Irish Healthcare – time to adopt the Singaporean model?

There are many parallels between Ireland and Singapore, both small countries with populations of the order of 4.5 million, both open export focused economies, both competing for foreign direct investment. One area where Singapore is streets ahead of Ireland is in health care. With Ireland experiencing a fiscal crisis that threatens the economic sovereignty of the state, is it time to consider a different model for health care that could drastically reduce the cost of health care provision (€15.5bn this year in Ireland compared with a 2008 average of $381 per person or $1.5bn in Singapore) to the state while improving the standard of care. It is not only the cost to the state that is lower in Singapore, but also the total cost of health care provision. Health care in Singapore costs Singaporeans only 3.7% of GDP compared with 7.5% of GDP in Ireland (this underestimates the amount the Irish pay relative to their income as GDP overstates Irish income by 10-20%).

What do the Singaporeans get for they’re much reduced spend? Well, life expectancy at birth in Ireland is 78.07 years; in Singapore, it’s 82 years; In the UK it is 78.85. The Singaporean infant mortality rate is a mere 2.3 deaths in Ireland it is 5.14, in the UK it is 4.93.The Singaporean model works by mixing public and private health care in an optimally efficient manner. The current Irish system also mixes public and private health care, but does so in a much less efficient manner. Singaporean citizens, like Irish citizens, but unlike British citizens are responsible for selecting and paying for their own health care. This means that the market and not a bureaucracy determines the provisioning of health care services and ensures that citizens have an incentive to become informed, and unwasteful, consumers fostering competition among service providers to drive costs lower and service levels higher. The Singaporean model is based on a system of 3Ms – Medisave, Medisheild, and Medifund.

Unlike Ireland, however the market distorting insurance companies are not involved in paying day to day medical expenses. The state ensures citizens have enough cash to pay for health care via a mandatory health savings scheme (Medisave), funds are automatically deducted from citizens pay each month, supplemented by employer contributions and accumulated in personal health care accounts. These accounts remain the citizens property but are boxed off for meeting healthcare costs while the citizen is alive. The state provides for cover for serious (and expensive) health problems via a public health insurance scheme (Medisheild), but citizens are free to choose private alternatives if they wish. Medifund is a government run fund for meeting the costs of those Singaporeans who are unable to contribute to Medisave and Medisheild.

While a market based system may gall those used to the public health care provision provided by the NHS, it does seem to produce positive changes over time by allowing innovation by entreprenuers and competition on price and service levels. For example, in the last five years in Ireland a small startup company has enjoyed enormous success with their VHI branded Swift Care clinics. The clinics which promise to see every patient in under one hour specialise in dealing with non-life threatening accidents and emergencies. Not only do these clinics reduce inconvenience for their customers they also help to take the pressure of busy public A&E wards which deal with the real emergencies (car crashes, heart attacks etc). Another innovation helping to create an informed citizenry and reduce doctor and hospital visits is VHI’s Nurse Line service. Complementary to VHI policy holders Nurse Line is a 24 hour service providing remote diagnosis and first level medical advice.

It’s important to note that the Singaporean approach leverages the market as a means-to-an-end, that is quality affordable health care for all, rather than an ideological (free market) end in itself. To ensure that service providers do not price gouge or take advantage of vulnerable patients a health care regulator regulates service levels and costs.

Perhaps the biggest advantage of public health service is that the same quality health care is provided to all. However without a market pricing mechanism to allocate the finite resources (or funds) available to the service decisions on what health care services are available must be taken by a committee. For example in the UK, Tim Harford pointed out in his book “Undercover Economist” that treatments for some ailments that cause blindness aren’t provided under the NHS until they are well advanced and will only be performed to save one eye! The Singaporean model appears to solve this dilemma, patients can choose which treatments they spend their money on – and the government ensures that all patients have enough money to purchase services (and that no patient can duck out of the system by avoding making contributions to their own health care fund)

Is there a downside to such a system? Drastically reduced cost to the government (up to 90% cheaper) and quality market based health care solutions available to all. It certainly sounds better than the inefficient public / private mix we have in Ireland today, and givien the scale of our fiscal imbalances it is imperative we find innovative ways not only to reduce costs but to actually improve services available while doing so.

  • What was it Mary Harney said? Oh yes, Irish people should be more like the Singopeans. Poor but happy.

  • Mack

    Have you ever been to Singapore, Garibaldy?

    They certainly aren’t poor, I’ve never been in a cleaner, more efficiently run city, with excellent transport networks, affordable cost of living (imported consumer goods at a fraction of the price we pay, high quality dining out at a fraction of Irish prices etc), the best public transport system I’ve been on (by far) etc.

    Singapore –
    GDP – Per Capita (PPP): $51142

    4th highest GDP per capita in the world according the International Monetary Fund.

    http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

  • That was a quote Mack, take it up with Harney if it’s wrong. Having said that, per capita GDP doesn not mean there can’t be lots of poor people.

  • kensei

    Mack

    You’ve not really outlined the system. It has a few features that are absolutely required, such as a public option, but you’ve not really outlined details. Or inequalities. Or any problems with the system. People always gloss over this stuff on health, no matter what they argue for.

    Also: isn’t percentage of GDP slightly disingenious here? The UK for example could spend more as a percentage of GDP than Sinapore, but significantly less if the GDP gap was big enough?

    Anyhoo, the dangers of injecting private capital into health care is adequately outlined by this dazzling New Yorker article on US Health care costs:

    http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

    The thing is, though: the market isn’t a miracle. There is a finite amount of resources to be spent on health. Rationing ultimately must occur by one mechanism or another. If you want to sell this, sell it on the benefits rather than appeals to the amazingness of the market in abstract.

  • Mack

    Ok, fair enough. I read it as an attempt to disparage the Singaporean model for Health Services by associating it with a reasonably unpopular Irish Health Minister who hasn’t achieved much in terms of improving the quality (or cost) of Irish health services delivered and by insinuating that Singaporeans enjoyed a lower standard of living than the Irish.

    There is poverty in a lot of rich countries, including Ireland. I think she was certainly wrong to refer to the Singaporeans as poor unless she also meant we were poor.

    I am not suggesting we copy every Singaporean policy, just this one, which does seem to produce better much results on the average at much reduced costs.

  • Greenflag

    Whatever Ireland does it should steer well clear of the American model which now consumes almost 20% of the US economy ( 2.5 trillion dollars) basically divvied up between the private health insurers , private for profit hospitals , the medical and legal professions , drug manufacturers and medical related large corporations. The ‘american ‘ patient is the poor sucker at the bottom of the feeding frenzied merchants listed above .

    While not exactly a Ponzi scheme there has to be a name for a health care system that leaves 50 million people uninsured -the highest rate of infant mortality in the world -the most expensive surgical operations , forces over a million people annually into official bankruptcy and employs some 400,000 people whose sole job is to read the very small print in over 1,000 plus private health insurance contracts so that claims can be denied .

    Madoff was in the wrong business. Had he gone into direct investment in health care he could still be making billions .

    If the Singaporeans have found a way to mix public and private health care insurance so that the focus is on the care and health of the patients then good luck to them .

    The Singaporeans may also have non forgiving laws that punish those private health care providers that abuse or gouge patients by putting these white collar criminals following conviction up against a wall and executing them by firing squad .

    This at least in the past would not be acceptable in western cultures . Perhaps we can learn a few more lessons from the Singaporeans other than their inexpensive health care system ?

  • Mack

    Kensei –

    I thought the most important features of the Singaporean system where

    1. The Medisave system for meeting day to day medical expenses. In Irish terms this would introduce a free-at-the-point-of-use health service while keeping the market/ pricing/ choice mechanism of driving competition and innovation between service providers

    2. The option of public and private health insurance providers. Most Irish people are familar with private health insurance and the Irish health insurance market is not yet bedivelled with the problems that plague the US market (driving costs up), that public health insurance solves, but perhaps it will be.

