A better way to pay for medical expenses

The standard of living of past generations has improved significantly over a wide range of our lives, thanks to technological innovation and productivity. New shoes, a gallon of milk, a plane to visit parents, a coast-to-coast call, or a new TV takes only a fraction of the time compared to parents.

Healthcare was a surprising exception. Spending in the United States The best of any developed country in the world. Spending has almost tripled from 6% of GDP in 1970 to 18% in 2019, but the return is mediocre when compared to other countries.For most Americans, real wages Barely sprout For decades, medical expenses have been Significantly outweighed our ability to pay them..

Imagine a farmer’s market to understand why health care costs tend to stay high. We will deliver a shopping list while comparing quality and price between stands. We look at how ripe the peaches are and smell them to decide if it’s better to spend money on two apples instead. If you find a rotten apple in the bag, return it to a new one or take it to another stall next time.

Health care is different. Most of us don’t know what we are buying, how much it costs, that is, the basic input of any market. Sellers have a substantial information advantage, coupled with incentives to oversell to naive consumers. This is a toxic combination. We are often in a desperate state when we are sick or injured, which reduces our bargaining power. If we are insured, why bother when someone else is paying? If you are disappointed with the services provided, it is usually not practical to rely on them (try returning the hip prosthesis).

Both of these attributes play a healthcare system that favors the seller and disadvantages the consumer. Collectively, they have resulted in an unprecedented jackpot of wealth redistribution from consumers to providers of healthcare products and services.

What are your options?

For decades, the debate about health care has been out of control. Critics of the single-payer model used in Australia, the United Kingdom and Canada argue that lack of competition leads to reduced efficiency, longer latency and reduced innovation. They are right. Critics of the free market model argue that “service charges” create moral hazard, as more care means more costs. They are also correct.

Political debates also tend to confuse healthcare technology with healthcare.There was natural praise for how our collective ingenuity came about. 300 COVID vaccines have been used in a few months and 17 have already been used.. Technological advances have cut our lifespan by about half in the last century. But the discovery of innovative technology is a world different from providing care.

Is there a better way?

Singapore inherited the United Kingdom’s National Health Service after independence in 1965, but faced the same shortcomings that are being criticized today. It then adopted aspects of the American “free market” model, but experienced similar flaws as those outlined above.

After more than 50 years of trial and error, Singapore has learned from these flaws and developed a medical system that achieves equal or better medical outcomes below. 25% of US costs, about 40% of Australian, Canadian and European costs.. What explains much of Singapore’s success is that consumers have incentives to save. The mechanism is as follows. Every month, about 20% of wages are withheld, about half are pensions and the other half are medical expenses, and the employers are in agreement. The patient then uses his savings to pay for himself or his family. Thus, because it is a kind of dedicated currency, patients have “gaming skin” and have some interest in constantly monitoring invoices. We spend 75% of our lifetime medical expenses over the last five years, so on average we mimic pension actuarial, which results in early savings throughout our lives. When sufficient savings thresholds are met, excess savings are directed to the patient’s pension fund. Unused savings form part of the patient’s property that the spouse or child inherits at the time of death.

The in-game skin transfers power from the doctor or hospital to the patient. Power also comes with responsibility and self-sufficiency. Healthy eating, exercising, and smoking cessation have additional implications when consumers are rewarded for good behavior, as the cheapest form of health care is prevention.Concept of Buyer should be careful (Latin for “attention to buyers”), it’s important that it has rarely existed in health care transactions.

Patients who are sensitive to savings lead to more competitive costs. Patients in Singapore often ask their doctors, for example, if a generic version of the drug is available. The Government of Singapore requires hospitals to publish service prices on a regular basis and provides selected quality indicators online to facilitate transparency, knowledge and choice.Typical cost For example, hip arthroplasty in Singapore costs US $ 14,000, while in the US it costs US $ 40,000.

Increased transparency and careful eyes can help reduce the incidence of fraud and fraud. These cost an estimated US $ 272 billion annually in the United States alone, again showing the distorted incentives that arise from the service pricing model.

It will be a smartphone in the future

Healthcare is in the midst of its own 5G transition as smartphones radically change the way healthcare is delivered. Digitally empowered patients will promote health care from the bottom up and become more and more responsible for their own health care.

With 3.6 billion smartphone users around the world, predictive diagnostics, sensors and telemedicine are making great strides. First, they create a more equal competitive arena and reduce the amount of information benefits doctors have for their patients. IBM Watson, Or Ping An’s AskBob It provides increasingly accurate and user-friendly AI-based predictive diagnosis and treatment. In many cases, these are more accurate treatments than those issued by a specialist doctor, eliminating the need for patients to go to the clinic or hospital all the time. This is usually the most costly element of the health care value chain.

Such advances depend on patients who have incentives to take advantage of these tools. The Singaporean model fosters a struggle for progress and innovation, while the American model discourages both, and here’s the flaw.

Singapore’s healthcare system suggests that there is considerable room for improvement. Today is from architecture, tomorrow is from smartphone-friendly technology. We may be trying to achieve technological advances with services of scale and speed that have historically been limited to medical advances in products.

All of this suggests that the boring debate between single payers and the free market can be outdated, or at least anachronistic.

Health systems around the world are under pressure to do more at less cost. With the rapid aging of the population, the bad roads of costs above wages are programmed to accelerate. Someone in their 80s spends 6 times a yearOn average, than someone in their early teens.

Maybe now is a good time to challenge the doctrines that have hindered us. Why limit the discussion to two inadequate and outdated models? Instead of lamenting the past, why not review it and ask yourself the best system for the future?

Perhaps it’s worth trying to combine the in-game “Singapore Light” version of the skin with the good old Silicon Valley ingenuity.

This article was written based on research input from Olivia Bisbee and Donald Carlow.

This is an opinion and analysis article.The views expressed by the author or multiple authors are not necessarily Scientific American.