A few notes on Singaporean (and other) health care systems

by on August 26, 2013 at 2:04 am in Economics, Medicine | Permalink

This is oversimplifying of course, but you can think of the Singaporean system as “2/3 private money, 4/5 public provision,” with private hospitals on the side.

You can think of the UK system as “public money, public provision.”  Again with some private supply on the side.

The US system is “lots of public money, lots of private money, mostly private provision.”

Many other systems are “public money, private provision.”  In all cases there are various complexities piled on top.

Singapore now is making some changes, outlined in brief here.  For the most part, Singapore is adding on some public money, but in targeted fashion (one of the changes is for people over 90 years old, another is for people over 60).

Here’s from The Straits Times (gated, I write from the paper copy) from Saturday:

The first [priority] is to keep government subsidies targeted at those who most need them, rather than commit to benefits for all.  Universal benefits are “wasteful and inequitable”, and hard to take away once given, he [the Finance Minister] said.

That’s exactly the liberaltarian line and sometimes the conservative line as well.  It is a principle I strongly agree with.

I am grateful to have had a lengthy dinner with several of the civil servants who run the Singaporean health care system (I don’t need to tell you about the food).  I had the liberty to “ask away” for several hours and I learned a lot.

Yes, the system really is a marvel, and no it is not laissez-faire.  The mix of “private money, public provision” has some marvelous properties for economizing on costs, not the least of which is that private hospitals and doctors and medical device salesmen do not become too strong a lobby.  And the level of conscientiousness in Singapore is high enough that the public hospitals work fine, though they don’t in general have the luxuries of the private hospitals.  Furthermore those public hospitals have to compete against each other for patient loyalty and thus revenue, and so the reliance on private money helps discipline public hospitals.

Whether those public hospitals would work fine everywhere in the world is a debatable proposition.  It’s easier to monitor quality in a small, Confucian city-state with high levels of expected discipline.  (Oddly, Krugman, who thinks the VA model in the U.S. could be generalized to a national scale, should be especially sympathetic toward a Singapore-like system.  An alternative is that the public hospitals are run at city, county, and state levels.)

In any case let’s start by admitting, and keeping on the table, the notion that the current version of the Singapore system is indeed a poster child of some sort.  And it is not being modified because somehow it has started spewing out unacceptable health care outcomes.  It is being modified because, for better or worse, Singaporean politics is changing.

Now enter Aaron Carroll, who tries to argue Singapore is moving in an ACA-like direction.  His post has been cited numerous times, but it is not insightful nor does it show much curiosity about the new changes in Singapore.  It is mostly a polemic against Republicans.  In any case the new Singaporean emphasis on taking care of the elderly isn’t well understood by a comparison with ACA.

For an additional and important point, here is a good comment by Chris Conover on just how limited Singaporean coverage can be.  This ain’t your grandfather’s ACA, though with some luck it may be your grandson’s.  Even if the Singapore model is not fully generalizable to larger, more chaotic countries, it shows that government health care coverage and finance, no matter what exact form they take, should and indeed can be quite limited and you still can end up with excellent outcomes, including better cost control.

I also should add that quite a few intelligent, non-ideological Singaporean economists and civil servants believe the new changes to be bad ones, driven primarily by the demands of citizens for goodies rather than by the quest for the best technocratic policy.  The alternative view is that Singapore is now a wealthy place and it can afford to spend extra on these health care services and indeed should do so to limit inequality and also for reasons of political popularity and stability.

The Singaporean health care system is not done changing.

Alex Tabarrok August 26, 2013 at 9:44 am

Comments are now open on this post, sorry for the glitch and delay.

bob August 26, 2013 at 10:44 am

Any system for a strategic good or service needs a cost control mechanism. Public provisioning with private choice does the trick pretty well. Private provisioning would work if there was actual price competition. If the agents that want lower prices have no control over said prices, prices will balloon.

Imagine having to buy your food along with a thousand other people. You do not know the prices of anything, or what anyone else is ordering: The only thing you know is that in the end, the bill will be split evenly among the 1001 customers. Growing or cooking your own food is banned, because you don’t have a license. Poor people can go to the same restaurant, but the government pays a good chunk of their tab. Imagine trying to keep prices low in that situation.

Ashok Rao August 26, 2013 at 10:48 am

“That’s exactly the liberaltarian line and sometimes the conservative line as well. It is a principle I strongly agree with.”

Is there a “liberaltarian line” on this? There are plenty on the Right that think targeting and eligibility requirements for any number of transfers increases corruption and power of the state whereas universal benefits are simple and can’t be gamed. I thought the liberaltarian line would be universal, but less.

Andrew' August 26, 2013 at 12:36 pm

With the caveat that I didn’t know the word last week, I would assume that middle ‘el’ liberaltarians would accept some marginal gaming while conservatives would on the contrary more likely focus on the incentive to game and that attendant ‘occasion of sin.’