    3. The fund that insures all citizens have access to funds to meet health care provisions.

    I suspect you skim read most of what was written above, because I did mention market regulation and did say it the market was merely a means to an end. Tim Harford devotes a whole chapter in the Undercover Economist on how market based resource allocation via pricing can produce superior outcomes (win-win) over resource allocation by beuracracy in health service provision. I’ll update with some later on.

    There are plenty of links to explore there if you are interested.

  • Greenflag

    kensei ,

    ‘the dangers of injecting private capital into health care is adequately outlined by this dazzling New Yorker article on US Health care costs:

    http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

    Kensei- thanks for linking to that article by Dr Gawande . I believe that President Obama has made that particular article compulsory reading for everyone involved in his Health Care policy review team as he struggles to make the urgent changes necessary for the USA before health care consumes the entire economy 🙁

    Perhaps the Singaporeans have found a ‘market ‘ related system which works but then perhaps Doctors and Lawyers and Private Insurance executives in Singapore don’t expect to be millionaires before they’re 35 ?

  • Drumlins Rock

    couple of factors that mite be stating the obivious but Singapore is basically a city state, so regionalism and travel distances are much less an issue. It is also a major transport hub for the world, which has created a large health tourism market to sibsidise the citizens, finally being shall we say a “soft authoritarian” state can ocassionally help

  • Mack

    Greenflag –

    but then perhaps Doctors and Lawyers and Private Insurance executives in Singapore don’t expect to be millionaires before they’re 35 ?

    Most likely they don’t work within a system that protects their jobs from competition and guarantees high salaries at others expense. 300k for a consultant is 200k that easily could have been spent on health treatments for patients elsewhere. Super high wages for doctors and lawyers are a punitive tax on the ordinary working citizen. The unwarranted professional protectionism that shuts out competition is the mechanism that perpetuates the load that overburdens the poor.

  • kensei

    Mack

    I suspect you skim read most of what was written above, because I did mention market regulation and did say it the market was merely a means to an end. Tim Harford devotes a whole chapter in the Undercover Economist on how market based resource allocation via pricing can produce superior outcomes (win-win) over resource allocation by beuracracy in health service provision. I’ll update with some later on.

    Nope, I read it. But the devil in health care is really, really, in the details. And broad brush stuff isn’t enough.

    A more detailled if still favourable article here:

    http://www.american.com/archive/2008/may-
    june-magazine-contents/the-singapore-model

    Rising health costs and moral hazard remains a problem, and I’d expectt hey’d be more of a problem in rip off Ireland. You have also brushed over the likes of co-payments.

  • Mack

    Drumlins Rock –

    Good points, we may always have to pay a little bit more for health in Ireland than the Singaporeans do. The cost to the state is over 10 times more at the minute, in Ireland, with lower health outcomes too boot.

    The Singaporean system is clearly highly regarded. I think it’s worthy of Irish investigation, as the debate rarely stretches beyond a comparison of the British and American health care systems (somewhere between which the Irish system lies).

  • Mack

    Kensei –

    I link to that article you provide in the blog entry, by the way 🙂

    I’m not saying that the Singapore model is perfect – merely that it is better than what we have at the minute (better outcomes, lower cost) and thus worth considering.

  • kensei

    Mack

    Good points, we may always have to pay a little bit more for health in Ireland than the Singaporeans do. The cost to the state is over 10 times more at the minute, in Ireland, with lower health outcomes too boot.

    You are being somewhat disingenious here. The cost to the state is more because the state is providing the service. There are corresponding assets in the form of higher taxes to cover it. It doesn’t really amtter if the cost to the state is 10p if I’m paying three tiems as much in fees as I was in taxes. The key figure here is the 3.7% of GDP. I’d guess it would be seriously tough for Ireland to get anywhere near that figure, not being a city state.

    It may well be possible to get better care for cheaper. But this is spurious, frankly.

  • kensei

    Mack

    I link to that article you provide in the blog entry, by the way 🙂

    Oh right. You are apparently using it as a source for a figure. Being quite happy to take that as read, why would I go trawling further?

    Anywho, thanks for further supporting my argument that it takes intelligent use of links to stop them being totally ignored. Turns out it was quicker to Google the subject.

  • Greenflag

    ‘The unwarranted professional protectionism that shuts out competition is the mechanism that perpetuates the load that overburdens the poor.’

    I agree it’s ONE of the mechanisms. But not the whole story. I’d like to see a detailed breakdown of where the taxpayer’s monies go to fund the present system .

    When ‘electricians ‘ strike for an 11% pay increase it’s portrayed as national sabotage but when the white collar professional medical establishment and consultants demand an extra 250,000 euros its ‘professional ‘ compensation ?

    For what it’s worth I agree we should look beyond the UK and or USA for ‘solutions ‘ Did I not read a while back that we were looking at the Dutch system which is very effective and is a mix of provate and public ?

  • Mack

    Kensei –

    You are being somewhat disingenious here… There are corresponding assets in the form of higher taxes to cover it.

    I see where you are going, but I think the core problem is there aren’t the taxes to cover it! 60bn in spending vs 30bn in tax revenues.

    Raising taxes and forcing people to save into accounts (over which they retain ownership) aren’t quite the same thing. As taxes rise, the propensity to create or use the taxed resource falls. I.e if we increase income tax to 70% to solve the fiscal crises, I will for sure not be working 2 jobs (like I am this year), next year. God knows how many immigrants would leave. With a Medisave facility, if they permanently left the state we could refund them the balance in their accounts.

    As an aside, I think the Singaporean system would produce cheaper health care in Ireland than the current Irish system.

  • Mack

    To clarify –

    God knows how many immigrants would leave. With a Medisave facility, if they permanently left the state we could refund them the balance in their accounts.

    By offering to refund their Medisave accounts, Medisave would not be equivalent to a tax, but more like a savings account and would therefore increase the likelihood of immigrants coming / staying.

  • kensei

    Mack

    I see where you are going, but I think the core problem is there aren’t the taxes to cover it! 60bn in spending vs 30bn in tax revenues.

    Using a short term crisis is just a little cheeky, there.

    By offering to refund their Medisave accounts, Medisave would not be equivalent to a tax, but more like a savings account and would therefore increase the likelihood of immigrants coming / staying.

    It’s not quite a tax. But it’s not quite saving, either. What happens if they fall ill while that account is rather empty? Who pays? And if they can simply bounce here and back depleting it…

  • Mack

    Greenflag –

    Yep, I’ve noticed the Dutch system being increasingly spoken of positively of late. Almost certainly also worth investigating. It could well be time to make a virtue of neccessity, why should we roll over and let this reccession beat us? It’s an opportunity to make the country great / or at least just a little bit better…

    (submit word – better!)

  • Mack

    Kensei –

    Using a short term crisis is just a little cheeky, there.

    I wish!

  • big bird
  • Mack

    Big Bird –

    You would expect (all else being equal) high levels of income inequality to lead to worse average outcomes in health though, would you not?

    But Singapore has much better health outcomes than the USA (which is slightly less unequal). That would imply that the health system in Singapore is able to counteract the negative effects of income inequality within the state?

    http://takingnote.tcf.org/2008/07/health-care-in.html

    Note, I’m not suggesting we copy every policy Singapore implements (such as abolishing the minimum wage, or banning chewing gum!), just that it does appear to get better results in health for less spend.

  • Erasmus

    Have you ever been to Singapore, Garibaldy?

    They certainly aren’t poor, I’ve never been in a cleaner, more efficiently run city, with excellent transport networks, affordable cost of living (imported consumer goods at a fraction of the price we pay, high quality dining out at a fraction of Irish prices etc), the best public transport system I’ve been on (by far) etc.

    And about 10 hangings and many more floggings per year. Have been there. Something creepily Stepford Wifeish about the place.

  • Greenflag

    How do Singaporeans fare in the obesity stakes?

    Surely life style and factors such as beer consumption per capita / tobacco usage etc must be factored in to the longevity comparison . IIRC the Japanese also live the ‘longest ‘ lives of the larger developed countries.

