Socialization of Health Care

First Published: 2006-01-27

Government has completed its work for the implementation of "the long-awaited National Insurance (NHI) project." The objective is to "finance" an "affordable" universal healthcare system for all Bahamians. In other words, nationalized healthcare.

Evidence of the effects of Socialization of Healthcare is readily available. In England and Canada the results are increased cost for declining service. Why would The Bahamas be any different?

All enterprise whether private or government must take into account economic efficiency, stability and responsiveness to consumers. Can a government bureaucracy meet these objectives, or is the Blue Ribbon Commission's Plan primarily to serve political objectives and insulate consumers of medical care from the fact of scarce resources and knowledge of how they would be utilized.

There is no end of propaganda to promote government managed health systems and a shortage of truth and fact about the way they function.

Dr. Max Gammon, a British physician, and Nobel Laureate Dr. Milton Friedman explain why government bureaucracies cannot meet the objectives as set out in the Blue Ribbon Commission's Plan.

Gammon's Law

Dr. Max Gammon, a British physician who researches medical care enunciated a theory called Gammon's Law".

To explain the "disorder which for the past fifty years has surely been destroying our medical services", Dr. Gammon formulated a theory he called "the theory of bureaucratic displacement", which in a bureaucratic system is an "increase in expenditure will be matched by a fall in production". Such systems act like 'black holes' in the economic universe, simultaneously sucking in resources, and shrinking in terms of 'emitted production.'

Gammon's Law applies to all bureaucracies that are rigid systems, governed by fixed rules that tend to exclude individual initiative and eventually displace productive activity with counterproductive activity.

Dr. Gammon tells of working in a small hospital in which the quality of care in one particular ward was outstanding. When he returned years later he discovered the ward was "in chaos". He asked for the Sister who had previously run the ward so superbly and was told that she had been moved to administration. He found her in an office, where "she wept as she told me that she had been forced to leave her ward and become an administrator since her salary would have been reduced ….had she remained in her clinical post".

This anecdote illustrates "bureaucratic displacement". The focus of nursing had been changed from the ward and the patient to the office and the seminar room.

According to Dr. Gammon in 1948 when the National Health Service began there were 480,000 hospital beds. By the year 2000 the number had fallen to 186,000. Official statistics in 2000 indicated there were "just under 1,000,000 patients awaiting hospital admission. He described a close correlation between the increase in the numbers of NHS administrative staff and the fall in numbers of NHS hospital beds.

Dr. Milton Friedman in an article on American Healthcare for the Wall Street Journal in 1991 states that a "casual glance at input and output in U.S. hospitals indicate that Gammon's law has been in full operation in the US since the end of WW II and especially since the enactment of Medicare and Medicaid in 1965".

"Before 1940, input and output both rose, input somewhat more than output, presumably because of the introduction of more sophisticated and expensive treatment. The cost of hospital care per resident of the U.S., adjusted for inflation, rose at the rate of 5% per year from 1929 to 1940; the number of occupied beds, at 2.4% a year. Cost per patient day, adjusted for inflation, rose only modestly.

"The situation was very different after the war. From 1946 to 1989, the number of beds per 1,000 population fell by more than one-half; the occupancy rate, by one-eighth. In sharp contrast, input skyrocketed. Hospital personnel per occupied bed multiplied nearly seven-fold and cost per patient day, adjusted for inflation, an astounding 26-fold. One major engine of these changes was the enactment of Medicare and Medicaid in 1965. A mild rise in input was turned into a meteoric rise; a mild fall in output, into a rapid decline."

State-mandated and state run health services in The Bahamas will be no different from other countries where bureaucrats, not doctors make major decisions about patient care.

The Bahamas should take the "road less travelled" and support a framework for the private market to satisfy healthcare requirements.

Other articles on this subject, outlining pitfalls and recommending alternatives are available at here

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