Mandating Freedom

Conservatives Love Obamacare - When it's Singaporecare—David Frum

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The hard part isn't having principles. The hard part is remembering them.

Was it only yesterday that conservatives argued that state-mandated health and retirement savings accounts were the secret to a well-functioning national healthcare system? Singapore and Chile were the star examples—Singapore even more than Chile. Here's the online magazine of the American Enterprise Institute praising the Singapore health model in 2008:

What’s the reason for Singapore’s success? It’s not government spending. The state, using taxes, funds only about one-fourth of Singapore’s total health costs. Individuals and their employers pay for the rest. In fact, the latest figures show that Singapore’s government spends only $381 (all dollars in this article are U.S.) per capita on health—or one-seventh what the U.S. government spends.

Singapore’s system requires individuals to take responsibility for their own health, and for much of their own spending on medical care. As the Health Ministry puts it, “Patients are expected to co-pay part of their medical expenses and to pay more when they demand a higher level of service. At the same time, government subsidies help to keep basic healthcare affordable.”

The reason the system works so well is that it puts decisions in the hands of patients and doctors rather than of government bureaucrats and insurers. The state’s role is to provide a safety net for the few people unable to save enough to pay their way, to subsidize public hospitals, and to fund preventative health campaigns.

Here's a glowing report on Singapore from Cato's Michael Tanner:

Singapore provides an excellent model for such a system. In 1984, Singapore began to require that a certain portion of CPF contributions be put into "medical savings accounts" to provide funds for hospitalization. These accounts operate as part of the country's Central Provident Fund system that also provides retirement. Currently, six percent of an employee's salary is put in a medical savings accounts until the account balance reaches approximately $8,522. As long as that balance is maintained, additional contributions are automatically placed in the individual's ordinary pension account.

Funds in medical savings accounts can be withdrawn to pay for routine, low-cost health expenses. At the same time, nearly all Singaporeans have private health insurance (with a large deductible) to provide protection against catastrophic illness.

Singapore's system has been remarkably successful in holding down health care costs. Not only have Singapore's health care costs been rising at a rate below that of most other countries, but, measured as a proportion of total private consumption, health care expenditures have actually declined since 1986. At the same time, the Singapore government spending on health care has also declined, both as a percentage of the country's total social service budget and as a percentage of total government spending (Heng and Low, 1991).

As we all know, a healthcare mandate is tantamount to the extinction of economic freedom. Yet the Heritage Foundation's 2012 index of economic freedom in the world ranks mandate-loving Singapore the second-freest country on earth. The United States drags along in embarrassing 10th place, behind 6th place Canada—which relies of course on a single-payer government healthcare monopoly.