    I’d hazard a guess that if the average Irishman or Briton cut down alcohol consumption by half and the cancer sticks by another half we’d probably live longer or equally as long as the Singaporeans?

    ‘why should we roll over and let this reccession beat us?’

    I was’nt suggesting we should 😉

  • Greenflag

    Erasmus ,

    ‘And about 10 hangings and many more floggings per year. ‘

    Sounds just like what Wall St needs to whip it into shape ;)?. Perhaps even the GOP you know the party of ‘family values ‘ and good christian living could do with a few strokes as well to ahem to improve their ‘christian ‘ credentials

    And the subject for this weeks sermon from the First Church of Family Values ?

    ‘Defending the sanctity of marriage and the importance of hiking in Argentina ‘
    The Rev Mark Sanford

    Assoc Ministers – John Ensign
    David Vitter
    Senior Minister – Newt Gingrich
    Choir Minister – Larry Craig
    Youth Minister – Mark Foley

    International affiliates and associations include the Orange Order in Ireland , and numerous religious orders of the Catholic Church who have ministered whippings among other diverse punishments for those who sin against family values over the centuries 🙁

    Let him who is without sin cast the first stone eh ?

    Over to you Mr Ahern 🙁

  • Mack

    Greenflag –

    Difficult to tell on the smoking, it’s a huge lagging factor and smoking rates are subject to significant changes overtime (e.g. the rise of female smoking in the West may lead to a balancing out of life expectancies). They won’t affect the infant mortality rates so much, which are over twice as good as the rates for Ireland or the UK.

    In Singapore as of 2009 24% of males and 4% of females smoke.

    http://www.singstat.gov.sg/pubn/papers/people/ssnmar09-pg12-16.pdf

    This study puts the percentages as 36% of men and 7% of women among middle-aged and elderly Chinese Singaporeans (the largest and wealthiest ethnic group within Singapore).

    http://jn.nutrition.org/cgi/content/full/135/10/2473

    Erasmus – Stepford Wives, yeah I agree.

  • Duncan Shipley Dalton

    An interesting piece and I would like to know more about the Singaporean system. Although as a note you might also point out that public administrators in Singapore are better paid and of a higher quality than they are in many other countries. Public service is rewarded and carries high status.

    But I do have an issue with your piece. You make the bald assertion that:
    [i]“This means that the market and not a bureaucracy determines the provisioning of health care services and ensures that citizens have an incentive to become informed, and unwasteful, consumers fostering competition among service providers to drive costs lower and service levels higher.” [/i]

    I have to say I am deeply sceptical of that claim without further data to demonstrate how that is actually happening. The problem with market driven solutions in healthcare is the inherent market failures in the health care market because of the nature of the product being consumed. The USA is the prime example of everything that is wrong with market driven health care. The traditional analogy of the USA market system is that it is like going to buy a car and having the salesman deciding what kind of car it will be and then a third party insurer pays for it. I think most people can figure out what is likely to happen in that scenario. That fundamentally is the problem. In the health care market the consumer of the product will never be a sovereign consumer as we rely on experts to make the decisions about what kind of care is delivered and with insurance a third party actually pays for it so cue the moral hazard problems. Your suggestion is that in Singapore the average healthcare consumer is able to avoid this and is in fact that mythological healthcare consumer with perfect information. This seems to me to be very unlikely. In reality it is much more likely that the providers i.e. doctors are making the real decisions about how much and what type of healthcare is being consumed not the patients. The question should be what kind of mechanism is being used to protect against the doctors inflating the amount and cost of the treatment provided. Your description is closer to a puff piece on the wonders of the market mechanism rather than I suspect an accurate description of what is actually controlling the cost and provision of medical services in Singapore. Unless of course they have figured out how to avoid the inherent market failure problem in the healthcare market but I seriously doubt it.

  • Mack

    Hi Duncan,

    In the book Undercover Economist, chapter “The Inside Story”, British (but US based) economist Tim Harford examines why the health care market in the United States fails. Knowledge held by market participants – primarily insurers and their customers is asymmetric (customers tend of have a better idea of whether or not they have a serious illness and thus need insurance) and the steps taken to remedy this situation cause distortions in the market. In fact he argues that a proper market simply can’t function. He also covers some of the advantages and disadvantages of the British system.

    Having compared and contrasted the British system and the US system, he then sketched out the details of a public / private system that could solve the problem of developing a market that efficiently allowcates health care resources. (An efficient market being one, where no improvement can be made to the lot of one participant without harming the lot of another, and inefficient market (like the US and inherently public systems) being one where at least one change that improves everyone’s lot remains unimplemented.) He then announces that these principles have been successfuly deployed in Singapore for two decades.

    The book itself is well worth a read. IIRC your based in the US – so here it is on amazon.com.

    http://www.amazon.com/Undercover-Economist-Exposing-Poor-Decent/dp/0195189779

    The inspiration for this very, very broad strokes overview (I’m not an economist, and don’t have the same 200 odd pages to reproduce Tim Harfords ideas 😉 ) was a blog entry by Irish economist Ronan Lyons where he delved in to the expenditure cuts likely to be recommended by Colm McCarthy’s ‘An Bord Snip Nua’ Public Sector Review Board in Ireland.

    http://www.ronanlyons.com/2009/07/06/an-bord-snip-eile-public-sector-cuts-part-1/

    To quote

    Ultimately, Ireland needs to consider its health model. I would love to see policymakers explore a Singapore-style model of a mandatory personal health savings account, similar to a pensions account, taken out of tax paid and stored as an investment account, to be used for general medical expenses. In the meantime, though, further savings of about €1bn could be achieved through reform of the medical card scheme, long-term residential care and in particular the block grants given to hospitals.

  • Mack

    Duncan

    The question should be what kind of mechanism is being used to protect against the doctors inflating the amount and cost of the treatment provided

    There is a regulatory body that prevents overpricing. I did highlight this in the blog entry.

    Your description is closer to a puff piece on the wonders of the market mechanism rather than I suspect an accurate description of what is actually controlling the cost and provision of medical services in Singapore

    Hmm. You are the second person to miss it, but I did cover it in the blog entry.

    It’s important to note that the Singaporean approach leverages the market as a means-to-an-end, that is quality affordable health care for all, rather than an ideological (free market) end in itself. To ensure that service providers do not price gouge or take advantage of vulnerable patients a health care regulator regulates service levels and costs.

  • Greenflag

    mack,

    ‘They won’t affect the infant mortality rates so much, which are over twice as good as the rates for Ireland or the UK.’

    I would think that a lot more than 4% of females smoke in Ireland/UK and it’s accepted medical fact that women who smoke during pregnancy have higher rates of infant mortality . Also those who drink alcohol during pregnancy have a much higher risk of giving birth to ‘brain’ damaged children which in turn may lead to greater rates for infant mortality in these islands as opposed to Singapore .

    Looks to me like Duncan Shipley Dalton is asking the pertinent questions re just what is controlling the costs in the Singaporean system .

    Could it be that Singaporean doctors are more ‘ethical ‘ than their Irish or American counterparts ? or it’s probable that the ‘system ‘ in the USA and to a lesser extent in Ireland allows practitioners and corporations and private health care insurers to gouge the ‘consumer’ i.e taxpayers despite the latters so called access to perfect information.

    I share Duncan S Dalton’s views generally on this issue and am extremely sceptical of the ‘free market ‘ achieving anything other than inflating the overall cost of health care . I’m all for self education and for people making themselves aware of the dangers for health re smoking and drinking to excess , lack of exercise etc but I don’t hold out much hope for the average consumer in any conflict with private health insurance companies (stateside anyway) . Britain and Ireland are shielded to a large extent from the kind of medical terrorism that is inflicted on a large section of the American people and yes even on those who ‘think ‘ they have insurance !

  • kensei

    Duncan

    The money quote from the New Yoprker article earlier:

    “Any plan that relies on the sheep to negotiate with the wolves is doomed to failure.”

