Feature Article: Singaporeans are healthier because they are wealthier

If government is serious about wanting South Africans to become healthier and for everyone to have access to a more efficient healthcare system, it should look to Singapore where life expectancy at birth is nearly 30 years longer than in South Africa – 82 years as opposed to 53. The reason Singaporeans live longer, healthier lives is no secret; the average Singaporean is roughly five and half times wealthier than the average South African.

When Dr William Haseltine, former professor at Harvard Medical School and Harvard School of Public Health, was in South Africa last month to promote his new book, Affordable Excellence, The Singapore Healthcare Story, he suggested that, given the South African government’s desire to reform healthcare in South Africa, we should consider adopting some aspects of the Singapore model because, “(It’s) an easier model for people to understand and emulate, rather than a country that has been wealthy for a long time”.

That Singaporeans enjoy some of the highest levels of care and can expect to live long and prosperous lives has to do with the fact that the country has embraced institutions that respect personal and economic freedoms. According to the Heritage Foundation, “South Africa has been losing ground on economic freedom for five years...The foundations of economic freedom are neither well established nor strongly protected. The judicial system remains weak and vulnerable to corruption, undermining the rule of law and prospects for stable long term economic development”. Whereas, it finds that “(Singapore’s) well-secured property rights promote entrepreneurship and productivity growth. A strong tradition of minimum tolerance for corruption is institutionalised in an efficient judicial framework, strongly sustaining the rule of law”.

Health care spending per capita (measured in constant prices on a purchasing power parity basis) is roughly three times higher in Singapore ($2,787) than in South Africa ($942).

Indeed, Singapore has many characteristics that are worthy of admiration. It has a GDP per capita of $59,711 (measured on a PPP basis); it has low levels of unemployment (2%); a strong economic growth rate of 4.9 per cent (5.7% five-year compound annual growth rate); and relatively large FDI inflows ($64 billion per annum) for its small population (5.3 million people). In contrast, South Africa has a GDP per capita of $10,973 (measured on a PPP basis); an official unemployment rate of 24.9 per cent; a growth rate of 3.1 per cent (2.7% five-year compound annual growth rate); and FDI inflows of $5.8 billion. South Africa’s population of 50.6 million people is roughly ten times larger than Singapore’s.

If South Africans want better health outcomes then we should be focussing on the institutions that we know result in higher levels of economic growth. We need to embrace free market capitalism, which is the surest way to create wealth and the only means to eliminate poverty.

South Africa’s proposed National Health Insurance (NHI) is premised on a principle of compulsion – an anathema to personal and economic freedom. Although it’s not clear how the NHI will operate yet, it has been suggested thatitwill be funded out of general taxes as well as a compulsory dedicated payroll tax shared between employers and employees. All contributions will go into one central fund that will be administered by a government agency. Every citizen will be able to access these funds so that healthcare will be free at the point of service for all South Africans regardless of whether they contributed to the fund or not.

For many years the Free Market Foundation has suggested that if government views “health care for all” to be politically essential, it could require the population to privately and individually purchase mandatory cover to insure against catastrophic health-related events but otherwise leave people to provide for their own and their families’ medical-related and other needs. Furthermore, instead of the governmentitself undertaking the management of taxpayer-provided funds intended for covering the medical costs of the poor, it should put the task out to tender. In the same way as people have many options to choose from in household insurance, car insurance and myriad other products and services, publicly-funded patients will then have a multiplicity of medical schemes to choose from. Competition between public and private hospitals and clinics to win business from taxpayer-funded public health insurance beneficiaries will ensure the best service for the best price.

It is only with economic growth and increased incomes that South Africans will gain greater access to medicines and hospital services. Government should therefore focus on adopting policies that foster economic growth by increasing the level of economic freedom in the country. The evidence that greater levels of economic freedom and increased wealth lead to better health outcomes is clear and unambiguous. Evidence from the Economic Freedom of the World (EFW) report produced by The Fraser Institute, demonstrates that life expectancy is about 20 years longer in countries with the most economic freedom (80 years) than in countries with the least amount of economic freedom (62 years).

Instead of promising ‘free health care for all’, government should concentrate its efforts and scarce taxpayer resources on those people who truly cannot afford health care by acting as financier and purchasing for them the best possible care available. To do this, it can and should enlist the support and help of the private sector by contracting out to them those services that they can provide more efficiently. Government should also enlist the help of charities and philanthropists wherever possible. Private charities based in communities have a very good idea of what services are needed and they are not a burden on taxpayers. Empowering individuals to choose their healthcare options and encouraging private sector competition is the best way to utilise scarce resources efficiently.

Government’s aim should be to get South Africa to rank higher on the world indices and concentrate on freeing up the economy to promote entrepreneurship and productivity growth, thus increasing job growth, reducing unemployment and displaying less tolerance for corruption by applying the rule of law. As has happened in Singapore, good health care in South Africa will then follow naturally.

Author Jasson Urbach is a director of the Free Market Foundation and of the Health Policy Unit. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

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