heart of the system lies in control and
parsimony.”
In the end, Singapore’s health care experience isn’t an argument for
consumer-driven medicine, but for targeted government interventions and
smart, timely, regulation of over-treatment. One of the world’s most
successful health care systems is built on the principle that personal
responsibility is good, but it has practical limits—and the
understanding that when it comes to health care, more can easily
become too much.
FUNNY
Uh .. secret?
First, they’re all Asians. Second, it’s a police state. Third, it’s a island-nation, slighly larger than Manhattan, with 300% more population (densely-populated).
Comparing SNG to USA is like comparing an ant hill to Manhattan. Funny.
The real test is who’s pocketing the money and how many people are being harmed because they have no health care. Staying in rooms with 12 or more seems not to be safe or comfortable.
A full picture would need to discuss where the money in the HSA’s is invested. One of the common rightwing attacks on Medicare is that the fund is going to go broke (as will Social Security, supposedly).
But, as recent events have shown, putting money into the stock market is not a good idea for core savings.
If Singapore is growing rapidly how the funds are invested makes little difference, but this is a bubble, just like in the US. The truth is that the wealth of a country can’t increase faster than the rise in population and the rise of productivity provides. The numbers can also be made to look bigger by treating inflation as real growth, rather than nominal.
One can have one sector grow at the expense of another, but the overall results can’t beat reality.
All systems ultimately have to be pay as you go, there is no where for governments to put surpluses, they can’t invest in themselves. Trust funds and the like are just accounting conveniences.
Yeah, can you imagine if Bush had privatized social security and SSI funds went into the mortgage market? I can’t believe our stupidity. But that gets off of Singapore. Sorry.
Niko,
Several comments on this.
First, there is plenty of room to debate how much credit the healthcare system deserves for Singapore’s life expectancy and infant mortality statistics. Asians generally have above average life expectancy. Some of it could be genetics and some could be related to diet. Japanese and Korean people have average adult obesity rates of 3% vs. 31% in the U.S. and 9%-14% in most of Europe except for the UK (23%). Infant mortality rates vary considerably within the U.S. independent of access to adequate prenatal care. The factor most correlated with higher infant mortality rates is low socioeconomic status and poverty.
I applaud Singapore’s effort at price transparency for hospital charges. I wish the U.S. would copy that. Their attempts to restrict the supply of hospital beds and specialized equipment probably does help to control costs, but I wonder about the impact on wait times for imaging and non-life threatening surgeries like hip replacement. Can people who can afford to access private care and significantly reduce the wait time for services? If so, many in the U.S. would object to such a “two tier” setup.
It is also important to note that Singapore has a population of a mere 4.5 million people as compared to over 300 million in the U.S. while our society is much more diverse than their’s. Every society has to build a healthcare system that is consistent with its culture and its values. Aside from hospital price transparency, I don’t see much in Singapore’s approach that could be successfully replicated here.
All,
Re: comments that Singapore is a unique case, you’re exactly right. No one’s saying we should copy Singapore’s system wholesale. The point is that supply-side regulation has helped them constrain costs and make the system more sustainable, and that health savings accounts FAILED to do just that. Would health care reform in the U.S. look exactly as it does in Singapore? Of course not. But we know from Dartmouth research (and countless Health Beat posts!) that the supply-side of medicine is where so many of our problems come in–and that that’s a place where government intervention can have a real impact on the performance of the overall system.
And guess what? That’s even true for a tiny, Asian island nation. No, we shouldn’t try to totally duplicate Singapore’s health care system; but it provides an example of how important it is to guard against a counter-productive glut of health care and over-treatment. That’s a lesson the U.S. can learn from, no matter where it plays out.
A point made here and elsewhere assumes that private rooms vs. semiprivate and ward are a sigificant contributor to costs. Private rooms often are assumed to be luxuries. I’d like to see that assuption examined with some serious analysis.
