Why health-care costs are 75% lower in Singapore than in the U.S.

Here is a breakdown from OECD on Health expenditure per capita, 2018 (or nearest year).*

Observe that the U.S. leads the way.

George Shultz and Vidar Jorgensen write in the Wall Street Journal on Singapore’s “Market-Based” Healthcare System:

Does a real health-care market exist anywhere in the world? It certainly doesn’t in the U.S., where health-care providers don’t tell patients in advance about pricing, outcomes or alternatives. Consumers don’t know what they’re buying or how much it costs. And the costs are largely paid by insurance companies, which don’t spend their own money. With a health-care market this dysfunctional, little wonder the U.S. spends 18% of gross domestic product on health.

If the U.S. wants lower costs, better outcomes, faster innovation and universal access, it should look to the country that has the closest thing to a functioning health-care market: Singapore. The city-state spends only 5% of GDP on medical care but has considerably better health outcomes than the U.S.

…What does Singapore do that’s so effective?

…All health-care providers in Singapore must post their prices and outcomes so buyers can judge the cost and quality.

…Singaporeans are required to fund HSAs through a system called MediSave and to purchase catastrophic health insurance. As a result, patients spend their own money on health care and get to pocket any savings.

…The combination of transparency and financial incentives has led to price and quality competition so intense that health-care costs are 75% lower in Singapore than in the U.S.

…Singapore’s system of health-care finance shouldn’t seem foreign to Americans, nor should we doubt that it could work here. The U.S. has already seen that the combination of competition and price transparency can be successful: Witness the falling prices for Lasik and cosmetic surgery, which aren’t covered by insurance. (“A Real Market in Medical Care? Singapore Shows the Way“, WSJ, June 15, 2020)

*Source: OECD Health Statistics 2019, WHO Global Health Expenditure Database. Note: Expenditure excludes investments unless otherwise stated. 1. Australia expenditure estimates exclude all expenditure for residential aged care facilities in welfare (social) services. 2. Includes investments.