    Mack

    We are not missing it. There is a natural scepticism of the ability of regulators to control the costs especially with the political pressure that would be made brought to bear by outside interests. The complete failure of “light touch regulation” in the banking system is a case in point.

    I am not in general a fan of regulators forcing price controls directly. That introduces political calculation and defeats the market mechanism. Far better if they have a way to influence the incentives or heavily punish the guilty. But both those rely on will.

    Another killer quote form that article:

    Something even more worrisome is going on as well. In the war over the culture of medicine—the war over whether our country’s anchor model will be Mayo or McAllen—the Mayo model is losing. In the sharpest economic downturn that our health system has faced in half a century, many people in medicine don’t see why they should do the hard work of organizing themselves in ways that reduce waste and improve quality if it means sacrificing revenue.

    There is a lot in that article, and I really recommend it. I like some of things done at the better clinics. And some market mechanisms are worthwhile, though that will be at the cost of variability of care. I’d just feel safer with the government ultimately controlling the purse strings, because ultimately I hire and fire them in a way I simply don’t with health care companies.

  • Paddy Matthews

    From:

    http://www.healthbeatblog.org/2008/07/health-care-in.html

    “These numbers owe little to HSAs. As the Canadian Medical Association Journal has put it, “Singapore’s MSA program itself has contributed less to cost control than the more recently introduced supply-side tactics” Hsiao also notes that “the well-executed Medisave scheme in Singapore could not contain costs, so it is unlikely that such a scheme could do so here.” And Barr eloquently concludes that while HSAs are an institutionally distinctive feature of Singaporean health care, “the practical and spiritual heart of the system lies in control and parsimony.”

    In the end, Singapore’s health care experience isn’t an argument for consumer-driven medicine, but for targeted government interventions and smart, timely, regulation of over-treatment. One of the world’s most successful health care systems is built on the principle that personal responsibility is good, but it has practical limits—and the understanding that when it comes to health care, more can easily become too much.”

  • aquifer

    Market theory suggests that when the market price of some good is zero, that the demand can rise to infinity. Healthcare may not be quite like this, but when there is no cash to pay for failing to take care of your body, and when you will be treated with more care and attention than you are used to, you will tend to overconsume healthcare.

  • “the practical and spiritual heart of the system lies in control and parsimony.”

    I can just see the consultants and the INO lining up for that and not going bawling to the meeja. Of course, in Singapore it helps that press freedom is not quite the Irish model either

    http://www.freedomhouse.org/uploads/fop08/CountryReportsFOTP2008.pdf (at page 187)

  • Dave

    “Your suggestion is that in Singapore the average healthcare consumer is able to avoid this and is in fact that mythological healthcare consumer with perfect information. This seems to me to be very unlikely. In reality it is much more likely that the providers i.e. doctors are making the real decisions about how much and what type of healthcare is being consumed not the patients. The question should be what kind of mechanism is being used to protect against the doctors inflating the amount and cost of the treatment provided.” – Duncan Shipley Dalton

    This is a completely ridiculous argument that is underpinned by nothing more substantial than socialist paranoia about the free market system. The consumer relies on advice from professionals in just about every area of life and doesn’t have problems with, for example, an architect involving them for an office building when they commissioned a five bedroomed house. Following your logic would lead to, for example, all lawyers being employed by the State so that the public are not invoiced excessive amounts. There is no need to be so paranoid about people who work for profit.

    In reality, most government healthcare that is paid for by the State is not provided by employees of the State. Unless you make it mandatory for all healthcare workers to work for the State on a fixed wage, you cannot eliminate the free market from the system (and only then in respect to labour costs but not to the more substantial costs of infrastructure, equipment, medications, ect). When the Irish State, for example, pays the cost of a GP visit for a pensioner, what is to stop that GP from bringing poor old granny back every week for a check-up so that he can collect another £40 fee? Sweet FA, yet he does not call granny back every week, does he? (Okay, he may well do, but unless you prove your claim that he must do because the free market system makes everybody into an evil rogue, I’ll just go with my assumption that you are paranoid).

    And suppose you do make all healthcare workers employees of the State, you will then have a situation where those workers won’t want to do any work beyond the minimum amount required because they have no incentive to do so. That will drive up the labour cost because you will need to employ more of them. In addition, you’ll be into a situation where a very poor standard of service is delivered because State workers are the laziest shits imaginable and the State never gets tough with its public sector (witness the insane level of wages paid to public sector workers in Ireland). Private healthcare clinics, on the other hand, are akin to hotels with the staff trained to offer top-rated service, and all run and ruthlessly efficient business lines that keeps costs under control. That is the level that we should be aiming for, not state-controlled backwardness.

    The only future for healthcare is privatisation of hospitals and healthcare insurance. There should be no public healthcare whatsoever. All of it should be paid for by private insurance policies. Those who failed to take out insurance should have no right to become a burden on those who provided for their own needs. Most private insurers have agreed prices for services with private healthcare providers and direct their clients to them. If the client opts for a non-designated provider, then that client pays a percentage of the cost in addition to the cost of the policy. Since the private insurers are paying the private healthcare providers, they have a huge incentive and huge power to keep the cost of the service to a minimum. That free market system works perfectly when the government allow it to work.

    Anyway, it’s all deckchairs on the Titanic stuff. Ireland’s projected tax revenue for 2009 will be €34 billion and its healthcare spending will be €18 billion, so that’s more than half of ever-declining tax revenue. Of course, allowing 109,500 immigrants into Ireland in 2007 and so on, such that Ireland saw the largest growth of population in recent history has nothing to do with why State services healthcare collapsed under the demands of that influx, not did it have anything to do with why the cost to the State of healthcare services rose 9% in 2008, and so on.

  • Harry Flashman

    @Greenflag

    “[The US has] the highest rate of infant mortality in the world”

    Complete.

    And utter.

    Bollocks.

    I think we can take a line through that to judge whether you have the slightest idea what you are talking about.

  • Dewi

    “Those who failed to take out insurance should have no right to become a burden on those who provided for their own needs”

    Oh come on Harry – How about sick, ill, poor people. I dunno about you but that’s why I pay my taxes – to look after the needy.

  • Dewi

    “Those who failed to take out insurance should have no right to become a burden on those who provided for their own needs”

    Oh come on Harry – How about sick, ill, poor people. I dunno about you but that’s why I pay my taxes – to look after the needy.

  • Harry Flashman

    That was Dave, Dewi.

  • Dewi

    Sorry Harry.

  • Charles

    “The state ensures citizens have enough cash to pay for health care via a mandatory health savings scheme (Medisave), funds are automatically deducted from citizens pay each month, supplemented by employer contributions and accumulated in personal health care accounts.”

    Like for everything and even more with any insurance the devil is in the details.

    Medisave and medishield coverage is enough to cover anything in limits of…?

    I’d be surprised (really) if you found that that Medishield and Medisave can cover for anything more than an appendicectomy.

    For anything else there is the family’s house mortgage.

    Charles

    As for the GDP per capita: Singapore is not a country, it is a town, with few infrastructures to develop.
    It is easier when the workers are coming from abroad (neighbouring Malaysia), and not counted in the capita.
    It is as if you were taking the GDP of London, with the Added Value of people coming to London everyday, but not counting them in the number of inhabitants; moreover any foreigner living in Singapore, needs a minimum income.
    It helps with the statistics!

    The disadvantage of the small size is that Singapore has to rely on immigration to enable its growth: 1 million more in 2007, 1.5 million more in 2008 out of a total population of 6!

  • Mack

    Paddy Matthews (also Kensei, Duncan, Greenflag)

    Yes I agree, it services and costs need to be regulated. Note that Medisave is a government run insurance scheme (public health insurance NOT private insurance) therefore the government have a very strong incentive to ensure price gouging is stamped out.

    Charles

    Medisave and medishield coverage is enough to cover anything in limits of…?

    I’d be surprised (really) if you found that that Medishield and Medisave can cover for anything more than an appendicectomy.