Probably the most obvious start is infection control. Once handwashing, ties, flowers and other known sources are controlled, how much cross-contamination is a function of room occupancy? It might be worthwhile to correlate this with number of visitors as well as number of patients. Clearly, no one is arguing against a need for isolating patients with confirmed airborne infections. Hospital-acquired infections are nasty and expensive; they tend to be much more antibiotic-resistant than community-acquired.
There is abundant data that hospitals are noisy places, noise interferes with rest, and lack of rest may delay healing. Again, is there any statistical data on whether stay length correlates generally to measured overll hospital noise, and then confirming my assumption that private rooms are more quiet?
There are also cultural factors. We’ve had recent posts about rude visitors being a problem, but, in many cultures, it is expected that family and friends will provide many basic nursing services. Any studies of the preceding factors have to, in some way, be corrected for visitor behavior, visitor compliance with infection control, etc.
As an aside, while I don’t assume visitors can help with more skilled care, and fully recognizing anecdote is not the singular of data, I can’t begin to count how many times I have made adjustments or repairs, while a visitor, on bedside equipment. IV pumps tend to be the worst offenders in false alarms, kinked tubing, and the like. Oxygen lines and nasal catheters get displaced. Less skilled, but also a drain on nursing care, are such things as urinal emptying.
It was vaguely amusing, in my last personal stay, when I had a respiratory assist that was constantly quitting or giving false alarms that the nurses couldn’t fix. I diagnosed the malfunction, convinced a nurse to brings some tools, and was in the process of fixing it, when the much-paged respiratory therapist showed up. Probably a pro football player in the season, he took one look, grabbed the cabling for the subsystem giving the problem, ripped it out of the machine, and walked away, smiling.
I think Frank is right. Singapore can be nice key study, however, for countries like USA (or Canada) is its outcome hardly reachable. Despite the interesting fact that health care costs are below 4% of GDP…
Lorne
Interesting article and astute comments. “Overtreated” is a problem as in Shannon Brownlee’s book OVERTREATED. She estimates that about one third (800 billion) of our $2.1 trillion-dollar health care costs are not only not needed, but actually harmful sometimes. Addressing that problem would be a big start towards getting the U.S. on the right track.
It’s not merely one problem, however, but reflects several problems: high cost of technology, doctor-owned ancillary services, profit-driven drug companies, competing hospitals who feel pressured to have he latest technology and most luxurious buildings, fear of law suits (order many tests and images to cover your ass), etc.
From a recent questionnaire being circulated to docs:
Questionnaire for Documentary
The U.S. has some of the best doctors and medical know-how in the world, but we still rank behind other industrialized countries in terms of health care delivered. Our legislators are floundering to find solutions. We want to tally your professional, expert advice for presentation to key legislators.
Why are our health care costs per person so high? Please give your estimate. Circle “1” for example if you feel it has no impact. Circle “5” for major impact. Circle “3,” if you feel there is a moderate impact. Circle “?” if you have no opinion.
High cost of malpractice insurance………………………….. 1 2 3 4 5 ?
Overuse of expensive tests …………………………………… . 1 2 3 4 5 ?
Availability of expensive technology …………………… 1 2 3 4 5 ?
Doctor-owned ancillary services……………………………… 1 2 3 4 5 ?
Profit-driven drug companies………………………………… 1 2 3 4 5 ?
Dealing with multiple insurance carriers………………… 1 2 3 4 5 ?
Lack of central data base……………………………………… 1 2 3 4 5 ?
Litigious tendencies (tort reform)………………………….. 1 2 3 4 5 ?
Some doctor salaries too high …………………………………. 1 2 3 4 5 ?
Emergency care rather than preventive care……………. 1 2 3 4 5 ?
Disproportionate spending on last six months of life…. 1 2 3 4 5 ?
Other:_______________________________________________________________
_____________________________________________________________________
If you would consider speaking for a documentary, please note your phone or email contact below, and we will contact you with more details: ________________________________________________________ Thank you.
