overheads alone, for example, are responsible for over 20 percent of the United States’ total healthcare expenditure. It is thought that private insurance can also be responsible for over-consumption of care by patients, and over-delivery of services by doctors, as neither group is incentivized to keep costs in check as long as insurance companies will pay. Private insurance companies are also seen as discriminating against people at risk in favor of healthy individuals and so creating problems of equity, a condition that Singapore works very hard to avoid in its society.
Ensure Good and Affordable Basic Medical Services for All Singaporeans
In the White Paper, the government stated the need to make a good, basic medical package available to all people, whatever their means. The package did not necessarily have to make available the latest medical technologies but should include proven, cost-effective treatments, benefiting the maximum number of people. The package excluded certain treatments deemed not basic, such as cosmetic procedures and in-vitro fertilization (IVF, which is now subsidized, by the way.)
The basic package had to be affordable and be provided by hospitals receiving government subsidies. The most highly-subsidized ward classes were to offer this basic level of care.26 The package should be reviewed frequently to reflect, among other things, the purchasing power of Singaporeans and productivity increases in medical science. In later years, means testing was initiated to ensure that government subsidies would be better targeted to help patients in greater financial need. Patients not meeting the criteria can still elect to go into the highly-subsidized wards, but they may not receive the maximum subsidy.
The White Paper foresaw that with the rising affluence of Singaporeans, the desire for sophisticated (and costly) medical services beyond the basic package would grow. It recommended that patients who were willing to spend more in order to obtain a different level of service be allowed to do so in the non-subsidized wards of public hospitals and in private hospitals.
In order to spur medical research, a plan was suggested under which the National University of Singapore (NUS) would focus on “academic research” that might provide valuable discoveries for the future. The subsidized hospitals were to focus on research that had “cost-effective” practical applications. The advancement of medical research in Singapore was furthered by the establishment in 1994 of the National Medical Research Council. It provides research funding to institutes and individuals, awards fellowships, and supports research that may one day be applied in medical practice, as well as clinical research.
Engage Competition and Market Forces to Improve Service and Raise Efficiency
The White Paper adopted the principle that resources available for healthcare were finite and must be put to efficient use. Market forces should be used to promote efficiency, improve quality of services, develop more choices for patients, and make sure patients are receiving good value for their money. It judged that healthcare providers were in a unique position to influence the demand for their services as patients rely on doctors for advice and are themselves generally unaware of better or competing alternatives. Yet, too much competition and too many providers might actually drive up the demand for medical services, since patients would naturally want to avail themselves to promising new treatments or technologies or popular doctors. Oversupply or overabundance of choices would in turn drive healthcare costs up rather than keep them in check and defeat the purpose of encouraging competition.
One step the Ministry of Health has taken to stoke competition is to provide price transparency by publishing the hospital bills for common illnesses on its website. One example of its effectiveness that I found striking is the drop in the price of LASIK surgery. In 2004, the price of the surgery for one eye was S
Intervene Directly in the Healthcare Sector, When Necessary, Where the Market Fails to Keep Healthcare Costs Down
I view Singapore's chosen approach to the healthcare market as a kind of highly-calibrated capitalism. Government intervention is sanctioned in certain circumstances to correct or redirect the market. This approach is seen in the fact that it funds public hospitals and other care facilities but also encourages the participation of private hospitals and clinics.
Situations that might demand government action included preventing an oversupply of healthcare services, moderating demand, and creating incentives to keep costs down. The White Paper also recommended that the government regulate specifics of the system. For example, over the years, intervention has included creating and adjusting medical savings programs, sponsoring insurance programs, providing subsidies to hospitals and polyclinics, determining the number of beds and their distribution in public hospitals, funding new medical schools, regulating the number and type of doctors who can practice in the country, and regulating and limiting the type and number of private insurance programs available to Singaporeans.
I will provide a closer look at a number of these practices for the development and maintenance of the system in subsequent chapters. But first, in the next chapter, I will walk you through the specific programs that make it possible for Singaporeans to pay for their care: Medisave and MediShield, as well as the safety net for those who cannot afford care: Medifund.
Chapter 1: KEY POINTS
Singapore has built and maintains a high-quality healthcare system at a lower cost than any other high-income country in the world
Four factors have enabled Singapore to achieve its remarkable health-care goals:Political unity, constancy of purpose, and a culture of cooperation within governmentAbility to recognize and establish national priorities, giving the economy time to grow before investing heavily in healthcareAn overwhelming desire for collective well-being and social harmonyAttention to the rights, education, and health needs of women
Singapore's then Prime Minister Lee Kuan Yew envisioned a system that would not be “free” to consumers and would not contribute to a welfare state mentality nor diminish the people's desire to achieve and succeed
Early actions to build the system included:Moving primary care to a network of outpatient clinicsCharging patients for visits to clinicsSending doctors abroad to train in specialtiesUpgrading and updating care facilitiesSolving the housing crisis
Singapore's National Health Care Plan, issued in 1983, set forth strategies for keeping care affordable and meeting the demands of a growing and increasingly affluent population. It also:Restructured the public hospital system, granting more autonomy to hospitals and promoting competition among themIntroduced Medisave, a medical savings account that enabled individuals to put away money to pay for their healthcare
The blueprint for Singapore's current healthcare system was published in 1993 as a White Paper entitled Affordable Health Care. It announced five objectives and set forth plans for implementing each:Become a healthy nation by promoting good healthPromote individual responsibility for one's own health and avoid overreliance on state welfare or third-party medical insuranceEnsure good and affordable basic medical services for all SingaporeansEngage competition and market forces to improve service and raise efficiencyIntervene directly in the healthcare sector when necessary, where the market fails to keep healthcare costs down
CHAPTER 2
High Quality, Low Cost
Lee Kuan Yew wanted Singapore to achieve excellence—“first world standards” as he put it in his memoirs. Only then, he believed, would his young country survive and thrive. There is no doubt in my mind that the standards he desired for his city-state have indeed been met, and healthcare is one good example.