Dan Weber August 26, 2013 at 12:51 pm

Yeah, universal benefits don’t have marginal tax issues as people start earning more. That is a really really good feature.

Prakash August 27, 2013 at 12:36 am

Yes, Friedman’s NIT is a universal provision, precisely due to the marginal tax issues. Are conservatives and libertarians not in favour of NIT now?

JWatts August 26, 2013 at 6:43 pm

Liberaltarian is an oxymoron.

Willitts August 26, 2013 at 11:35 am

I assert in almost complete certainty Krugman has never received care in a VA hospital and never will. He likely knows few people who have. I assert that he would not wish to be treated in a VA hospital as opposed to a private hospital.

Krugman knows nothing about the VA’s budgeting or cost containment methods. He’s not aware of any objective measures of the quality of its care. Simply put, he’s in love with the idea of government -provided health care, sees one in operation, and declares it a success without the slightest examination.

He also pays no heed to the effect of scaling up the VA’s operations. VA care is, in a fashion, a ‘you break it, you bought it’ system. It has qualities of tort liability and worker’s compensation in it that confound an analysis of the system as a health care provider.

JWatts August 26, 2013 at 7:00 pm

Oddly, Krugman, who thinks the VA model in the U.S. could be generalized to a national scale …

The VA system creates 8 classification of vets (policy groups) and prioritizes based upon that. The very highest classification gets roughly half their health care from the VA, lower classifications get a lot less.

That’s not a system that you can be generalized to a national scale.

Bryan Willman August 26, 2013 at 11:45 am

“not the least of which is that private hospitals and doctors and medical device salesmen do not become too strong a lobby”

Why should this be or remain true, given the counter example of public teachers unions (and police and fire unions) in the US? I fail to see how working for a government provisioned service ever reduces the incentive for lobbying?

Does Singapore have a very strong model for controlling such lobbying? A particularly low level of cronyism? In the current environment how do their speech rights compare to the US?

Bryan Willman August 26, 2013 at 11:48 am

2nd try – why should this be true: “not the least of which is that private hospitals and doctors and medical device salesmen do not become too strong a lobby”

Given the counter examples of say teacher’s unions in the US? And consider the success of various medical provider groups at getting states to force insurance to cover them. Why wouldn’t that happen in Singapore? I can easily imagine vocal groups arguing the need for more publicly provisioned hospitals, and that they should be funded by raising the private contributions people are required to make.

Bender Bending Rodriguez August 26, 2013 at 1:26 pm

I think we’d see a completely different story on US teacher’s unions if the parents had some form of cost sharing, like a voucher that covered 80% (with 100% provision for low income parents).

Ka September 9, 2013 at 2:23 am

But they do – property taxes primarily. Obviously this excludes state with significant redistribution across districts and federal money. But in the Tony suburbs where I’d guess most of the non-urban readership lives, the relationship is well recognized by pretty much everybody.

Claude Emer August 26, 2013 at 12:37 pm

I wish the post had focused more on explaining the Singaporean model, then the ACA and compared and contrasted them. As it is, it’s just a political rant sprinkled with few tidbits of information. I also note the ACA seems to stand for either universal coverage or public healthcare, neither of which it is.

I get that TC doesn’t think universal coverage is good. So?

E August 26, 2013 at 3:02 pm

Posts like this further Carroll’s point, that people selectively highlight areas of Singapore’s system that fit with their ideological inclinations while ignoring a number of other features that make it so effective at controlling costs.

lonely Libertarian August 26, 2013 at 1:41 pm

I won’t speak for Tyler – but there is a pretty large difference between Universal Coverage and Universal Benefits…

The problem with Universal Benefits is they are neither efficient or effective – and as the post notes – once given they are hard to take back.

I got in trouble over at TIE for pointing out that Singapore spends 4-5% of GDP on health care in an economy that has 20% higher GDP. I know many here know that – but I think it is important to remember this and acknowledge that the differences are very substantial – not “marginal”

And they achieve outcomes far better than the US…

As for the inevitable “it’s too late now” or “where were you when the law was being debated” memes which I have heard, I will only note what I have said on other blogs. I don’t think there was any desire on the part of the administration for a real discussion or debate – much of the ACA was hastily written and we all know never really read and understood before it was passed by more than a small group of people.

Claude Emer August 26, 2013 at 3:21 pm

It’s interesting how different people can witness the same event and come up with a different description. What I remember from that episode is that there were initially 6 bills debated, that it took nearly a year to come up with the final package, that most of the debate in public at least centered on politics and tactics, that the administration’s opposition focused entirely on derailment of the process, that the only thing introduced that was universal in anything was the “public option” which was dropped for lack of support from the administration.

What did I miss?

