Bahamas Healthcare Plan Parallels US Reform Debate

by Larry Smith

Before the 1920s, people didn't give much thought to healthcare. You could die from infectious diseases like cholera or from "natural" causes, and medical technology was so poor that most patients were treated at home.

In fact, the chief cost associated with illness in earlier times was the lack of pay when sick people couldn't work. But all that changed after the Second World War, when two sharply different approaches were taken in Britain and the United States to deal with the rapid growth of medical technology and costs.

The British set up a National Health Service in 1948, in the belief that universal access to healthcare was part of the structure of a civilized society. Prior to this, hospitals were operated by local governments or charities and many people could not afford care. The publicly-owned NHS is financed by taxes, with services free to everyone at the point of use.

In America, doctors and hospitals had set up pre-paid health plans called Blue Cross and Blue Shield well before the war, and their success encouraged commercial insurers to move into the market. Since wartime controls prevented employers from using wages to compete for labour, companies began offering insurance plans as benefits.

After the war this employer-based system of health coverage was promoted by government tax exemptions. And today about 84 per cent of Americans are covered by some kind of health insurance. The poor and elderly are covered by public plans (Medicaid and Medicare) that were introduced in 1965.

Our system resembles the American approach. Historically, government was the main healthcare provider, with the Princess Margaret Hospital starting out as a poorhouse in the 19th century. But with rapid private sector expansion after the war, half the population is now covered by health insurance while the other half relies on tax-funded facilities.

Government-run hospitals and clinics consume a quarter billion dollars a year, and hundreds of millions more are needed to build new hospitals and make other capital improvements as the population grows and demand for new medical technology increases.

And the risks falling on the public sector are increasingly those who are sicker, poorer patients with chronic illnesses, those who have been excluded from private cover, retirees who fall outside the private insurance schemes, and those who require long-term care and post-traumatic rehabilitation.

This funding dilemma has led successive governments (going back to the 1970s when National Insurance was launched) to dream about a universal health system funded by payroll taxes. A plan was introduced in 1989 but never implemented, and a new plan was formulated during the Christie administration, with enabling legislation passed just before the last election in the face of serious doubts about sustainability.

The present government has balked at implementing such a comprehensive plan at a single stroke - pointing out that free medical care is already available to schoolchildren, civil servants, the indigent and pensioners. According to Health Minister Dr Hubert Minnis, the priority must be to strengthen the existing system, while placing much more emphasis on preventive care and education.

It may be helpful to view our health reforms in the context of the debate that has been raging in the US ever since Barack Obama was elected a year ago. The goal of reform in the US is to ensure coverage for the 40 million Americans without insurance, to prevent insurers from denying coverage because of pre-existing conditions, to cap out-of-pocket expenses and to help low-income earners buy insurance.

Soaring healthcare costs are also cited as a key reason why reform is being pursued, as well as why it is being opposed so vociferously. And we should not lightly brush these concerns aside. Health costs in the US (the only rich country without universal coverage) were 16 per cent of GDP in 2007, compared to 10 per cent in Canada and 8.4 per cent in Britain. Yet despite this heavy spending, health outcomes in the US are below OECD averages.

A recent article in the Economist magazine reported that: "On the most basic metric of life expectancy at birth, Britain (79.1 years) outscores America (77.8). A similar story emerged from a study in 2006 that used direct measures to compare the health of middle-aged people: the Americans were sicker than the English...A 2008 study that compared death-rates for treatable illnesses among the under-75s, placed Britain sixth among 19 advanced countries, with America coming last."

The Economist concluded that, while America offers very good clinical care, too many people lack cover or fret about losing it. And while the British cover everyone at a much lower total cost, patients have less clout and wait longer for treatment. In short, both countries need reforms to bring about better and cheaper care.

Bahamian health outcomes are worse than those in either the US or the UK. The CIA’s projections for 2009 infant mortality rank the Bahamas as 93rd in the world - behind most Caribbean countries, as well as a whole host of much poorer countries. And the estimate for life expectancy at birth is only 66 years.

