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TOr 9 in 10 Americans They have more health insurance than ever, but health care is less affordable than ever. up to 100 million Adults in the United States carry medical debt. Falling inflation forces people to decide between spending on medical care or other essentials like food and housing. People typically spend thousands of dollars on premiums before they start insurance. And rising out-of-pocket costs are only one side of the story: Health insurance premiums are also rising. Insurance cost supported by the employer A whopping $22,221 for a family It is in 2021 one third From the median family income.
The insurance system in the US is broken. Instead of continuing to plow money into insurance and expensive issues, families should save that money for future health care needs. That’s what they do in Singapore. People flock to them there. His own Health Care Needs Mandatory Individual Health Savings Account – Government acts as a safety net.
Singapore’s system has shown far greater success than the US insurance-based system, and at a fraction of the cost.
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Singapore issues. About 4% From the gross domestic product (GDP) on health care (US It takes 18%) and achieves. Superior health results. Certainly, the experiences of a city-state with less than 6 million residents and more than 330 million in the US are not directly comparable. But it is worth exploring how Singapore achieved its success.
Arguably the best part is for the country. Health website explains As “a financial system based on the twin philosophies of individual responsibility and affordable health care.”
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Healthcare in Singapore is funded both publicly and privately. They account for 41% of total health care expenditures. covered by the governmentHospitals cover most of the cost of treatment and keep strict controls on hospital prices to limit costs. People use personal health savings accounts, known as Medisev, to pay for non-hospital care. Medisave accounts are government-mandated, funded through payroll deductions, and controlled by individuals. To enable individual choice in how to spend health care dollars, the Ministry of Health Publishes the cost of health services.
There were health savings accounts. Approved in the US According to the Medicare Prescription Drug Reform and Modernization Act of 2011
When a Singaporean patient goes to a doctor, she is informed of the price up front and has the opportunity to find a provider who will charge a reasonable price for the quality she needs. She pays for the visit using her Medisave account. She doesn’t face sky-high charges or staggering bills.
In the US, patients are often completely in the dark about pricing and can’t afford to shop around for value. Costs are out of control because patients have no control. Putting patients back in charge of health savings accounts requires two simple things: empowering them to direct where their health care dollars go, and giving them the opportunity to receive the money before they take it. That’s what Singapore’s individual Medisave accounts and transparent rates allow.
In order to be able to spend his own money on health care, he needs to save a lot of money first. The good news is there is enough money to go around. People spend on average 316,000 dollars Lifetime health care services. While that may sound like a lot, you’ll pay more in health care premiums— Millions. Because costs increase toward the end of life, saving for health care like we do for retirement makes more sense than spending every month on health care premiums.
Since 2003, the use of health savings accounts in the US has been very limited. Most people are barred from having one — including everyone on Medicare and Medicaid — and annual premiums are low, at $3,650 for individuals and $7,300 for families in 2022. These restrictions preclude the use of an otherwise very attractive financial instrument. These accounts offer a triple tax advantage: annuity dividends reduce taxable income, investment growth in a health savings account is tax-free, and qualified withdrawals (which are used for medical expenses) are tax-free.
The US health care system should follow Singapore’s example by limiting the use of insurance to complex and unexpected events and moving routine and affordable care into health savings accounts.
Three simple steps can help make the American system more like Singapore’s:
First, the annual contribution limit for individual health savings accounts should be increased from $3,650 to $6,000 and allowed to accumulate if not used. Second, for low-income individuals, these accounts can be funded similarly to negative income taxes. Under the negative income tax, a taxpayer below the federal poverty line, adjusted for geographic cost of living, receives from the IRS the difference between their income and the poverty line. Similarly, a taxpayer below the poverty line would get a “top-up” of up to $6,000 in a health savings account. Third, before their deductibles are met, patients must contract directly with providers instead of going through insurance. That makes providers more competitive on price and more directly accountable to patients. Ultimately, this plan allows patients to choose and insurance companies to compete by creating products to attract patients.
US It will cost More health care per person than any other country in the world. This is because most health insurance is not a hedge against unforeseen risks, but rather an entitlement that facilitates overuse and overspending of services. Bringing health care dollars back to Americans and allowing providers to compete for those dollars is a great way to contain unsustainable spiraling costs and inefficiencies.
Elise Ames-Droth is the Washington, DC Area Health Policy Manager and a member of the Youth Voice Contribution Program. Philip Phan is Professor of Strategy and Entrepreneurship at Carey Business School and Professor of Medicine at Johns Hopkins University.
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