Medisave Accounts in Singapore

by John Goodman,

In 1984, Richard Rahn and I wrote an editorial in The Wall Street Journal in which we proposed a savings account for health care. We called it a Medical IRA. That same year, Singapore instituted a related idea: a system of compulsory Medisave accounts. Through the years, my colleagues and I at the National Center for Policy Analysis have kept track of the Singapore experience, including publishing a general study of Singapore’s social welfare system in 1995 and a study of its health care system in 1996.

It’s taken about almost three decades, but all of a sudden Singapore has come to the attention of a lot of other policy wonks, including a book by Brookings, a whole slew of posts by Austin Frakt and Aaron Carroll, a good overview by Tyler Cowen and lots of links in all of this to other studies and comments.

Before commenting on the commenters, let me jump to the bottom line, which was completely missed by Austin and Aaron, as well as some others: No, Singapore does not have a free market for health care. What it does have is an alternative to the European/American welfare state, in which private saving and private insurance do what employers and governments do in other countries. The Singapore philosophy is:

– Each generation should pay its own way.

– Each family should pay its own way.

– Each individual should pay his own way.

– Only after passing through these three filters, should anyone turn to the government for help.

If the United States adopted a similar approach to public policy, there would be no deficit problem in this country.

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