    I doubt that very much. Medisheild is public health insurance, in Ireland (which is were we are talking about applying the model), why would that work any differently than private health insurance (VHI, Quinn, Vivas etc) today?

  • Mack

    Kensei –

    because ultimately I hire and fire them in a way I simply don’t with health care companies.

    In practice you will find industry bodies (hello Mr. Timmons, FG Shadow Health Minister) and Unions have more clout than you, or the poor customer / patient.

    There is a natural scepticism of the ability of regulators to control the costs especially with the political pressure that would be made brought to bear by outside interests

    Well, they appear to have succeeded in Singapore, while we in the West have been ‘coping’ at best…

  • kensei

    Mack

    In practice you will find industry bodies (hello Mr. Timmons, FG Shadow Health Minister) and Unions have more clout than you, or the poor customer / patient.

    Concerted electorate anger can produce a response in government that it simply can’t in private practice. Influence of those bodies are means to an end: my vote and everyone else’s.

    In large part the UK Tories were undone in the last decade by what they did to the NHS.

    Well, they appear to have succeeded in Singapore, while we in the West have been ‘coping’ at best…

    Big cultural differneces there, Mack. Like soft authoritarianism.

  • Paddy Matthews

    Medisave funds cannot be used to purchase some types of obstetric care and long-term hospital care, and Medishield will not cover expenses associated with pre-existing conditions including stroke, coronary artery disease, chronic obstructive lung disease and cancer. It appears that Singapore’s MSA program itself has contributed less to cost control than the more recently introduced supply-side tactics.

    The failure to control costs through the MSA approach is especially noteworthy, given several characteristics of the Singapore population that might have been expected to assist in minimizing expenditures. The population is comparatively younger than Europe’s, and the country has yet to confront the health costs associated with an aging population. Many citizens are immigrants with relatively low expectations of the role of the state in providing health care. An ethos of individual responsibility stands in contrast to the redistributive philosophies of most Western European societies. Many patients in Singapore turn to traditional Chinese medicine, a type of health care not covered by government plans but one that serves to reduce reliance on Western therapies.18 Finally, the Singapore economy grew rapidly for 2 decades after the mid-1970s; although the resulting high employment rate ensured that most citizens contributed to MSAs, it left the MSA system vulnerable to the impact of a slowdown in economic growth.

    Given the magnitude of out-of-pocket costs borne by individuals, the costs of medical care in Singapore often cannot be met by elderly people, especially elderly widows who were never employed outside the home, and poor people. Indeed, the World Health Organization rated the city’s system 101st of 191 countries studied for fairness of financing. This below-average equity ranking, coupled with the documented inability of MSAs to justify their primary rationale of cost containment, suggests that the Singapore system undergo closer scrutiny before it is emulated.”

    http://www.cmaj.ca/cgi/content/full/167/2/159

    If I was being sardonic, I’d note that “elderly people, especially elderly widows who were never employed outside the home, and poor people” tend not to post too much to the kind of economic or political blogs that are most keen on market-based solutions.

  • Mack

    Paddy –

    There is Medifund to cover costs incurred by those who are not covered by Medisheild or Medisave.

    What insurer would take on someone with an existing illness? (It’s a bit like trying to buy car insurance after a crash). It’s unfortunate but those without insurance when the get ill are stuck relying on public health (in Singapore Medifund).

    What do the poor in Ireland rely on today? They have no VHI, Quinn or Vivas. Neither can the poor in the UK go private to get treatments not approved by NICE (the beuracracy that decides what treatments should be publicly available and which should not).

    Health outcomes in Singapore are still hugely better. Infant mortality is less than half that of the UK with it’s NHS – life expectancy is significantly longer.

    If in Ireland we adopted that model we could correct any problems with it – i.e. by making more funds available under the Medifund equivalent to ensure that no-one is denied quality healthcare. Isn’t that the goal? Or are you idealogically committed to the idea that only government can run hospitals and the like?

  • Paddy Matthews

    Or are you idealogically committed to the idea that only government can run hospitals and the like?

    I’m ideologically committed to the notion that the level of treatment that people should get should depend on their needs and not on their income.

    I’m also suspicious of ideas advanced by people who are young, healthy and ideologically committed to market solutions and which have the effect of screwing those who don’t share their good fortune.

  • Mack

    The Singaporean system is a mix of both a market solution and public health – it represents a pragmatic attempt to strike a balance. The Irish system is also a mix of public and private health, but a much less successful and efficient one.

    and which have the effect of screwing those who don’t share their good fortune.

    Well, the Singaporean model should lead to an improvement in health outcomes for the poor in particular over the current Irish system and I’m sure it could be improved upon in implementation.

  • Driftwood

    http://www.guardian.co.uk/society/2008/aug/28/health.socialexclusion

    The report highlights stark disparities within the UK, as in most countries in the world. A boy in the suburb of Calton, Glasgow, can expect to live 28 years less than one brought up in Lenzie, a few miles away. One born in Hampstead, London, will live around 11 years longer than a boy from St Pancras, five stops down the underground Northern line

    Are there similar discrepancies in the Republic? I’m assuming different parts of Dublin have similar patterns?

  • Greenflag

    harry flashman ,

    Thanks for pointing out my error . The sentence should of course have read

    ‘The US has the highest rate of infant mortality in the DEVELOPED world’

    Thanks for agreeing with the rest of my post 🙂

  • Greenflag

    Dave ,

    ‘Private healthcare clinics, on the other hand, are akin to hotels with the staff trained to offer top-rated service, and all run and ruthlessly efficient business lines that keeps costs under control.’

    As your alter ego Harry is prone to say -complete and utter bollocks . The USA is now being bankrupted by it’s private healthcare system and it’s thieving private insurance companies . As for keeping costs under control I urge you to read Kensei’s link to Dr Gwande’s New Yorker article to see how ‘efficently’ private health care delivers ‘cost control’ in the neighbouring counties of McAllen and El Paso in Texas . Sad news for the pro free marketeers uber alles . It doesn’t . It provides the same level of service at twice the price per capita with the demographics of both counties being equal in respect of those factors which matter in health care .

    ‘This is a completely ridiculous argument that is underpinned by nothing more substantial than socialist paranoia about the free market system.’

    More simplistic bollocksology from the school of Milton Friedman , Maggie Thatcher and Ronald Bush Reagan Rumsfeld and of course our anti EU Dave .

    Have you noticed by any chance the current world economic crisis ? and the role of the unregulated shadow banking private sector in looting billions from taxpayers? Did it strike you as somewhat ironical that the ‘free market ‘ ran cap in hand to Government to help bail them out from their self engendered financial collapse which they ‘built ‘ on free market foundations ?

    These are the self same idiots who wanted to ‘privatise ‘ American social security which fortunately despite Bush’s wishes did not happen . Had it done so the ‘retirement ‘funding of some 200 million americans would have done a disappearing trick as per the Madoff method 🙁

    ‘The free market system works perfectly when the government allow it to work’

    More nonsense at least in respect of health care and education . Every country in Europe had to rely on government to provide basic education and health care for it’s people . In the middle ages these needs were provided by the monastries and the church up to the Reformation. It was only during and after the industrial revolutions in the UK and Germany that Government ‘interfered’ in the market to provide education and health care . They had to . The ‘free market’ was not interested . When you can make a huge profit by allowing 1 million Irish to die in famine or 27 million in India or allow dysentery and cholera to reduce life expectancy in Manchester to 19 years why would you want to reduce your profits by providing health or education services to people who can’t afford them anyway ?. Best to let them die in poverty and ignorance after all it’s their own fault anyway !

    Spare us from your anti socialist paranoia . Your ideological committment to the ‘free market’ is passe . Health care and education for all according to their need is a fundamental right in modern democracy. If the market cannot provide that then the State MUST intervene to ensure that these services are provided .

  • Mack

    Greenflag, Kensei

    I am pretty much convinced that you can’t have a free market in health. You are both absolutely correct about that.

