A healthcare utopia…the impossible dream. Part 2.

First Published: 2003-12-20

Following is the second and final part of the text of a speech written by Rick Lowe and Joan Thompson, directors of The Nassau Institute, delivered to the Abaco Chamber of Commerce on Thursday, December 11, 2003 titled, A healthcare utopia…the impossible dream.

There is also some inconsistency in the verbiage being bandied about by the Commission. On the one hand there are complaints that the Bahamas should pay less for the drugs used to treat AIDS, despite the country's relatively good economic performance when compared to our neighbours like Haiti. But on the other hand, it is suggested that successful people should pay more to help their fellow man obtain healthcare. This rhetoric is most unfortunate as it encourages people to believe they have a right to other people's money to pay for their healthcare.

Studies have shown the consequences of a Socialised healthcare scheme are:

1) Costs escalate and the quality and available services decline.

2) A percentage of the highly trained and competent doctors will eventually opt out, leaving mediocre or older physicians and little incentive for young doctors to return home.

3) In-hospital training standards would be expected to decline.

4) Physicians will discover that up to 25% of emergency cases will not be enrolled. And, if treating patients eligible for treatment is a condition of their getting paid (as is normally the case), then these doctors will be working part of the time for no pay. And,

5) Care to the general public will be rationed.

We have already said that no information regarding a cost benefit analysis has been released to date, so one wonders how pricing scenarios can be released to the public? Scenarios we might add that will increase the cost of doing business.

Here are a few assumptions based on the various pricing scenarios released by the Commission.

As you can see from these assumptions, a company with 50 employees earning an average salary of $300 per week, the least an employee might expect to pay is $3 per week, to a high of $18.45 per week. This company can also expect to pay from $0 per week to a total of $72,150 per annum for their 50 employees ($27.75 each per week). The higher rates are obviously comparable to private health insurance rates, so what is the point of setting up another bureaucracy that will inevitably waste taxpayer dollars? Also, it is unlikely the services envisioned can be provided for the rates at the low end of the scale.

We would like to suggest that our leaders do the responsible thing and encourage every citizen to purchase their own health insurance leaving the state to do the important things like maintain the country's infrastructure, protect our lives and property, and maintain independent courts and the rule of law.

Before going further government should clean up the abuse and waste in the public system that many professionals will tell you exists, and back off for the sake of the sick and the healthy and everybody in between.

For example, the Hospital Authority can improve operating efficiency by:

1. Collecting from everyone with insurance.

2. Changing the notion of healthcare as free for all.

3. Outsourcing to others who can provide service at a lower cost, and

4. Designing a sliding scale for use with means testing so that all who can afford it pay something, and those who cannot pay…do not.

To do this means we need a real credit bureau and the ability to verify means. Government should expedite these issues rather than go into the business of health insurance.

In his March 2002 booklet, Six Questions Everyone Should Ask About Health System Reform, Dr. Jesse S. Hixson, Principal Economist at the American Medical Association, gives us a great stage from which to leap into this mammoth discussion:

His six questions are:

1. HOW DOES THE PROPOSED SYSTEM CONFRONT SCARCITY?

No system can meet the demands for medical care in the quantities that are generated when patients view it as free.

2. IS THE SYSTEM AN EQUILIBRIUM OR A DISEQUILIBRIUM SYSTEM?

A healthcare system that tries to insulate medical care from scarcity will be unstable from both the economic and political standpoints. People will try to subvert the rationing devices that are used in place of market price adjustments. In contrast, equilibrium systems reach a balance that produces solutions that most people can live with.

3. WHAT IS THE ROLE OF PRICES?

Most health care problems related to rapid expenditure growth, are due to the absence of a proper price system. Because their medical expenses are covered by prepaid benefits, most consumers are barely aware of the costs.

Consequently providers have not faced strong pressure to compete on the basis of price and have faced only weak incentives to produce efficiently.

4. ARE INCENTIVES CONSISTENT WITH REFORM GOALS?

Without cost conscious consumers on the demand side there will be no incentive for serious market price competition, efficient production, or consumer-oriented service on the supply side. Consequently providers of services do not face market pressure to compete on the basis of price, but to treat resources as if they were essentially free.

5. WHO DETERMINES WHAT HEALTHCARE IS PRODUCED AND WHO GETS IT?

If differences on the approach to determining what gets produced and who gets what, its health systems problems cannot be resolved.

6. HOW WILL THEY KNOW IF IT'S WORKING?

The best information comes from the market, and correctly structured incentives and pricing mechanisms guide both public and private systems automatically toward their goals.

If the country does not consider completing a study to answer these six important questions, there can be no doubt the Socialized Healthcare scheme is doomed for failure.

This study should not be headed up by a local physician. An individual with a varied background beyond Canada and Bermuda should play an integral role. This individual should not be biased toward a Socialized system or any other system. We need objectivity, health coverage experience and honesty.

Another member of the Nassau Institute recently expressed that, government should "also listen carefully to the professionals who are still practicing under a Socialized system, and who have reached their income cap and only work part time, even though there is a shortage of skilled medical practitioners-a shortage that results in patients dying unnecessarily. Of course, they refuse to work for free."

We must all bear in mind that as we allow the state to encroach on more and more of our lives, we are invoking serfdom, or to use more dramatic terminology…being enslaved to the government.

A quote from Friedrich A. Hayak's, The Road to Serfdom seems very appropriate as we are…after all…discussing the way toward a better Bahamas:

"To build a better world, we must have the courage to make a new start. We must clear away the obstacles with which human folly has recently encumbered our path and release the creative energy of individuals. We must create conditions favourable to progress rather than 'planning progress'.

The guiding principle in any attempt to create a world of free men must be this: A policy of freedom for the individual is the only true progressive policy."

Before the powers that be get off the tangent that we are na?ve conservative's, we reiterate that we would suggest our leaders do the responsible thing and encourage every citizen to purchase their own health insurance, leaving the state to do the important things like maintain the country's infrastructure, protect our lives and property, and maintain independent courts and the rule of law.

So in summary, the government leadership should:

1. Improve the operating efficiency and reduce the waste in the public hospital system.

2. Conduct means testing and charge user fees commensurate with costs.

3. Promote individual responsibility and encourage people that are working to pay their own health insurance through private firms.

4. Prepare and present a proper study of the costs, benefits and pitfalls of the National Health Insurance Plan to all Bahamians, and

5. Answer the six questions proposed by Dr. Hixson.

We are all aware of the spiralling national debt of The Bahamas, and if healthcare is Socialised and run by the government…there will be a wake up call for the utopian dream. However, it may come too late to prevent damage to the economic stability of The Bahamas.

So in closing, we borrow a phrase from comedian Fred Allen: we are hopeful that this 'blue ribbon commission' is a gathering of important people who singly can do nothing, but together can decide that nothing can be done.

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