I am taking a shot at formulating my own national policy. In this post I plan to eliminate the subsidy system as we know it. Let me begin by giving my definition of subsidy.
Definition of subsidy: Forcing A to bear the partial expense incurred by B.
Based on the above definition, some subsidies like the HDB subsidy is not counted as one. Other than that subsidy is inherently unjust. I propose to eliminate most of it and residents are to pay the full cost of government services. In addition, I propose some measures to ensure the cost of living to be affordable to the citizens like negative income tax.
Of course, the above policy does not cover all of the government’s functions. There are functions cannot be so easily priced like the role of police, army, fire fighters, judges etc. These roles are to remain as usual but services with direct usage like healthcare and education needs to be reformed by charging full cost to the users.
Does this make us a less caring society? The answer is “no”. A truly caring society is a society where people help the less fortunate voluntarily, not by force. The policy of subsidising the poor is achieved by forcing to rich to help the poor. This does not make the rich to be more caring. Likewise, for the policy of subsidised healthcare. It is achieved by forcing the healthy to pay for the medical expenses of the sick.
Let us take healthcare as an example. Is it just to force people who do not go to the hospital to pay a part of the cost of those who do? Some may argue that any one of us have the chance of getting hit by a car or being diagnosed with some cancer. So, it should be the benefit for all of us. I agree on that but there are also many diseases that are linked to lifestyles.
For example, those who live a sexually active lifestyle will have a higher risk of being infected with sexually transmitted disease. I have no objection to the man’s choice of such a lifestyle but he should also respect my freedom in not wanting to contribute to his medical funds should he be infected with those disease. The same can be said for those who maintain a healthy lifestyle and don’t eat meat. They should not be forced to pay for the medical expenses of those who do not care for their health.
So, my plan is to create a system where individuals pay the full cost for the services used with some exceptions (like the police etc) and government funded charity should be kept to the minimum.
This does not mean I am not aware of the high medical expenses should the unexpected happens. How should we deal with this? The answer is in the promotion of cost effective healthcare insurance. When I say that, I am referring to the insurance that people have the choice on whether they want to take. It should not be forced. In order to ensure the plan to be affordable, premium should be made as low as humanly possible.
In order to do that, I propose the following steps:
1. Liberalise the entry requirement for insurance companies in order to create more competition.
2. Allow the public to buy insurance directly from the companies to eliminate commissions.
3. Allow limitations to the insurance plans to reduce premium.
In the first point, the only legislation we need is to ensure those insurers to pay up when it is time to do so. Other than that, there should be minimum barrier of entry. A more competitive market will ensure the lowest insurance cost.
In the second point, commissions form a significant portion of the insurance premium. If the public can get their insurance directly from the insurance companies, then they can save the commissions. What about those who need advice on what to buy? They can seek insurance professionals to advise them for a fee. Here is an example: Instead of paying $100 in commissions, the public can save the money and pay $50 as advisory fee for a professional to advise them. It is still cheaper and better.
For the third point, one needs to understand that insurance companies make their profit in getting paid to take up risks. Each time a client gets admitted into the hospital, the company has to fork out a lot of money. So, if we can help them to reduce their risks, then it must lead to lower charges. Here is an example. Based on my current lifestyle, I know I will not get any sexually transmitted disease. I can tell my insurance company to exclude that from my health plan. This means if I ever get admitted to the hospital for sexually transmitted disease, the insurance company have my permission in not paying a single cent. This will reduce their risk. In return I expect them to reduce my premium accordingly.
So much for insurance.
I am also aware that there are many poor people who cannot make ends meet. How can they survive if they have to pay full costs of everything? The answer is in the implementation of negative income tax. This means the government will use tax-payers money to top up the cash income of the low income earners to enable them to live decent lives.
I propose 2 categories of recipients for the top-up:
2. Able bodied.
Those in Group 1 will receive their cash top-up of up to $1,000 per month with no other conditions. This should be the minimum charity at the government’s expense. The potential for abuse is low because it is very unlikely for anyone to chop off their legs for the $1,000.
Those in Group 2 will be different. In order to qualify to receive the top-up, the recipients must be answerable to their assigned career coaches. The career coach’s job is to help the recipients to move to the higher salary bracket. The coaches will identify the obstacles and recommend steps for the recipients to follow. For example, if the problem is the lack of education, the coach will recommend the recipient to take up night classes. The expense of his class will be paid fully by the recipient using the money from the top-up. The government will not spend a single cent more on them.
Should the coach find the recipient to be not cooperative or have no intention to improve, then he will recommend the top-up to be cancelled. The public should realise that the cash top-up is meant to help the poor to be rich. It is not meant for them to stay poor. Tax-payers’ money should not be wasted on those who have no intention to improve.
That is all for now. I will discuss the education plan in my next post.