The Republic of Singapore government operated under the United Kingdom health care system until 1965, when it became independent from Malaysia. At that time, the government decided it wanted to design its own system.
To help initiate this design, the government convened a group of citizens to answer the question: “What should be the objective of the new health care system?” The answer? To allow the typical extended family of grandparents, parents and children to avoid financial ruin in the event the family is struck by catastrophic and/or long-term chronic illness. This new Singapore health care system, based on the above objective, was fully implemented in 1993.
The Singapore system’s unique characteristics have made it the most cost-efficient health care system in the modern Western industrialized world. The U.S. should think seriously about incorporating some or all of these characteristics into our Obamacare replacement:
Every citizen of Singapore is required to purchase, and keep active, a catastrophic health care insurance policy with limits ranging from $50,000 to $1,000,000. If a couple is married and has children, those children must be included in the parents’ policy until the child joins the workforce. These catastrophic health care policies are paid for throughout the life of each citizen. Because the citizen pays a small amount for all of his or her life, only a small payment is necessary to make this part of the health care system actuarially financially sound. As a side note, this is exactly the type of insurance our young millennials in the U.S. want but has been illegal under Obamacare.Every Singapore citizen is encouraged to create a health care savings account and contribute a fixed amount to it each year. These accounts are used to pay for any out-of-pocket costs that are incurred below the minimum of the catastrophic health care insurance (e.g., costs from $0 to $49,999). The funds an individual or family deposit into these health care savings accounts are tax deductible. These personal health savings accounts, like any other asset account, can be transferred to relatives in the event of the death of the owner.The individual or family health care savings account can be used to purchase traditional “gap insurance” for coverage from $0 to $49,999 in out-of-pocket costs. This gap insurance payment from the health savings account, or any other withdrawals for the purpose of paying out-of-pocket health care costs, are also considered non-taxable events. This gap insurance market is very competitive and cost-effective because the participating insurance companies are not facing surprise catastrophic unknown cost filings.In the event that within the extended family (i.e., grandparents, parents or children), one or more experiences a catastrophic and/or chronic illness, or illnesses that require high or long-term out-of-pocket costs, the Singapore health care system allows the extended family to combine their respective health care savings accounts to pay the costs of the afflicted family member or members.Since the establishment of this system, new privately supported hospitals have been built and are operated with private single- and double-recovery rooms, much like most Western hospitals. Those citizens with high incomes can design their catastrophic and gap insurances to allow them to have access to these more modern Western style hospitals. Citizens with lower incomes can get the same doctors and treatments at the older United Kingdom-era hospitals that were left behind after independence and that now have modernized recovery wards with multiple beds. Maybe our states and counties can use some of the recently vacant mall spaces around the country for less expensive health care clinics and recovery wards?The Singapore health care system allows buy-in for foreign residents whose companies have stationed them and their families in the major financial center of the Asia-Pacific region. There are also many countries in the area that provide contract construction services to the Republic of Singapore. Indigents in the Republic of Singapore are served by a separate health care program that provides extensive financial support to those who cannot support themselves.The Republic of Singapore is a small nation of about 6 million people with several ethnic groups. The Singapore health care model should be very applicable to the design of any new U.S. state health care system. There is one very big issue that must be aired regarding the creation of a modern health care system for our states. That is the waste of 10 to 14 percent of our gross domestic product – the difference between Singapore’s costs of 4 percent of GDP and the typical Western costs of 14 to 18 percent of GDP.
If we use the Singapore design to create our new state health care systems, our citizens would gain an approximate 14 percent income increase over what we would typically pay to support another mammoth western style health care system.
William C. Lyons, PE (ret.), Ph.D., lives in Durango and is the primary author of seven major engineering books published by Elsevier Science and McGraw-Hill.
