Socialized Healthcare for The Bahamas

First Published: 2003-09-22

The Blue Ribbon Commission on National Health Insurance declared on September 2nd that National Health Insurance is the best way to provide Bahamians with equitable access to quality health care services. The Commission contends that it has examined all alternatives; and its proposal would provide Bahamians medical care regardless of cost, without exclusions for pre-existing illnesses and regardless of age in return for their paying an affordable amount into the system.

As there are indications that the Commission has patterned its proposal on the Canadian system and that costs are still pending, let us look at how it works for Canadians.

The Canadian Alternative.

The Government of Canada Nationalized health care forty years ago following the example of Great Britain and during a period of nationalization of other so-called “essential” services.

One generation later many of the “essential” services were “denationalized” as privatization became the trend. However changing to a market driven system in health services is difficult in spite of the obvious fact that the free market supplies all manner of other “essential” goods such as food, housing, transportation etc. and we hardly bother to wonder how or why it works so well.

Canada continues to struggle with a “single provider” system even as increasing awareness amongst the public and physicians that the quality and supply of services are inadequate.

Three years ago, the Canadian government appointed a commission to investigate health services. It took fifteen billion dollars and two years for the report that concluded the problem is insufficient funding. In addition, it recommended limiting private suppliers.

This is classic government bureaucratic socialism as described by Dr. Milton Friedman:

If you start a program that is a failure and you are in the private market, the only way you can keep it going is by digging into your own pocket. That is your bottom line. However, if you are in the government, you have another recourse. With perfectly good intentions and good will nobody likes to say ‘I was wrong’ when you can say, ‘oh, the only reason it is a failure is because we haven't done enough.’”

The Fraser Institute has been reporting on the delivery of health care to Canadians since 1978. Their objective investigations use hospital waiting lists as one measure for assessing the delivery of certain services. The waiting lists vary from province to province but overall they lengthen each year.

The ideal of “equal” access turns out to be untrue. The Fraser studies find discrimination in who gets the service. For example “cardiovascular surgery queues are routinely jumped by the favoured and politically connected, suburban and rural residents confront barriers to access not encountered by their counterparts in urban centers and low income Canadians have less access to certain kinds of treatments and have lower survival rates than their higher income neighbours”. Physicians adapt to shortages by using a system of triage that sorts patients into three groups; those who are beyond help, those who benefit greatly from immediate care, and those who can wait.

A Lesson for the Bahamas

Recognition of a fundamental law of economics is essential before nationalizing health care.

Legislation cannot repeal the non-legislated law of demand and supply. The lower the price, the greater the quantity demanded, and at a zero price, the quantity demanded becomes infinite. It follows that some method of rationing must be substituted for price and that invariably means administrative rationing”.

Studies of the Canadian system show that in spite of pumping more and more money into the system rationing rules and waiting lists lengthen. Of twenty-six OECD countries with universal access, an age-adjusted study shows that Canada spends 11.7% of its GDP, the highest of all the countries in the study. In the Bahamas, at this level of spending financial stability will be the casualty and rationing the rule.

Increasing spending, Increasing demand

In the U.S. and Canada healthcare is a sizeable and growing market. Economists show that at the current rate healthcare will represent one third of these economies.

The growth in healthcare can be viewed as an opportunity for innovative healthcare insurers and suppliers in a competitive market. Efficiencies and reliability are critical factors not characteristic of government run programs anywhere. No leap of faith is required to trust the private market when it is obvious that it supplies equally essential products and services like food, transportation, housing, communications etc. at affordable prices.

It is universally acknowledged that technological development in almost all areas of western economies has lowered costs, so that the fraction of national income spent on food, transportation, communication, etc. has gone down. Resources are released thereby to produce new products or services. In the case of nationalized healthcare the reverse occurs; there are escalating costs for diminishing returns.

A key difference between medical care and the other technological revolutions is the role of government. If we relied on government to be the sole provider of food, housing and all the other essentials, we would have a living standard closer to that of the 12th century.

Investigation of ways to provide health services is well worth the effort. However, misleading the Bahamian people to trust that government can guarantee universal care and “stable financing” is morally wrong.

An Alternative.

There are alternatives to government-managed systems. The investigations should first acknowledge that individuals have a personal responsibility in their own health. Healthcare (or any other care) is not a “right” belonging to anyone if it forces others…doctors for instance…to fulfill that “right”. To fall into the trap of government provided services leads to the untenable situation where nobody is responsible for what they do but all become responsible for what somebody else does.

An option that involves personal responsibility for one’s own health is Medical Savings Accounts. According to the National Center for Policy Analysis, they are flourishing in South Africa where they cover 4.6 million residents, more than any other type of private insurance, and their popularity keeps growing.

The NCPA reports, “For much of the past decade, South Africa enjoyed what was perhaps the freest market for health insurance anywhere in the world. After it deregulated its insurance industry in 1994, virtually every type of health plan sold in the U.S. was made available there; and after a favorable ruling from tax authorities, employer’s contributions to Medical Savings Accounts received the same tax breaks as payment of third-party premiums. Thus, in South Africa, MSAs have competed against other forms of health coverage on a level playing field, and in just six years have captured more than half the market for private insurance.”

Conclusion.

Experience in Canada suggests that the Health Commission in its September 2nd statement is naive in its Utopian belief…its "impossible dream"…that the country can afford a system where everyone is entitled to services regardless of cost. Such naivety can only be dispelled with a full disclosure of the Commission’s analysis and thinking and with full consideration of costs and the effect on the medical profession. None of these has happened.

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