Why Not The Best?

Recently one of the architects of the Affordable Care Act (ACA), Ezekiel Emanuel, wrote a Wall Street Journal OP-Ed. In the article, he concedes the ACA has mostly been an expansion of Medicaid.This is a program paying providers so poorly many refuse or severely limit service. In light of this, Emanuel now acknowledges the ACA isn’t working and needs replacement. His recommendation is we look to the health plans of Germany or the Netherlands. He chooses these two, “where citizens choose among competing private health insurers called “sickness funds,” are closest to the U.S. system.”

Why would we want something close to what we have? Our present healthcare system is a costly mess. Just 11 days earlier, George P. Shultz and Vidar Jorgensen had an article on the same Op-Ed page. It pointed to Singapore as providing top-notch healthcare at a low price. By most measures, Singapore is at the top national healthcare heap. Why ignore this success? Why promote the lower performing German and Dutch systems? Maybe Emanuel only writes for the WSJ Op-ed page rather than reading it.

With the possibility of the ACA being declared unconstitutional, real discussion healthcare has to take place. Even if a decision is delayed, it will be a significant topic in the upcoming election. It’s no embarrassment to look to other nations to find what might work better. According to Shultz and Jorgensen, Singapore is the place to start. Some may say Singapore is too small to compare. Yet, many people keep throwing up comparisons to the Scandinavian nations. Only Sweden has a larger population. Singapore also measures up favorably on a per capita wealth basis.

Shultz and Jorgensen mention Scripps College economist Sean Flynn as a statistical source on Singapore. Strangely, this name came up in Steve Forbes’ fact and comment in his magazine’s June/July issue. Forbes lauded Flynn’s book “The Cure That Works.” I found it on Amazon and immediately downloaded the Kindle version.

What I received was a clear and easy to read look at arguably the world’s best healthcare system. The author frames this with an understanding of how we got to our present healthcare system. What’s peculiar is this remarkable book was published over a year ago. Still, Forbes and I are only talking about it now. Regardless of flying under the radar, it is an essential contribution to our healthcare discussion.

Given we spend far more on healthcare than other developed nations, considering a very successful and cost-effective national system should be at the forefront of any reform discussion. Yet, I’ve never heard of any politician running on a U.S. platform switching to a Singapore-style healthcare plan. Could it be the city state’s system is a consumer rather than government-driven? Instead of “stakeholders” and government getting together, Singapore set the perimeters and let the individual through the market chose. The “Stakeholders” either adjusted or lost out to New entrants and innovation.

Imagine a nation deciding how to handle the industrial revolution by getting together with the existing “stakeholders.” Accommodate the big existing horse lobby at the expense of the steam engine upstarts: the more Government economic direction, the worse the outcome. Just look at China, Russia, and Japan until they loosened up. The government does best when it provides the framework for the people to chose. Singapore took this tack, and it works.

By adhering to the fundamental relationship between savings, earnings, and insurance, Singapore allows the market to deliver excellent outcomes at a price much lower than we pay. High deductible catastrophic insurance is at the heart of the program. Buy eliminating a large part of third party payments, it does away with costly overhead, while increasing efficiency.

You might ask, why don’t we do something similar. Actually, we do have Health Savings Accounts (HSA). These plans eclipse the ACA, with over 28 million enrolled in these high deductible plans. This is considerably more than signed up for the ACA. Rather than listening to the lobbyists of the “stakeholders”, we might see what people really want.

While an improvement, as presently constituted HSAs, are less effective than the Singapore system. They are still linked to employment rather than individually chosen and owned. They have gained some portability but need to be independently owned and operated accounts. Employers can contribute but not dictate. A more significant drawback is this isn’t universal. In Singapore, everyone has an account. This means a mass market for innovative providers to take aim. As the city-state has shown, this will make the savings and results even better.

Actually, my healthcare plan (series available plan on this site under Dave’s Healthcare Plan) comes closest to the Singapore model. Universal, individually owned, and totally portable, it would be positioned to get Singaporean market dictated results. It differs from the Singapore model in that it combines all our tax-favored savings plans, 401Ks IRAs, etc., into a personal benefits account (PBA). The PBA is combined with a high deductible catastrophic health insurance policy. In Singapore, mandatory retirement savings are separate from the savings element of the healthcare plan. Singaporeans are more accepting of authoritarian government action. The same party has been in power since its inception. Therefore the government is more visible in the Singapore model, but the plan is still market based.

We don’t have mandatory savings in the U.S. Still, by linking savings with compulsory universal healthcare, we can make it the equivalent of compulsory savings. By constructing one big account, we increase credit power. This allows for a health credit card and the virtual elimination of provider credit risk. This should further lower the cost. By ultimately doing away with the very idea of pre-existing conditions, costs are fair and lower. Unlike Singapore, where people have always had a high savings rate, we need encouragement and convenience to save more. Less savings translates into more credit woes.

The whole plan is run through the IRS, so its mandatory features would be legal under the Roberts ACA supreme court decision. It makes it easy and efficient to route subsidies and deposits. With a universal market , the elimination of the vast majority of third-party payments, and ridding providers of credit risk, we should be able to approach Singapore like results.

If you want affordable high quality healthcare, Dave’s Plan should be in the conversation. Let’s compare it to anything else around. I suggest a side by side comparison by the Congressional Budget Office.

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