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Accountable Nationwide Well being Insurance coverage Half 3: A Story of Three International locations – jj

Accountable Nationwide Well being Insurance coverage Half 3: A Story of Three International locations


TLDR: At least three countries appear to outperform the U.S. in terms of healthy life expectancy at birth and age 60 while also being less expensive in terms of the share of GDP devoted to health and per capita health spending. Of these 3, Singapore—a system most analogous to Universal Health Savings Accounts—performs markedly better than either Canada—the closest analog to the Medicare for All plans endorsed by Senators Sanders and Warren—or Switzerland—which is roughly analogous to universal basic coverage in a completely private health insurance market.

Last summer I started a series on Responsible National Health Insurance. My more recent five-part take-down of Elizabeth Warren’s health plan arguably might be viewed as being part of that series in the sense that it gave a pretty clear picture of what direction we ought not to head.

Let me stipulate that wholesale adoption of another country’s health care system is not practical politically, nor even achievable in cultural terms. For example, more than one pundit has observed that the Canadian health system may be great for Canadians but likely never would work for Americans who in general are far less patient and attach a far higher value on freedom of choice than their counterparts to the north.

A Quick Overview of Canada, Switzerland and Singapore

This post is not intended as a primer on the nuts and bolts of how any of these systems work. What follows is a capsule summary with links that interested readers can follow if they want more details.

Canada. Canada’s health care system—fittingly known by Canadians as medicare—is the closest counterpart the Medicare for All plans endorsed by Senator Bernie Sanders and Senator Elizabeth Warren. Some important features include single-payer tax financing (as opposed to U.S. Medicare, which is financed through a combination of taxes, premiums and patient cost-sharing), free services at the point of delivery (i.e., no patient deductibles or copayments), prohibition of balance billing (providers must accept the medicare payment as payment in full) and prohibition on private health insurance coverage of any covered services.

Switzerland. Switzerland’s system relies on an individual mandate to achieve universal private health insurance coverage. Unlike Singapore, the mandated package is best described as basic benefits as opposed to catastrophic coverage:

  • “The “basic” package in Switzerland is comprehensive and includes outpatient care (essentially whatever a doctor prescribes), hospital care, mental health, all pharmaceuticals on the government-established “positive list,” some rehabilitation services, some dental care, acupuncture, and some herbal medicine” (p. 257).
  • “All policies sold in Switzerland have a deductible of Fr.300 (roughly equivalent to US$300) and a maximum out-of-pocket cost (for covered services) ofFr.700. Users can choose to purchase cheaper policies in exchange for higher deductibles (up to Fr.2,500 for adults and Fr.600 for children)” (p. 257).

Singapore. Singapore also achieves universal coverage by mandating private health insurance coverage. Unlike Switzerland, the mandatory MediShieldcoverage is catastrophic, i.e., with very high deductibles. However, Singapore also mandates its citizens to save funds in a Medi-Save account [1]. The average citizen has enough banked in their Medi-Save account that they could cover four year’s worth of total health spending without relying on any other source of payment (p. 106). In short, for people such as Senator Warren, who are preoccupied with bankruptcy risk, Singapore has devised a system that virtually eliminates medical bankruptcy even while retaining a strong role for private health insurance to efficiently pay for needed care.

The Bottom Line: Health System Performance

The purpose of this post is to further demonstrate my belief that reforming U.S. health care along the lines of Medicare for All would take us in a seriously wrong direction. A market-oriented system that is grounded in a sturdy private health insurance market offers far more promise in achieving superior health outcomes at an affordable cost than Canada’s Medicare-for-All style system that seems to have captivated the imagination of so many progressives.

Healthy Life Expectancy

The proof is in the pudding. Start with healthy life expectancy at birth, a metric that tells you not only how long you will live but also takes into account quality of life. A year spent in a wheelchair, for example, is not equivalent to a year enjoyed by someone capable of undertaking all activities of daily living.

There is nearly an 8-year difference in newborn life expectancy when Singapore is compared to the U.S. But even compared to Canada, Singapore has a 3 year life expectancy advantage. Not all of this difference can be chalked up to differences in health systems. After all, Asian-Americans have about a 7-year life expectancy advantage over Whites in the U.S. An important contributor to this differential may be the Asian rice-based diet. In a follow-on post I will examine these mortality differences in a little more detail.

Suffice it to say that Singapore’s reliance on high-deductible coverage coupled with Health Savings Accounts maximizes the incentive of its citizens not only to be prudent purchasers of health services when needed, but also to adhere to healthier lifestyles, whether that take the form of better nutrition, lower rates of obesity, more exercise etc. Such steps reduce the amount that otherwise might have to be spent on medical care but also will extend life expectancy. But thanks to mandatory savings accounts for retirement and health care, citizens of Singapore do not have to worry about running out of money as a result of living longer.

A similar picture emerges when we focus on healthy life expectancy at age 60. Singapore continues to outpace all three comparison countries, but the margin of advantage is slimmer. As well, Canada slightly outperforms Switzerland on this metric. Caution is needed in interpreting this metric. Given Switzerland’s slight advantage in overall healthy life expectancy, it may be that less hardy non-elderly patients fare less well and their early mortality results in a heartier stock of 60-year-old survivors. But not much weight can be accorded such a hypothesis without much more detailed examination of the mortality patterns. The point is not to leap to conclusions too quickly, but instead view these as very rough “dashboard indicators” of the approximate direction of outcomes.

Health Spending

The reason I started with health outcomes is to reassure readers that Singapore achieves rather astonishing results when it comes to lowering health spending, yet these enormous savings are not achieved at the expense of worse health outcomes.

When measured as a percentage of GDP, Singapore’s health spending is merely one quarter of the U.S. level. Last year, Americans spent $3.6 trillion on health care. Can you imagine having universal coverage, being able to save $2.7 trillion a year and improving health for the entire population? It would seem impossible but for the fact that Singapore appears to pull off the equivalent of this trifecta year after year. This has been going for at least a decade and a half, most likely longer. But 2000 is the earliest I could get this data from the World Health Organization.

These figures might be more meaningful if expressed in terms of health spending per capita. Fig. 4 uses purchasing power parity (international dollars) to make the figures comparable across nations. An international dollar would buy in the cited country a comparable amount of goods and services a U.S. dollar would buy in the United States.

In per capita terms, a Singapore-style health system has the hypothetical potential to provide better health outcomes at a cost that is nearly $6,000 less than Americans now pay! A Canadian-style Medicare for All plan likewise could produce sizable savings. But such savings look much less attractive when we realize that a Singapore-style system might produce savings that are $1,000 per person per year higher, i.e., $330 billion. Who would want to sacrifice $300 billi0n a year in savings pursing a progressive pipe dream?


Let me reiterate that I am not proposing the wholesale adoption of Singapore’s health care system. No health system is perfect and in some ways the Singapore system is more regulatory than I think it needs to be. My simple point is that if we do side-by-side comparisons with Canada, then Medicare-for-All does not look on its face like an unreasonable choice. But once Switzerland and Singapore enter the comparison, it becomes clear that rushing to adopt Medicare-for-All could be a tragic blunder. Such a move would produce far less savings and achieve far less in terms of health outcomes than might be achieved were we willing to consider a more market-oriented system replete with the very same private health insurance companies so roundly despised by progressives far and wide.

In my next post I will drill down a bit more on the health outcomes side of this question to see whether that will shed more light on what level of performance is attainable under different health systems.


READ CHRIS’ BOOK, The American Health Economy Illustrated (AEI Press, 2012), available at Amazon and other major retailers or as a pdf at AEI.

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