Medical Savings Accounts: The Singapore Experience
Introduction
In 1984 Singapore adopted a system of Medisave accounts, individually owned accounts used to pay for many of the health care expenditures that would normally be covered by health insurance in the United States. The fact that people are spending their own money rather than that of a third-party insurer has helped to curtail Singapore's health care costs. Singapore spends only 3.1 percent of its gross domestic product (GDP) on health care, while the U.S. spends about 14 percent, yet Singapore's hospitalization rate is about equal to that of HMOs in the United States.
"The fact that people are spending their own money rather than that of a third-party insurer has helped to curtail Singapore's health care costs."
In addition, Singapore spends less than many of the other "sian tigers," while maintaining strong health statistics. For example, Singapore had an infant mortality rate of five per 1,000 live births in 1992, equal to that of Japan and lower than that of Hong Kong, which was six.1 But even with these low expenditures, the Singapore experiment has succeeded in expanding patients' choices and providing easy access to technology.
Since the U.S. Congress is moving to make tax-free Medical Savings Accounts available to the public, an examination of Singapore's experience should prove beneficial.2