Assessing A Bahamian National Health Plan

by Larry Smith

National Health Insurance:
The compassion of the Internal Revenue Service
The efficiency of the Postal Service
All at Pentagon prices!
-American bumper sticker

It was Benjamin Franklin who said: "In this world nothing is certain but death and taxes."

And some jokers would apply this to the government's proposed national health plan, because it is more concerned about raising money than keeping us alive and healthy.

Others complain that the government is introducing socialised medicine - but we already have that. The Ministry of Health currently offers universal access to publicly funded medical care at a cost of some $200 million a year.

The country's three main hospitals (the Princess Margaret, Sandilands and the Rand in Freeport) are run by a public corporation, and there are about a hundred government-operated clinics scattered around the country.

Just under half the population uses these tax-supported facilities, often paying nothing for treatment. The government wants to shift the cost of this healthcare from the Treasury to a new payroll tax levied on the other half of the population - who are already paying through the nose for private insurance and generally don't access the public healthcare system.

The commission pushing the government's plan has come up with an optimistic valuation of $235 million in healthcare costs to be financed by a 5.3 per cent tax on salaries up to $5,000 a month, split between employees and employers. But critics - including many doctors - say this is an unrealistic costing.

"They have no clue as to what this will actually cost even two to three years down the road," one doctor told Tough Call. "This is purely a political initiative that the government has manufactured as an election issue."

For evidence of the proposal's fiscal unreality, look no further than existing state enterprises. The government currently shells out $90 million a year to subsidise uneconomic operations like Bahamasair and ZNS. The electrical and telecoms monopolies suck up huge resources and return very little in terms of value, other than political patronage.

And in a few years, the National Insurance Board (which will presumably be administering the national health programme) will go bust without major reforms. Outgo at NIB has exceeded income since the early 1990s. And the government’s proposed health plan can be expected to be far more costly, because it will have to satisfy unlimited demand.

Shockingly, NIB operates with a 23 per cent administrative burden, compared to under 1 per cent for the national health systems of Canada and France (which face major challenges of their own).

Even if NIB gets its administrative costs (read salaries and perks for officials) under control and earns some revenue on its investments (read non-performing loans to other government entities), we can all expect to pay a lot more in contributions and get less back in benefits.

As one commentator put it: “managing such a (healthcare) programme and avoiding disasters will require an efficiency no national institution displays currently.”

Dr Duane Sands said the scheme will entrench and extend a system that is inefficient, overstaffed and so centrally restrictive that it will ultimately lead to a deterioration of healthcare in the Bahamas."

He argued that the existing system had to be reformed to provide better care, not just a different way of paying for services.

And that is really the crux of the matter. It is politically correct to talk about equitable access to healthcare for everyone. It is much more difficult to tackle the harder issues of quality, accountability and sustainability.

If the government wants to shift the cost of supporting our health infrastructure, why not just privatise the hospitals and clinics - at least those that are marketable (and you could subsidise the rest).

That would leave the Ministry of Health as a slimmed-down regulatory body. The private sector would have the burden of funding and operating healthcare facilities and the government would continue to subsidise those unable to pay.

And as a bonus, the government would gain hundreds of millions of dollars in extra income from the sale of currently underperforming state assets.

This strategy would also help to apply a key principle that should be worked into any entitlement programme in the Bahamas, where dependency and government handouts are a peculiar way of life.

The original healthcare working party set up by the PLP in the mid-1980s proposed a plan that allowed almost half the total population to escape any responsibility for their own care. That cannot be right - particularly when many health problems are due to poor lifestyle choices.

For example, HIV/AIDS has been the leading cause of death among Bahamians for the past decade. It is a major issue, both in terms of healthcare costs and economic development, because of its impact on the labour force. And as we all know, this disease can be prevented by responsible behaviour.

According to Dr. James Gwartney, a development economist at Florida State University, "making healthcare or anything else 'free' removes the incentive of both the buyers and sellers to economize. The result will always be soaring costs and waiting lines.”

The system that the government's commission has settled on is known as social health insurance. It operates in many European countries as well as in Israel, Trinidad and Costa Rica, among others.

These plans finance medical benefits for wage earners through mandatory earmarked income taxes, and the benefits are used to buy medical care from either the public or the private sector – with no opt-outs or exclusions.

"Let's hope the actuarial calculations are accurate," warned one industry source. "Group health is the most challenging in our business with only a 2-3 per cent margin. If this isn't put together right, it's doomed to bankruptcy."

Comments

[john dunkley]

As usual a very good article.

You bring into reality the fact that we have a National Health Scheme through our Public hospital and clinic facilities. To introduce NHI would increase demand for services far beyond what is currently required and what may be projected.

One only has to look at the frequent and often unnecessary use of the clinics under co-pay plans of private schemes to see how the demand for NHI would dramatically increase.

Maybe NHI is a way to fund the receivables of PMH?

[Joan Thompson]

Great article.

Doctor's Hospital has been around a long time. They no doubt have their ups and downs financially, but their "for profit" principle enables them to offer services not provided by PMH.

In earlier years, a group of Bahamian - and foreign doctors - mostly English, well trained physicians, tried to start up private hospital care -in competition with Doctors Hospital. I believe they had arranged for capitalization of the facility.

Although it is all history now, the reasons we do not have more private facilities has to do with government intervention.

With the Blue Ribbon "Scheme" - there will be 100% intervention. Bless us and save us

[tab]

I thought the article left a lot to be desired...it wasn't meaty enough, you just grazed the surface. But good start nonetheless.

[larry smith]

Wow. That's refreshing. Usually people complain about my long-windedness.

[tab]

what can I say...your always trying to tell a story :-o

[Dr. Dexter Johnson Leader the BNP]

As a medicolegal specialist with a distinction Masters in Medical law, I have studied the Bahamian Medical position since 1975 in more depth than perhaps any Bahamian. Recent Union Health Care Plan studies and group assessment at UKC establish the cost of this Health plan at between 365 to 550 dollars per taxable adult, depending on if you want a non-comprehensive as opposed to a comprehensive plan.
I have spoken on this issue in the National media. These figures will prove to be correct, and this Health Tax will prove to be the single worst financial measure of the post independence era. If the PLP are returned they will implement this bottomless pit of a tax. The BNP will have to undo it when elected.
see www.bahamianationalparty.com for more.