Oh my God…the sky is falling! This will likely cause serious injuries and unfortunately, our healthcare system is a complete mess and a bunch of sociopaths, who obviously get a kick out of it when people die, are trying to stop healthcare reform! These baby seal clubbers want to stop what’s being called “the public option.” In other words, the government will also provide insurance to those unable to get it in the private market. Keith Olbermann had some choice words for these sociopathic, baby seal clubbing, misanthropes. While not debating anyone who might disagree with him, Olbermann went over a long list of Republicans and “blue dog” Democrats who oppose the public option, (none of whom he had on his show to debate him), describing how much money they took from the medical industry. His point wasn’t a bad one; unfortunately, in the midst of his monologue, sandwiched between several conversations with people who agree with him on everything, he forgot to mention that just about every politician is owned by someone. Republicans are bought and paid for by a lot of corporations and religious groups. Democrats are bought and paid for by some other corporations (such as GE, the parent company of MSNBC, the network that hosts Olbermann) as well as trial lawyers, labor unions and activist groups. Both parties loathe small business, but that is beside the point (and deserves another article entirely).

Regardless of who supports the public option (which the Congressional Budget Office estimates will cost $100 billion annually and only cover an additional 16 million of the 47 million uninsured) (1), we should look at what the legislation will likely accomplish, what the real problem is with our medical industry and what alternatives are available.

The first question to ask is how did the medical industry get such a foothold on the government in the first place? Well the reality is much of government’s increased role over the years has been at the behest of corporations, not against their will. For example, Medicare Part D was lobbied for by the insurance industry. Congressman Ron Paul explained this phenomenon very well:

We have been enduring managed care over these last 35 to 40 years. And what has developed from this is corporate medicine. The individuals who were best able to gather up the money that was passed out or mandated by the government became the chief lobbyists; so the drug companies lined up, the health insurance companies lined up, the health management companies lined up. And it turned out that they started running it… and made it less efficient… Too much money was going to these corporations that were the middleman. And the patients have suffered and the doctors [have] become unhappy. (2)

And just how inefficient has this made things? Well, look at what has happened since the 1950s: First there was Medicare and Medicaid in the ‘60s, then HMOs in the ‘70s and then Medicare Part D in 2003. And the prices just skyrocketed!

Our current system is obviously a train wreck. So should we go with the public option? Well, Massachusetts tried something very similar and costs have gone up 28% since 2006! Thus, in my humble opinion, the current proposal is an embarrassingly bad idea. In that case, maybe we should just get it over with and go with a single-payer system. Admittedly, it would probably be better than what we have now, but a single-payer system means that medicine would have to be rationed: expect much longer wait times. Furthermore, eliminating the profit motive would eliminate the competition-induced incentive to produce new drugs and medical procedures. The United States is still responsible for a disproportionately large share of medical innovations, which under a single-payer system would almost certainly no longer be the case.

Removing government entirely from the equation is never discussed, but I think it’s a worthy proposal. If that were the case, medical prices would probably fall significantly like they have in other technology-dominated industries left untouched by the government, such as computers and cell phones.

Right now, our system charges everything off to a third party. This gives doctors, who are deathly afraid of malpractice lawsuits, the incentive to run every test and do every procedure imaginable (or at least every safe procedure). These third parties, namely HMOs and insurance companies, then have every incentive to try to nickel and dime these bills, so as to stick the patient with as much of it as possible.

The major problem here is that we have forgotten what “insurance” actually means. We insure our homes against fires, floods and hurricanes. We do not insure our houses against the neighbor’s kid throwing a baseball through the window, or paint peeling off in the hot sun. Insurance is for the big things, not the little ones. Yet in medicine, insurance will pay for even routine checkups. This creates mini-monopolies (mini, of course, being a relative term). Once you’re with an insurance company and they pay for everything, minus the deductible, both the insurance company and the hospital know the patient won’t go price shopping. Once a customer has signed up, there is little reason for firms to compete on price or even quality. The predictable outcome is that prices skyrocket.

Should we kick government out of the healthcare industry all together? I say no, despite the fact that supporting government intervention makes me nauseous. I’d prefer a system with health savings accounts, allowing people to save money, tax free, for medical expenses. This would bring back the competition. Unfortunately, insurance companies would still have an incentive to skimp on the big things. And while medical prices would fall, it could leave a significant part of the population in dire straights if they got sick. Is there a country out there that leaves the market be, but addresses these problems? In fact, one does, (as the title of this article might suggest).

We should not be looking to Europe for insights into how to build our economy; they’ve been stagnant for decades. Instead, we should look to the Asian tigers. Everyone knows Asia is where it’s at these days. And the small nation of Singapore has a fantastic healthcare system that everyone should consider emulating.

First the facts:

How is this possible? How could the citizens of Singapore spend approximately 1/5th of what Americans spend, have fewer caregivers, yet live longer and have only 1/3rd the infant mortality rate? Before I answer, let’s build up some more anticipation. Singapore does just as well with much less than those countries with universal healthcare, too, as the following charts show:

The key is that, unlike the United States, Singapore allows the market to work; Almost 70% of the medical expenditures are private. Singapore encourages their citizens to price shop and thereby push the price of healthcare down. Singapore’s Health Ministry explained it as follows: “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.” (3)

The government side has four primary components. The first is Medisave, which pays a portion for hospital expenses and some outpatient care. It does not replace private insurance, merely supplements it. The second is Medishield, which covers the costs of extremely serious health problems (the main purpose for insurance). The third is Medifund which provides a subsidy for the poorest of the poor. And the final is Eldershield, which provides a subsidy for the elderly. (4)

Aside from the ridiculously cheesy names they’ve given these programs, Singapore has set up a system that uses “the public option,” mainly in the case of an emergency. Otherwise, it simply supplements private insurance, instead of replacing it (like Medicare), or setting up a third party to manage it (like HMOs). They have created a system that incentivizes saving, price shopping and competition. These things push prices down and force hospitals, insurance companies and drug companies to be lean and innovative. Singapore has successfully created a system that marginalizes both the corporations (listening Republicans?) and the government (listening Democrats?). And it works marvels!

Journalist Rowan Callick, who wrote a great piece on Singapore’s system, put it best: “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.” (5) Amen to that. Hopefully someone in the United States government is listening… I kinda doubt it though.

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(1) Congressional Budget Office, Preliminary Analysis of Major Provisions Related to Health Insurance Coverage Under the Affordable Health Choice Act, 6/15/2009, http://www.cbo.gov/ftpdocs/103xx/doc10310/06-15-KennedyLetter.shtml

(2) Ron Paul, “Congressman Ron Paul on Healthcare,” 6/18/2009, http://www.youtube.com/watch?v=foXQbmZxWYY

(3) Rowan Callick, “The Singapore Model,” The American, 5/27/2008, http://www.american.com/archive/2008/may-june-magazine-contents/the-singapore-model

(4) Ibid

(5) Ibid

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