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Sunday, November 14, 2010

Singaporean Health Care

If the Administration really wanted to "bend the cost curve down" they could do worse than to look at Singapore.

Medisave, which covers about 85 percent of all Singaporeans, is a component of a mandatory pension program. Employees typically pay 20 percent of their wages into the Central Provident Fund (CPF), while employers pay 13 percent. (Since 1992, the self-employed have also participated.) At the beginning of 2007, CPF had over $1 billion in surpluses.

Medisave accounts can be used to pay directly for hospital expenses incurred by an individual or his immediate family. Limits are in place on the extent of Medisave funds that can be used for daily hospital charges, physicians’ fees, and surgical fees. The idea is to cover fully the bills of most patients in state-subsidized wards of public hospitals. Beyond that, individuals dip into their own pockets or use benefits from insurance plans (see more on this below). Medisave can also be used for expensive outpatient treatments such as chemotherapy, renal dialysis, or HIV drugs.

Medishield, the second part of the program, is a national insurance plan that covers the higher cost of especially serious illness or accident, which in Singapore’s system is described as “catastrophic.” Singaporeans can choose Medishield or several private alternatives, some offered by firms listed on the Singaporean stock exchange. Premiums for the insurance plans, including Medishield, can be paid using Medisave accounts.

Medifund, the third part, was established by the government for the roughly 10 percent of Singaporeans who don’t have the means to pay for their medical needs, despite the government’s subsidy of hospital and outpatient costs. The fund was set up in 1993 with $150 million, with the budget surplus providing additional contributions since then. Only interest income, not capital, may be disbursed.

It's actually very close to the set up Kid Various has. The Kid has a health savings account and a high deductible insurance plan. He puts money into his HSA every pay period, and can take money out to pay for all health care costs up to $4,000. After $4,000 in expenses the insurance kicks in. Therefore, Kid Various gets cheap insurance (the high deductible plan is moocho cheapo because he is not using insurance to pay for little scrape and sneeze) and pays for regular maintenance out of his pocket - but can't spend that money (the HSA) on anything else so he doesn't waste it on hookers and blow - thus being incentivized to shop around for health care.

It's a great system, and as we all know, because the President promised "If you like your health plan, you can keep it..."

Oh wait a minute. Kid Various can't keep his health plan? It's illegal under the new Obamacare federal regulations? Oh Noes!

So what does Obamacare do instead? It severely curtails the use of flex plans by limiting them to $2500 per year. (The average annual cost of health care in the US is more than $7000 a year per-capita.)

For people who use flex plans, the sharply reduced amount means they’ll have to either buy a much more expensive insurance policy, or go uninsured. It’s a totally crazy move which flies in the face of Obamacare’s stated objective of making healthcare more affordable for everyone.

And of course, you should be reading (and re-reading) this excellent Obamacare primer:

ObamaCare: The sum of all fears

Recent polls reflect America’s zeal for repeal, as does an August ballot referendum in Missouri rebuking the individual mandate, which succeeded by a margin of 71-29. Throughout the lengthy public debate, President Obama and his surrogates consistently ridiculed and denounced critics of the bill as bad-faith, fear-mongering propaganda merchants.

The facts now prove there was plenty to fear in good faith.

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