The secret to Singapore’s “free market” health care

Conservatives love to talk up Singapore as a great example of how a country can have universal, low-cost, market-based health care.  Erza provides a great explanation of Singapore’s system and explains the ultimate way costs are held down– government intervention, just like every other advanced country with universal, affordable health care.  Now, Singapore does some really interesting things that do allow more of a role for a free market and consumer choice– in very basic health care, not for your heart attack– but the whole damn system is predicated on massive government intervention and regulation to keep prices down.  Ezra:

But Singapore isn’t a free market utopia. Quite the opposite, really. It’s a largely state-run health care system where the government designed the insurance products with a healthy appreciation for free market principles — the kind of policy Milton Friedman might have crafted if he’d been a socialist.

Unlike in America, where the government’s main role is in managing insurance programs, Singapore’s government controls and pays for much of the medical system itself — hospitals are overwhelmingly public, a large portion of doctors work directly for the state, patients can only use their Medisave accounts to purchase preapproved drugs, and the government subsidizes many medical bills directly… [emphases mine]

It’s easy, looking at Singapore’s insurance scheme, to see what conservatives find so attractive in the system. While there’s significant coercion, there’s also a real focus on pushing patients to act like consumers, and reserving insurance for unexpected, unusual costs. In addition, Singapore’s safety net — Medifund — is limited in its commitments and administered at the local level.

But all that happens within the context of a government-controlled — and often government-run — medical system

Singapore’s system is probably better designed in terms of how consumers spend their own money. But the lower overall prices make them much less exposed to health costs than both patients and employers inside the American system — which suggests to me that Americans have at least as much incentive as Singaporeans to try to use their power as consumers to cut costs.

The fact that that hasn’t worked is, I think, a reason to believe we’ve gotten the lesson of Singapore’s health system backward. Singapore heavily regulates both the pricing and provision of medical care to keep costs low (as do all other developed countries) and then, working off that baseline of low costs, has Singaporeans pay out of pocket in order to keep them mindful of how much they’re spending.

In America, conservatives want to apply that strategy in reverse: working off a baseline of extremely high prices, they want to force people to pay out of pocket as a strategy to bring those prices down. That hasn’t worked so far, and my guess is efforts to double down on it — of which the Republican Obamacare alternative is one — will continue to fail.

Yes, there really are some “conservative” lessons to be learned from Singapore.  It would be great to try and apply some of these after we used government to aggressively control prices in the non-free market that is health care.  The biggest lesson is that, no matter the details of the particular design, the ultimate key to holding down health care costs is effective government regulation.

About Steve Greene
Professor of Political Science at NC State

5 Responses to The secret to Singapore’s “free market” health care

  1. Nicole K says:

    ” the non-free market that is health care.”
    Yes! That is what is so damned frustrating about Republicans and health care. They cannot seem to understand that health care isn’t a free market. You can never expect market based reforms to work in a system that is not – and likely never will be – a free market.

    Free markets require choice and competition. When people get sick, they aren’t faced with many choices. Especially with drugs, there is likely to be one or two specific treatments that will be required. The only choice people have is pursuing treatment or going without. This leaves drug companies in the enviable position of being able to extort insurance companies and patients to pay prices that have no relationship to development costs, production costs, or reasonableness.

    When one party in a market has all the power and all the leverage, the other party is going to get screwed 100% of the time. The only possible way to get any sort of balance between drug companies and consumers is government intervention. Why isn’t that obvious to just about everyone?

    Government intervention into markets isn’t inherently bad. I don’t understand how conservatives have such black and white thinking on this point. Why do they have to automatically assume that less government is always better when we have such clear evidence to the contrary? Every single other wealthy county figured this out a long time ago. I don’t understand why refuse to see what works and do that.

  2. R. Jenrette says:

    If the GOP policy toward health care is so irrational, then we have to look for a rational explanation of why intelligent people would support such a policy. In most such cases, following the money would give you the data to analyze the actual goal in that policy.

    • Nicole K says:

      Actually I think that it is because conservatives are conditioned to think government = bad, free market= good. They then take that and try to shoehorn it into areas where it clearly does not work.

      It’s the same way many progressives automatically default to big corporations= sinister and then apply it to things like vaccines, nuclear power, and GMO food where that also clearly does not ring true.

      • R. Jenrette says:

        Isn’t it remarkable that people’s ideology mostly justifies their economic well being and social status?

      • Steve Greene says:

        Yep, that’s pretty fair. The difference is that, clearly, big corporations = bad does not actually drive much Democratic policy proposals.

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