    Asymmetric information (insurance customers have a better idea of their health, doctors have a better idea of the efficacy of treatments) causes adverse selection problems (e.g. insurers attempt to reduce their risk by overcharging and selecting customers). Kenneth Arrow proved that an unregulated market in health care will not efficiently allocate resources 45 years ago.

    http://www.scielosp.org/scielo.php?pid=S0042-96862004000200012&script=sci_arttext

    That’s not what we’re discussing here though.

    The Singaporean model attempts to address the problems highlighted by Arrow, via public health insurance (which can undercut any price gouging by private insurers) and regulation (which prevents price gouging by practitioners) while still retaining the advantages of choice provided by a market system.

    The system was purposely designed by economists to be as efficient as possible. Where a totally efficient system is one in which no change can be affected that raises the outcome for all participants without harming one other participant (by this definition the US healthcare system is highly inefficient as is the British NHS).

  • Mack

    Kensei

    Does the Obama plan to involve introducing Public Health Insurance – possibly backed up by public funds for those unable to pay? Does this sound like a partial migration towards the Singaporean system? (Still missing the part that would help pay day to day expenses – GP fees, X-rays, prescriptions etc).

  • Mack

    Kensei – (Further to the above)

    President Obama has made his own preferences clear. In a letter to Senators Edward M. Kennedy of Massachusetts and Max Baucus of Montana, the chairmen of two key Senate committees, he wrote: “I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.”

    http://www.nytimes.com/2009/06/28/business/economy/28view.html?_r=1

  • Casper

    The Singapore health system is great for those that can afford it. It is not as financially unachievable as the US system but it has limits … and critical ones at that.

    The critically ill youth who eventually run out of medisave, insurance, income and support cant access health care. Singapore hospitals regularly take to court and bankrupt individuals who can’t pay the bills.

    What do you think is the primary requirement of health care – availability or efficiency. Personally I put them in that order or priority.
    1. Availability
    2. Efficiency

    The Singapore system ends up excluding health care to long term critical care patients (and I have first hand experience of this). The universal systems in operation in the Ireland, UK and Australia to name a few are always available to everyone who is ill.

    You may rail against some of their internal mechanisms and efficiencies and waiting lists can sometimes be high. but Availability must be first.

    Dont forget that basic tenet before proposing alternatives (the article above doesnt do that and shows ignorance of the realities of a flawed system)

  • Greenflag

    mack ,

    Fair enough comment . Whatever Obama may prefer it looks like Max Baucus’s reelection campaign will be financed mainly by the private health insurance companies just as it has been in the past . Senator Kennedy is ailing as we speak and may not live to see a public option never mind universal health care . It will be interesting to see how far Obama gets his way . There are many Senators and Congressmen in both parties who are ‘beholden’ to the insurance industry for their financial support !

    As for keeping insurance companies honest ? Good luck . As Kensei says above we can at least in theory remove governments which maladminister or make a botch of health care -we don’t have any say with ‘private health insurance ‘ companies .

    Just like some of the US banks and AIG and sections of the shadow financial services sector who were allowed to become too big to be allowed to fail i.e fall on their ‘free market ‘ swords so it is that the entire US Health Care morass cannot be cleaned up or reformed or made into a USA equivalent of what France or the UK or Germany or Singapore or even Ireland has -overnight . Obama has already made the point that bad and all as the present mess is americans can probably not afford to turn the entire system upside down without risking the entire economy in the short term and it’s risky enough at present with rumours of increased numbers of foreclosures in the offing .

    The Singapore model may well be worth investigating . My suspicion is that it works there not just because it was designed by a bunch of gypsy fortune tellers sorry economists but because of the local culture and a rather stringent (by western standards ) deterrents for those who would try to gouge the system for personal excessive gain .

    My opposition to a free market only system is because it would end up as in the USA i.e gobbling up some 20% of the economy while delivering excellent 21st century care for the wealthy and insured and those lucky enough to be employed by the larger corporations while leaving everybody else at the mercy of ‘legalised ‘ gangsters , rip off merchants and white collar criminals .

    Private health care only is also a major impediment to labour mobility and flexibility . Employees are not going to change jobs if it means that their ‘insurance ‘ with a future employer may not be as good as their present or if they have developed a health condition which would make their hiring more problematic.

    Many young people don’t pay into health insurance because they are ‘eternal ‘ and not likely to become ill . At the other end of the scale 60 year olds who are too young to retire and don’t qualify for Medicare have taken to robbing banks in the hope that a three year jail sentence will provide them with food , clothing , and free health care until they reach the magic age of 65?

    The Dutch system which is rich in preventative care strategies is presumably the main reason why the Dutch have become the ‘tallest ‘ people in the world over the past two generations . Not too long ago i.e the 19th century the Dutch were known for being ‘undersized ‘

    Whatever system Ireland adopts ‘cost control’ will have to be a major factor given scarce tax resources . In addition while everybody should contribute as a percentage of earnings to any such system those consumers who deliberately neglect their own health should be penalised premium /contribution wise to encourage a change of behaviour . And while we can wax lyrical over the failure of a private health care system to regulate itself in the interest of the consumer it also is beholden on the state to ‘regulate ‘ the regulators of public services through strong longs and deterrents including confiscation of private property and in extreme cases the death penalty for those who abuse their position as financial trustees of the public health !

  • Greenflag

    Error above second last line

    ‘through strong longs’

    should read ‘through strong laws ‘

  • Duncan Shipley Dalton

    Yes I will try to take a look at the undercover economist some time. It is interesting to hear about a different system of healthcare as my own knowledge is limited to the UK the USA and a few major European systems.

  • Duncan Shipley Dalton

    Dave though, jeez where to begin?

    [i]This is a completely ridiculous argument that is underpinned by nothing more substantial than socialist paranoia about the free market system.[/i]

    Dave no its not it is a reflection of pretty widely held recognition of the problem of market failure in the healthcare system. It cannot be a perfect market because it violates so many of the necessary underlying assumptions of a properly functioning market e.g. asymmetric/imperfect information, positive externalities, barriers to entry etc. You on the other hand are an uncritical fanboy for the wonders of the market system in any and all walks of human endeavour. As for the discussion about Irish grannys the problem is that where doctors do have an incentive to inflate the cost or order extra treatment that is demonstrably what they do. It is a fact illustrated by a great deal of quantitative data in the USA not just a wild stab in the dark based on my assumptions about human nature. Where doctors have a financial stake the per patient cost can be increased by up to 50%. I would also recommend the New Yorker article listed above as it covers that point quite well.

    [i]Private healthcare clinics, on the other hand, are akin to hotels with the staff trained to offer top-rated service, and all run and ruthlessly efficient business lines that keeps costs under control. That is the level that we should be aiming for, not state-controlled backwardness.[/i]

    Just complete and utter bollocks. Ok here is one problem to consider. Teaching hospitals. To be a teaching hospital is to add a cost to every transaction in that hospital. Their overall costs and thus prices will be necessarily higher to facilitate the process of teaching the next generation of doctors. If all hospitals have to compete ruthlessly on a lowest price basis for business then the teaching hospital will be driven out of business. The problem here is that teaching new doctors is a positive externality. It has a wider public good but the value of that cannot be captured by the teaching institution thus it makes it uncompetitive in a perfect market. You see a market failure. Are you getting that concept yet?
    In fact the experience of the USA suggests that rather than being super efficient the opposite has happened. Stays in the super efficient private US hospitals are the most expensive in the industrialized world. Thus the length of stay in them is the lowest in the industrialized world. Does it deliver the best care in the world? Well the broader indicators would suggest not.

