A special report on business in America: : Life is expensive | The Economist.
If there’s anything I appreciated about Singapore – It’s the relentless efforts of the government to keep healthcare costs down and managable, without affecting the long term sustainability of the nation’s health care plans. Not many locals can appreciate how hard the government is working to keep healthcare costs from escalating. Be it through means testing or through shifting the medical burdens of a patient to their family. It is certainly not nice to have these burdens shifted to your own family (when you are one of the “victims”, but it is one way of ensuring the long term sustainability of our nations to cope with the increasing health-care costs.
If there’s anything worth mentioning in this article, it’s this one -
Employers can buy health insurance with pre-tax dollars. Individuals cannot. This creates an agency problem. When a typical patient goes to the doctor, he has no idea what anything costs. He pays only about 15% of the bill, so if the doctor recommends something he will probably say yes. The doctor gets paid for everything he does, so he has a powerful incentive to perform costly, unnecessary procedures. Besides, he may be socked for damages if he omits a test that a lawyer subsequently convinces a jury might have been useful. The costs are passed on to insurers, who pass them on to employers in the form of higher premiums, who then pass them on to workers in the form of lower pay.
My personal feel of the insurance coverage policies in Singapore – They are pretty sub-standard for the policy owners. I remembered my insurance coverage back in the States for a premium plan was based on an exclusion policy – ie the policies stated upfront which medical expenses they will not cover. The Singapore insurance industry policies only states which policies they will cover, leaving the policy owner to handle the whole universe of medical expenses. This is probably one way to contain the healthcare costs for the insurers. However, it led me to be really skeptical on the value of acquiring insurance in Singapore.
There are many reasons why American health care costs so much. Americans love fancy new medical technology. New drugs, for example, are prescribed a year or two earlier in America than in Europe, and do not come cheap. American doctors pay a fortune to insure themselves against frivolous lawsuits. A study in the New England Journal of Medicine found that even in cases where no medical error was found, plaintiffs received payments a quarter of the time. And half of medical malpractice payments were gobbled up by lawyers and overheads.
We always believed America to be on the fore-front of technology innovations, and these innovations are supposed to be driving down costs. But are they doing what they claim? There are times I’ve felt that the high level of entrepreneurial activities is actually caused by the number of internal problems that the country has. Lawsuits, insurance, and government regulations has raised the costs of doing business to an extent that the consumers are the ones who suffer. The lack of a proper public transport infrastructure makes it difficult for the lower class to continue on with their daily activities. The poor goes into a deep downward spiral of being poor always. Check these two articles out on the high costs of being poor in America.
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