Challenges & Myths of a National Health Plan

First Published: 2003-09-09

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Presentation by Cardinal McHardy at The Rotary Club of East Nassau, October 18, 2002.

The scenario is all too common. A resident of Bain Town – let's call him Harry – works as much as he can to support himself and his family on pretty meager construction worker’s pay. His foreman tells him there is no company insurance plan. Like many Bahamians, Harry works 40 hours a week in a permanent position earning too little to afford good health insurance.

ALSO LIKE MANY Bahamians, Harry didn't think a whole lot about health care until the moment of truth. He probably didn't think about insurance at all. Now, Harry is one of hundreds uninsured, sick Bahamians who will attempt to battle his way into PMH or one of the public clinics that will provide him with care. If he goes to PMH he may spend many hours waiting, hoping that an anonymous person in a white coat will see him and will be able to interpret and treat his problem. If he’s lucky, his problem will be a minor one and he will walk away after a few hours of frustration. If he’s not he’s at the mercy of our civil servants and or the ever popular cook-outs. Not to mention the strain placed on our public health system.

Today, I wish to take a few minutes of your time and talk to you about the challenges & myths of a national health plan, but in order to do so sensibly I need to touch briefly on a few of the challenges facing this pivotal industry.

CHALLENGES

The underlying nature and risk of the healthcare business is most unpredictable and much more complex than even the traditional life insurance risk. Someone once said it is as unpredictable as marriage. You don’t always know what you’re dealing with, and when you think you’ve got it right it explodes in your face.

The challenges facing the healthcare industry are enormous.

From the insurance companies’ point of view there are many challenges, including maintaining reasonable premium levels and making a small profit.

From the physicians and healthcare facilities viewpoints, the reduction in earnings as HMO’s and Managed Care plans tighten the margins, and the reduction of medical errors are two of their top concerns. According to an article by the Australian Public Information Technology Company OAKTON called “Taking the pulse of healthcare industry” 98,000 people die each year due to preventable medical errors.

But, without a doubt one of the biggest challenges facing the entire industry today may be the ever-increasing rise in healthcare cost.

Finger pointers can not settle on who's to blame for healthcare costs.

In a USA TODAY article By Julie Appleby, she writes:

Insurers blame rising drug costs. Drug companies blame HMOs and hospitals. Doctors blame lawyers. And, it seems, everyone blames consumers.

The problem? Health care costs in the U.S. are continuing their rapid rise — averaging 13% this year and expected to be more than that next year.

"Everyone is a villain," says Drew Altman of the Kaiser Family Foundation, a research group. "Everyone is blaming everyone else because they're trying to shift the cross hairs onto someone else."

The blame game is heating up because no one really has an answer on how to slow the increases.

The first volley in the blame game came this spring, when an organization backed by health insurers released reports critical of the drug industry. Spending on prescription drugs, the studies said, grew more than 17% in one year — an increase of $22.5 billion — with much of the increase blamed on a relatively small number of expensive, often not very innovative drugs.

Not so fast, said the drug industry. New medicines can save money by keeping people healthier, and Health insurers should be encouraging the use of more drugs. And the drug-makers issued this kicker: HMOs spend more money on administrative costs — such as paperwork and CEO salaries — than on drugs.

And pity the poor consumers. Nearly all of the health care industry's players blame them for rising health care costs. Patients, they say, naturally want the best and latest treatments — but they also want others to pay for it.

"The people to blame in the end, the ones ultimately responsible, are consumers," says senior economist Christopher Thornberg of UCLA's Anderson Forecast, a national survey of businesses. "People don't adequately take into account the true costs of the services they're consuming."

While Mr. Thornberg was referring to health insurance his point is no less driven home by the story of the lawyer and engineer who were fishing in the Bahamas.

The lawyer said, "I'm here because my house burned down, and the insurance company paid for everything." "That's quite a coincidence," said the engineer. "I'm here because my house was destroyed by a flood, and my insurance company also paid for everything." The puzzled lawyer looked at the engineer and asked, "How do you start a flood?"

When something is free or appears to be free we abuse it. Consumer abuse or misuse is a refrain that's selling well among those looking for ways to slow rising health care costs. Already, employers are asking workers to pay more. The Anderson survey of 460 companies in the U.S. found that more than 70% expect to make changes to their health benefits next year, including reducing the level of benefits and increasing the amount employees pay toward premiums and deductibles.

While the above article is based on the US experience, we in the Bahamas are facing similar challenges.

And so, what’s the answer to this healthcare maze? As we in the Bahamas wrestle with the problems in our health care system, it is tempting to look elsewhere for solutions. It is commonly believed that one can control healthcare costs and provide quality care through national health insurance. But is this really true or is this just a myth?

The following are some common myths about national health insurance, gleaned from an article by:

Dr. Gerald L. Musgrave, President of Economics America, Inc., and

Dr. John C. Goodman, President of the National Center for Policy Analysis.

MYTHS ABOUT NATIONAL HEALTH INSURANCE

Myth No. 1

Countries with national health insurance have been more successful in controlling health care costs.

On the surface, this may appear to be so since the United States (one of the largest countries without a national healthcare plan) spends more on health care than any other country in the world, both in dollars per person and as a percent of gross national product (GNP),

But research has shown that this may be a real myth for the following reasons.

First of all, the United States is wealthier than other countries, and almost without exception, countries with more income spend more on health care. In fact, health economists have discovered that 90 percent of the variation in health care spending among developed countries is based on income alone.

Secondly, the United States has a much higher violent crime rate, heavier illegal drug use and a greater incidence of AIDS – all of which generate more health care spending, says Leroy Schwartz (Health Policy International):

And thirdly, in a private healthcare environment there is no limit to spending whereas in those countries with national healthcare systems, governments can and do limit health care dollars and tell hospital managers to ration the money they are given.

Myth No. 2

In countries with national health insurance, all people have equal access to health care.

One of the most surprising features of European health care systems is the enormous amount of attention given to the notion of equality and the importance of achieving it. Aneurin Bevan, father of the National Health System (NHS), declared that "everyone should be treated alike in the matter of medical care.”

Inequality in Britain? Such rhetoric rarely relates to the facts. Britain's ministers of health have long assured Britons that they were leaving no stone unturned in a relentless quest to root out and eliminate inequalities in health care. But, although an unofficial government campaign tried to suppress it, an official task force report (the Black report) concluded that there was little evidence of more equal access to health care in Britain in 1980 than when the NHS was started in 1948. Virtually every scholarly study of the issue has pointed to a similar conclusion. For example:

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