    [i]The only future for healthcare is privatisation of hospitals and healthcare insurance. There should be no public healthcare whatsoever. [/i]

    Well as pointed out before healthcare has positive public benefits that cannot be captured by the market (these are called positive externalities in economics). In a mad capitalist world it may sound great to ignore those who can’t pay for their treatment but it is not so good when the great unwashed masses get sick and spread that illness to everyone else regardless of their social status. Inoculation is great example of this. It is cheap and extremely effective but it requires a critical mass of the populace to be inoculated before it will effectively wipe out a particular disease threat thus achieving the best result. Interestingly it is something the US system is very bad at doing as the cost is higher there than in other countries and a larger number of people go without basic lifesaving inoculations. But hopefully you see the point that in healthcare often times a wider public good is served by everyone getting access to it and that is beneficial to wider society and to individuals as well. There is of course the not inconsiderable argument that in a modern wealthy society no one should have to go without basic medical care as a positive political choice but I was trying to stick more to the economic arguments.

    [i]That free market system works perfectly when the government allow it to work.[/i]

    Just utter bollocks. There is no market anywhere that works perfectly. If they did there would never be anything in the shops because a perfect market clears itself i.e. the last bit of supply is taken up by the last demander at the clearance price of that market since that pretty much never happens no market is ever perfect is it? Economics is riddled with inconsistencies and with unsustainable assumptions about the behaviour of economic man that in my view render much of it half baked and it is very unsafe to so blithely assume that the free market system works perfectly and then build your whole political and moral outlook on top of that very shaky edifice.

  • Dave

    “Dave no its not it is a reflection of pretty widely held recognition of the problem of market failure in the healthcare system. It cannot be a perfect market because it violates so many of the necessary underlying assumptions of a properly functioning market e.g. asymmetric/imperfect information, positive externalities, barriers to entry etc.”

    As I pointed out to you, law and architecture are two of a plethora of examples that operate successfully under the same criteria. Why stop at healthcare if you deem it better for the user that the State should provide the service? Your flawed argument would mean that all services where the client relies on the expertise and integrity of the service-provider should be provided by the State (which, presumably, is the purveyor of all that is good).

    Yet where is the compelling evidence that the State can successfully run a newspaper stand, never mind a highly complex business like healthcare? Totally absent, of course.

    “You on the other hand are an uncritical fanboy for the wonders of the market system in any and all walks of human endeavour.”

    Fan, certainly. Uncritical, never. Boy, 25 years ago.

    “As for the discussion about Irish grannys the problem is that where doctors do have an incentive to inflate the cost or order extra treatment that is demonstrably what they do. It is a fact illustrated by a great deal of quantitative data in the USA not just a wild stab in the dark based on my assumptions about human nature. Where doctors have a financial stake the per patient cost can be increased by up to 50%. I would also recommend the New Yorker article listed above as it covers that point quite well.”

    I haven’t read the New Yorker article and I’m not bothered with magazines and their assorted agendas. However, I’m not disputing that the business of business is maximising profits. Prices are usually determined, not by the cost of providing the service, but by what the market will pay for it.

    What I am disputing is that doctors will perform procedures that are not required and that cause undue distress to poor granny for profit. In order words, that the profit motive makes “everybody into an evil rogue.” In the US, for example, one third of American women will have a hysterectomy by age 60, which is four times the rate in most European countries. Yet there is no evidence whatsover that that extraordinary difference is due to US doctors performing unnecessary procedures in order to maximise profits. US doctors tend to err on the side of caution because it is much easier to sue them than it is to sue doctors in Europe. Nor, of course, is there any evidence that state-controlled hospitals are any better. The report of the Lourdes Hospital Inquiry showed that Dr. Neary was performing caesarean hysterectomies at the hospital at the rate of 1 for every 37 caesarean sections, compared to a European statistical norm of 1 per 304 caesarean sections. The State was performing unnecessary hysterectomies without any profit motive being applicable.

    The best way of keep costs under control is by privatisation of hospitals and by the use of healthcare insurance, with the private insurers paying the private healthcare providers, thereby having the incentive and the power to keep the costs of services to a minimum. Likewise, the private healthcare providers are looking to maximise profits and they thereby have an incentive to keep costs under control.

    If the State is paying the cost, no one gives a toss about the cost, since they view the State as a limitless source of free money.

    “Just complete and utter bollocks.”

    Not at all. My short stay in The Galway Clinic was a pure delight. Indeed, just step inside the door and you’re into an atrium that is indistinguishable from a plush hotel. Room service isn’t half bad either. And all it cost me was a modest annual subscription to health insurance.

    “Ok here is one problem to consider. Teaching hospitals. To be a teaching hospital is to add a cost to every transaction in that hospital. Their overall costs and thus prices will be necessarily higher to facilitate the process of teaching the next generation of doctors. If all hospitals have to compete ruthlessly on a lowest price basis for business then the teaching hospital will be driven out of business. The problem here is that teaching new doctors is a positive externality. It has a wider public good but the value of that cannot be captured by the teaching institution thus it makes it uncompetitive in a perfect market. You see a market failure. Are you getting that concept yet?”

  • Dave

    [b]Continued[/b]

    Oh dear… do you regard the public as guinea pigs? We must have public hospitals so that doctors can learn? I don’t think so. Trainee doctors will be required respective of whether healthcare is private or public. Now, in case it escaped your attention, trainee doctors are paid less, so the hospital cuts costs by employing them. If it is college students that you are referring to, then they should not be allowed in hospitals as part of a teaching course.

    In regard to the US, of course, it takes 8 years to college to qualify as a doctor, whereas in Europe, it only takes 6 years. They could save money simply by cutting the 2 years off the college course, thereby reducing the amount that doctors earn due to the length of time it takes to teach them. Also, doctors wages are subject to the law of supply and demand, so what do you do to keep the cost down? That’s right: increase the supply. Are you getting that concept yet?

    Okay, I’m already over the post size limit, so rather than continue to point out how mistaken you are, I think I’ll just accept that you are committed to state-provision of healthcare on ideological grounds and that rationality has no part to play in that ideology. That sentence might be a little loaded in the expression, but you get the gist. 😉

  • kensei

    Mack

    Does the Obama plan to involve introducing Public Health Insurance – possibly backed up by public funds for those unable to pay? Does this sound like a partial migration towards the Singaporean system? (Still missing the part that would help pay day to day expenses – GP fees, X-rays, prescriptions etc).

    Obama is on record as saying he prefers single payer, but views it as unattainable. The public option is suggested because of several reasons; partly because the administration costs of Medicare are so much lower than private clinics, and partly because in many states there are effectively local monopolies. Note it is by no means guaranteed that the public option will escape Congress.

    When it comes to what the Americans term social security – pensions, health care, unemployment etc- I much prefer these things to be in the hands of the government. That is because I am primarily interested in security over efficacy. Shifting things to the individuals does produce some advantages, but it ultimately represents a large shift in risk to the individual. Personal accounts do get depleted. Insurance fails to cover what is needed. We have already pulled a few issues here you glossed over in the original piece. I am not adverse to market based reforms, but I know where I want the buck to stop. With people I can kick out if they screw up.

  • Driftwood

    Whatever ‘system’ is adopted, the allocation of resources will still have to deal with lifestyles.
    Smokers, obese people and other selfish loafs should always be at the bottom of the list for treatment. Evolution takes no prisoners. Let it roll.

  • Harry Flashman

    ‘The US has the highest rate of infant mortality in the DEVELOPED world’

    Still bollocks Greenie.

    I presume you regard your beloved EU as part of the “developed” world in which case I count no fewer than nine EU countries with higher (in some cases substantially higher) infant mortality rates than the US. Russia, Israel and Argentina, fairly developed nations I would have considered, also have higher rates and the US comes in about the same as Italy, New Zealand and South Korea.

    So nice try, if you’re smoking crack, but otherwise rubbish.

  • Mack

    Kensei –

    pensions, health care, unemployment etc- I much prefer these things to be in the hands of the government

    Do you have a private pension or are you relying on the state pension? I certainly know a few people who have taken out insurance against losing their job (looking like a good move in the current environment). Both unemployment benefit and the state pension are quite low. Both (as currently constituted) depend heavily on the number of workers per dependent remaining high to be affordable (even at current low levels). Ireland’s social security bill is almost as high as our tax revenues (>21bn vs just over 30bn!). Certainly in the south, all 3 areas are covered by the state but supplemented by private cover to varying degrees.