Unfortunately, the real problem with improving our healthcare system isn’t the lack of good ideas, it’s the lack of political will.

Jan August 26, 2013 at 4:53 pm

Yeah, you would have to have been completely ignoring all coverage of Congress 2009-2010 to think there was no intention of a debate. That is demonstrably false. Dems would have come out much better and produced a different law if they had recognized Republicans’ refusal to participate early and proceeded on their own.

JWatts August 26, 2013 at 7:09 pm

I watched the coverage extensively and there was no substantive inter party debate. The Democratic controlled Congress routinely excluded Republican input into the drafts of the bill.

“Senator Olympia J. Snowe of Maine, a moderate Republican who has spent years working with Democrats on health care and other issues, said she was “extremely disappointed” with the bill’s evolution in recent weeks. After Senate Democrats locked up 60 votes within their caucus, she said, “there was zero opportunity to amend the bill or modify it, and Democrats had no incentive to reach across the aisle.” ”

http://www.nytimes.com/2009/12/25/health/policy/25health.html

Claude Emer August 27, 2013 at 10:40 am

I’m going to assume you replied out of… lack of information as opposed to lack of good faith, which wouldn’t be surprising anyway.

Olympia Snowe said what she said to retain some street cred. after the uproar over her 60th vote. In reality, she had just spent a year negotiating the details of the bill as part of the Gang of 6. The Gang of 6 was setup specifically to give Republicans equal say, even though at the time it was formed they only comprised 40% of the Senate. When it became apparent that her colleagues had no intention of participating, illustrated by Chuck Grassley, another member of the gang bad mouthing his own ideas after they were included on the bill, she broke ranks.

If you want to get a refresher, Google “Gang of 6″ and “Obama’s Waterloo”. The notion that Republicans wanted to negotiate in good faith but Democrats stopped them is an extremely bizarre interpretation of the debate. A lot of the Congressmen knew they were committing political suicide and president Obama said as much in his pep talk before the final vote.

lonely Libertarian August 27, 2013 at 11:47 am

There were no open hearings – no opportunity for comment – no ability to read the bill and propose changes – none!

The right way to do this would have been to have hearings – allow for discussion – seek input from a range of folks. What happened was done behind pretty closed doors and drafted pretty poorly by all accounts.

That is why we have the news from California that farm workers are going to be challenged to meet the demands of Obama Care.

That is why we have unions concerned about the impact of the law on the 40 hour work week. Show me the debate/discussion that went into deciding that 30 hours would be the full employment criteria.

Show me the debate that ended up with the arbitrary 50 employee standard.

How did we come up with a 50% surcharge for smoking – but no surcharge for drug use or HIV…

Where was the debate on the IT implications that are going to put some smallish and medium sized businesses out of business.

Where was the debate on data security implications and conflicts between existing HIPPA law and ACA reporting

To the extent there was a debate it was pretty one sided – I remember Obama ignoring Ryan – and others – and being pretty dismissive.

steve August 26, 2013 at 3:30 pm

What Tyler misses, is the response to Conover in the comments. Those things not covered by the Singapore plan make up a relatively small part of the health care budget. Also, I am, frankly, surprised at some of your claims. If 65% of the money comes from private expenditures, but if much if that comes from forced, government run Medishield savings, do you really consider that private money? Maybe you could make this case if they did not have a single payer catastrophic system behind that.

“The first [priority] is to keep government subsidies targeted at those who most need them” -

The ACA targets those with lower incomes. Singapore targets older people. Why is targeting older people more libertarian? In the US, our elderly are pretty well off. Why would we target them?

What is most distressing here is that you, and other economists, are looking at a system that has mixed private and public sector influences. It is not clear which factors actually result in the lower costs while maintaining good care. Why isnt the take point that you need govt influence to hold down costs, rather than this showing that govt influence should be limited?

Steve

Alex K. August 26, 2013 at 6:21 pm

“If 65% of the money comes from private expenditures, but if much if that comes from forced, government run Medishield savings, do you really consider that private money?”

Of course it’s private money and trivially so: people still get to decide on what health care services and products they spend their money — the forced aspect is basically just imposing a lower bound on how much people should spend on health.

If you don’t get that point there is little that you’re likely to get about Singapore’s health system.

steve August 26, 2013 at 8:49 pm

“people still get to decide on what health care services and products they spend their money ”

No they don’t. I suggest you read the book. Singapore limits the number of physicians and the specialties that practice. They limit the number and kinds of high tech devices hospitals can purchase. They limit the kinds of medical services that can be purchased with that money.

As to your assertion, without the forced savings, forced by the government, the system fails. AS Haseltine showed in his book, when they started the MSAs, cost inflation increased. People did not treat it like it was their own private money.