Branch of medicine or title:______________________________________________
Interesting article and astute comments. “Overtreated” is a problem as in Shannon Brownlee’s book OVERTREATED. She estimates that about one third (800 billion) of our $2.1 trillion-dollar health care costs are not only not needed, but actually harmful sometimes. Addressing that problem would be a big start towards getting the U.S. on the right track.
It’s not merely one problem, however, but reflects several problems: high cost of technology, doctor-owned ancillary services, profit-driven drug companies, competing hospitals who feel pressured to have he latest technology and most luxurious buildings, fear of law suits (order many tests and images to cover your ass), etc.
From a recent questionnaire being circulated to docs:
Questionnaire for Documentary
The U.S. has some of the best doctors and medical know-how in the world, but we still rank behind other industrialized countries in terms of health care delivered. Our legislators are floundering to find solutions. We want to tally your professional, expert advice for presentation to key legislators.
Why are our health care costs per person so high? Please give your estimate. Circle “1” for example if you feel it has no impact. Circle “5” for major impact. Circle “3,” if you feel there is a moderate impact. Circle “?” if you have no opinion.
High cost of malpractice insurance………………………….. 1 2 3 4 5 ?
Overuse of expensive tests …………………………………… . 1 2 3 4 5 ?
Availability of expensive technology …………………… 1 2 3 4 5 ?
Doctor-owned ancillary services……………………………… 1 2 3 4 5 ?
Profit-driven drug companies………………………………… 1 2 3 4 5 ?
Dealing with multiple insurance carriers………………… 1 2 3 4 5 ?
Lack of central data base……………………………………… 1 2 3 4 5 ?
Litigious tendencies (tort reform)………………………….. 1 2 3 4 5 ?
Some doctor salaries too high …………………………………. 1 2 3 4 5 ?
Emergency care rather than preventive care……………. 1 2 3 4 5 ?
Disproportionate spending on last six months of life…. 1 2 3 4 5 ?
Other:_______________________________________________________________
_____________________________________________________________________
If you would consider speaking for a documentary, please note your phone or email contact below, and we will contact you with more details: ________________________________________________________ Thank you.
Branch of medicine or title:______________________________________________
Bill–
Thanks for your comment.
Yes, “Overtreated” is very good.
I’ve also written at length about the Dartmouth Reserach and the $1 out of $3 dollars wasted in Money-Driven Medicine, (Harper/Collins, 2006)
And you are right, the waste can be found at every level of our healthcare system: unncessary hospitalizations, inneffective, often unproven and over-priced drugs, device and procedures, unnecessary often redundant tests. . .
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Hi, I’m victor from Singapore. Interesting to view the comments on our system.
Yes, supply side healthcare economics play a very important control on cost escalation. It’s growing annually. The cost of a similar drug or supply could be as high as 4 times that in public hospitals.
Public hospitals in Singapore are now what we call restructured with private sector rates for those opting for more expensive care so we try to merry the best of both worlds & offer more choices to the public but never deviating from the co-payment philosophy to minimise moral hazard and buffet syndrom
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IV pumps have false alarms but they are critical and are getting better.
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Really health care is a concern in Singapore. Privatized social security and funds went into the mortgage market and only 3.7% of GDP is spent on health care. I can’t believe this.
Thanks for sharing the information.
The real test is who’s pocketing the money and how many people are being harmed because they have no health care. Staying in rooms with 12 or more seems not to be safe or comfortable.
Private rooms often are assumed to be luxuries. I’d like to see that assuption examined with some serious analysis.
If Singapore is growing rapidly how the funds are invested makes little difference, but this is a bubble, just like in the US. The truth is that the wealth of a country can’t increase faster than the rise in population and the rise of productivity provides. The numbers can also be made to look bigger by treating inflation as real growth, rather than nominal.
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