    We have already pulled a few issues here you glossed over in the original piece.

    That’s the purpose of a comments section. I gave an overview that ran to 8 paragraphs of a topic that probably warrants a book (that would take considerable time to research in depth!). But yes, we did make good progress.

  • kensei

    Mack

    Do you have a private pension or are you relying on the state pension? I certainly know a few people who have taken out insurance against losing their job (looking like a good move in the current environment). Both unemployment benefit and the state pension are quite low. Both (as currently constituted) depend heavily on the number of workers per dependent remaining high to be affordable (even at current low levels). Ireland’s social security bill is almost as high as our tax revenues (>21bn vs just over 30bn!). Certainly in the south, all 3 areas are covered by the state but supplemented by private cover to varying degrees.

    I have a private pension. Where I have to manage the investing myself – again in historical terms a big fuck off risk shift towards me. I do not want another one. I have unemployment insurance, because I need to make sure my mortgage is covered in the event of losing my job. It’s expensive.

    And please stop quoting unrealistic figures. It’s dishonest. You need to quote peak to peak or trough to trough figures. Expenditure will always lag sudden drops in income. It is also likely that the tax base will recover to some extent (but obviously not completely) in the medium term.
    And some of the Republic’s benefits are unusally generous.

  • kensei

    Dave

    I haven’t read the New Yorker article and I’m not bothered with magazines and their assorted agendas.

    Fuck me, David. NUCLEAR FAILAGE.

    What I am disputing is that doctors will perform procedures that are not required and that cause undue distress to poor granny for profit.

    Perhaps you should read the bloody article before going on a four post rant.

  • Mack

    Kensei –

    Irish social welfare payments aren’t particularly generous in European terms, just more generous than the UK – which is one the lowest payers in Europe http://notesonthefront.typepad.com/politicaleconomy/2009/03/dear-sarah.html.

    Generous social welfare is something like a Ponzi scheme – it absolutely depends on larger numbers of new workers coming through to support pensions (even at relatively low levels) and large numbers of workers to support other non-workers. Yes we’re in a severe recession now, which is cyclically reducing the dependency ratio (making this stuff obvious to us) – the fall in European birth rates will structurally do the same thing eventually.

  • Mack

    Casper

    Interesting comment. Efficiency as used in this context isn’t quite the same as it’s everyday use and is highly related to availability.

    In every country a limited number of resources / funds (state or otherwise) are available for providing health care – while potential demand for health care services in financial terms is almost limitless.

    Here is an article by Tim Harford that highlights this problem quiet well –

    http://timharford.com/2006/03/bitter-medicine/

    Ann Marie Rogers needs a drug, Herceptin, to save her life (she has breast cancer). The NHS refuses to pay for it. They have a bearucracy, NICE, which determines which services the NHS can make available to it’s patients.

    Because there are limited resources a decision must be made on treatments some how. Unfortunately treatments will always be unavailable to some who need them in any health care system. What efficiency in this context does, is deliver more effective treatments for a given spend.

    It is important to note that the Singaporeans spend less than half the amount the Irish do per capita (less than a fifth of what the Americans do). If we were to adopt and properly implement a more efficient service – we could deliver better health care (and more services) to more people. We don’t need to cut our spending to their level, but it would be desirable, in my opinion anyway, if we were to get more bang for our buck.

  • kensei

    Mack

    On a long enough time scale the population comes back into sync. The problem is short termism and a lack of generational acounting, rather than the inherent nature of the benefits. Ireland is not forecast for a structual problem for quite some time anyway.

    Second – give her 100,000? Fungability of money. She could blow it on coke to feel better, and we are left with the choose to let her die slowly or have some treatment. It is qualitively worse. Second, I can’t see how it fails to shoot up costs. Third, it may not be close to enough. Fourth, that is an extreme case where it is a likely fatal illness; insurance could probably cover this quite well if it was taken early enough. Harford might not see how its worse, btu I don’t se how many other people reacht he same conclusion.

  • Mack

    Kensei –

    Second – give her 100,000? Fungability of money. She could blow it on coke to feel better, and we are left with the choose to let her die slowly or have some treatment

    Mammy statism, eh? Do you really think I dying patient would blow cash for a life saving treatment on Coke? I’ve seen tons on fund raisers for ill children in time, and contributed occasionally too – to be honest – it never even crossed my mind they might blow it on drugs!

    1. You could give her a special medical services only debit card.
    2. There is evidence to the contrary
    3. In this case, yes I think it is
    4. There are many, many other such cases – and they are always going to be there. But is it better that we allow patients to choose between say a hip operation and going blind? Or is it better to have bureaucracy make that decision?

    I honestly don’t understand where the outright hostility to investigating alternatives to state based health comes from? Is the NHS the best model for health service, in your opinion? Could you supply evidence to back it up (no health service is perfect so it’s easy to find faults)? Also, bear in mind where we are in the south – our system is already a mix of public and private health and is significantly different to what you guys have up north..

  • Mack

    Kensei –

    Yes, private health insurance could well help in this case. However around 23-24% of her wages (employee and employers contributions combined) would already been spent on National Insurance.

  • Mack

    Kensei –

    The problem is short termism and a lack of generational acounting, rather than the inherent nature of the benefits. Ireland is not forecast for a structual problem for quite some time anyway.

    I agree on the short termism, but if the benefits aren’t self-sustainable it becomes a problem eventually. If not me for me, then my daughter and if not her then her children etc..

    I would not want them to be caught in a generation that thought it could rely on a generous state pension only to find, having supported their parents, that their weren’t enough workers to support them!

  • kensei

    Mack

    Mammy statism, eh? Do you really think I dying patient would blow cash for a life saving treatment on Coke? I’ve seen tons on fund raisers for ill children in time, and contributed occasionally too – to be honest – it never even crossed my mind they might blow it on drugs!

    There’s never been a bogus one? False positives? I don’t know what she’d do with the money. That’d be the point.

    1. You could give her a special medical services only debit card.

    Doesn’t matter. She’s now 100,000 better off.

    2. There is evidence to the contrary

    You are moving towards a US system a tendency to overconsume. Plus, centralised bargaining power? Bye.

    3. In this case, yes I think it is

    You cannot imply the general form a single specific case, Mack.

    4. There are many, many other such cases – and they are always going to be there. But is it better that we allow patients to choose between say a hip operation and going blind? Or is it better to have bureaucracy make that decision?

    It is not an apples or apples comparison. It’s not the same patients, Mack. And there is some evidence they are protecting people form a tendency to overconsume health care.

    I honestly don’t understand where the outright hostility to investigating alternatives to state based health comes from? Is the NHS the best model for health service, in your opinion? Could you supply evidence to back it up (no health service is perfect so it’s easy to find faults)? Also, bear in mind where we are in the south – our system is already a mix of public and private health and is significantly different to what you guys have up north..

    There are better European models I believe, but they pay higher taxes and charge and the NHS gets a lot of bang for buck. I don’t mind investigating other models – as long as more risk is not shifted to me, and as long as it doesn’t shift too much power to private comapnies. I just don’t like a lot of the suggestions made here.

  • GGN

    I called in due to the number of hits assuming that by this stage we we discussing Godwin’s law, the Cruthin and flags and yet we appear to be discussing social and economic policies.

    Well done youssuns.

  • Mack

    Kensei

    And there is some evidence they are protecting people form a tendency to overconsume health care.

    I would have thought the opposite. There are less GPs per capita in the Republic of Ireland than in Northern Ireland, yet I’ve never had to wait longer than 15 minutes to see one, as soon as I arrive at the GPs having made the decision I want to see one. One of the reasons for that I imagine is the fact you have to pay €50 each time you visit (and that the more patients a GP sees in a day the more money he makes). Better to ask a pharmacist, or google, or Nurse Line unless you are sure you need it.

  • kensei

    Mack

    It’s not really representative – and the lack of going to the GP in the first place due to expense is a problem in itself. The cost problem is what happens when the Doctors start suggesting treatments.