The paper referenced by Haseltine on this can be found at link.

http://sphweb.sph.harvard.edu/health-care-financing/files/hsiao_1995_-_medical_savings_accounts_-_lessons_from_singapore.pdf

Lonely Libertarian August 27, 2013 at 1:17 pm

I don’t think it is accurate to say that “Singapore targets older people” – ONE of the proposed changes would extend coverage past 90 years of age – the current upper limit…

And I am not sure the ACA “targets” lower incomes – a plan targeting lower incomes would have probably been designed more like Medicaid – and would have had both posted and negotiated prices to keep costs down. Indeed the ACA might best be described as targeting the broad middle – trying to extend the kinds of things that most Americans feel are “reasonable” parts of health care to as many people as possible.

dearieme August 26, 2013 at 8:20 pm

You can think of the UK system as “public money, public provision.” Indeed, but don’t overlook a feature that suits our rulers very well. When a politician wishes to make the point that he’s One of Us, he goes into an NHS hospital for treatment. There, because he is a politician, he gets the luxuries and comforts (and treatment?) associated with private medicine without having to pay for it. This custom goes back to the early days of the NHS – the first celebrated case was the socialist battle-axe Barbara Castle.

Tyrone Non-Fan August 26, 2013 at 8:41 pm

Is this more Tyrone? Aaron Carroll probably thinks so.

Govind August 27, 2013 at 12:11 am

Apparently Singapore system is also unfair to poor-old people who generally suffer rather than try to get treated.

Claude Emer August 27, 2013 at 12:44 am

I think I posted this last time there was a discussion on differefar that healthcare systems. 5 capitalist countries were investigated to find out what we could learnffrom. The most interesting was Taiwan which essentially scrapped their system entirely and decided to restart from scratch. I don’t want to spoil it for whoever is interested.

http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/

One thing I’d note though is that every country I’ve heard of so far that’s doing healthcare better than us has more not less government involvement.

lonely Libertarian August 27, 2013 at 1:12 pm
Ricardo August 28, 2013 at 12:33 am

Avik Roy is not a trustworthy commentator. In the article you link to, he claims Paul Ryan tried to introduce “Swiss-style” reforms to Medicare. Yet a quick check on how Switzerland’s health system works reveals that insurers are forbidden from earning a profit on basic mandatory insurance and that Switzerland sharply limits the ability of insurers to charge old clients more than young ones.

So actual “Swiss-style” reforms to Medicare would require an individual mandate in which the young subsidize care for the elderly through higher insurance premiums and where premiums are regulated even more tightly than they are under PPACA to ensure zero profits for insurers. This is not at all what Ryan proposed to do and Avik Roy knows this full well.

TallDave August 27, 2013 at 11:42 pm

I’m always skeptical of metrics in these international comparisons.

lonely Libertarian August 28, 2013 at 8:48 am

Well the Ryan plan – explained by Ryan is pretty easy to access – see below

And Roy suggested some of what it offers might be “Swiss-Style” – not that the entire plan was “Swiss”

So chill Ricardo – you are free to ignore whomever you want – but you might also want to know that Zakaria is “ignoring” the fact that Taiwan’s plan is already in deficit – projected to get a lot worse – fast, and that it will face real difficulty raising revenues since premiums are difficult to raise. So I might say that “Zakaria is not a trustworthy commentator”

But I prefer to read and learn a bit from both – and do some additional digging around if warranted.

http://www.youtube.com/watch?v=DJIC7kEq6kw&feature=player_embedded

Oakchair August 28, 2013 at 8:42 pm

When you account for Singapore higher GDP, its costs aren’t any better then other industrialized countries; and when you account for the fact that drug use in Singapore is almost unheard of and a lot lower then that of other countries its costs are slightly higher.

matthew August 30, 2013 at 3:47 pm

“I also should add that quite a few intelligent, non-ideological Singaporean economists and civil servants believe the new changes to be bad ones, driven primarily by the demands of citizens for goodies rather than by the quest for the best technocratic policy.”

I can sympathize with that sentiment, but I think it should be cause for serious introspection about whether we, as economists, are giving policy-relevant advice. Economists don’t get to pick the social welfare function–the voters get to pick that. The only job for a technocratic economist is to tell them how to maximize it.

In this case, it seems to me that Singaporians want a social welfare function where the Pareto weights are somewhat more equal across individuals. Any policy advice that doesn’t acknowledge that is irrelevant, and for good reason likely to be ignored anyway.

John Edword August 30, 2013 at 4:02 pm

You ignored the 2009-10 congress.
EHR.

AFL AND ALL August 31, 2013 at 10:18 pm

we have been reading in the ST about Medishileld Life and Pioneer Generation Health Care mooted out by our government. i felt in our greying years this should be an important subject for all of us. no matter what money you may have saved up today to take care of you and wife there is always the uncertainity and therefore a reliable safety net would always be welcome. hope you all have some views which will help all of us to ease through life without unnecessary worries for the future. Joe

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