Despite these results, the Bahamas spends about 7 per cent of GDP on healthcare. Clearly, we need better value for our healthcare dollars, and at the same time we must be careful not to dig ourselves into a financial hole we can't get out of. A massive expansion of our grossly inefficient public sector combined with decisions that are driven by politics are the quickest way to fall into that trap.

This was borne out in a 2007 study by Health Canada of our proposed NHI plan. That report said costs had been underestimated and the plan would likely be unsustainable because it promised universal access to a broad range of benefits with no point of service charges in the public sector - a more ambitious programme than any OECD country had attempted.

There are lessons to be learned in this regard from the introduction of Medicare and Medicaid in the US in the face of bitter opposition from doctors, drug companies and the insurance industry during the 1960s. President Lyndon Johnson's point man at the time was health secretary Joseph Califano, who had some interesting things to say recently about the current healthcare debate.

Califano acknowledged that policymakers in the 1960s had vastly underestimated the rising cost of medical technology, as well as the extraordinary leap in life expectancy. And he concluded that the best way to curb costs today "is to put as much profit in prevention as there is in acute care, and to put financial gain and pain into how individuals take (or don't take) care of themselves."

That seems to be the track we are on now in the Bahamas. According to Dr Minnis, the goal is to realign medical spending and priorities to promote healthy lifestyles. The fact is that most of our healthcare challenges are lifestyle diseases. Cancer, AIDS, diabetes, stroke, heart attack and kidney failure top the list of modern medical problems in the Bahamas - and they all are largely preventable with education, diet and medication.

In his address to parliament on the drug plan, Dr Minnis described the impact of these chronic diseases on the public health system: "Today, 60 per cent of our population dies from chronic diseases, 48.5 per cent of our medical wards are occupied by patients with chronic diseases, our emergency rooms are bombarded by patients suffering from chronic diseases. All this will be addressed with our soon-to-be-introduced national drug plan."

Initially, this plan will cover senior citizens for prescription drugs to treat arthritis, asthma, breast cancer, diabetes, glaucoma, high cholesterol, hypertension, heart disease, major depression, prostate cancer and psychosis. It is unclear whether all seniors will be covered or only NIB pensioners (about 70 per cent of the total), but the drugs will be available from private pharmacies as well as from government dispensaries. Patients will be registered, educated and tracked to ensure that they are managing their diseases properly.

According to Etoile Pinder, a Bahamian health economist who was a technical advisor to the NHI Commission, the proposed drug plan is not a bad idea "if it is the first step towards a broader plan. We know there is a large under-consumption of pharmaceuticals in the Bahamas, which probably leads to some of our very bad indicators with regards to diabetes, hypertension etc. But giving chronic disease patients drugs, without paying for medical tests or doctor's exams or lifestyle advice, will have very little effect in most cases."

Most doctors agree that there is a critical need for preventive care in the Bahamas. Regular checkups and seeing a doctor early can mean the difference between stage 1 or stage 3 breast cancer, or help those suffering from cardiovascular diseases to avoid strokes and heart attacks. Acute care patients require more expensive treatments and have lower survival rates.

So far there has been a lot of talk about prevention and education, and the original NHI plan allocated well over $5 million to such programmes, but we have yet to hear the hard details of Dr Minnis' proposals, and it is unclear where the money is coming from to finance them. Some argue that we should sharply tax alcohol and tobacco and make excessive drinking and obesity as socially out-of-step as smoking is today.

And then there is the whole issue of accountability within both the public and private health systems. No government has had the gumption to deal with this difficult issue, but it should form a key part of any health reform package. In the public sector, the Ministry of Health gets the financing, provides the services and regulates itself. In the private sector, both doctors and hospitals are largely unregulated and accountable only to themselves.

In the 1950s there was no alternative to the government's redevelopment and operation of the Princess Margaret Hospital. But today the situation is markedly different, and we have to ask why the government should be spending hundreds of millions of scarce public funds to build and operate hospitals. The Ministry of Health should be a regulatory body that manages the private sector and provides public services only where necessary.

Both public and private systems have their virtues and their faults, but the choice does not have to lie between the British National Health Service or the American employer-based system. There are insurance-based systems in Europe that also provide universal coverage. In Switzerland and the Netherlands, for example, everyone has to have health insurance and every patient is guaranteed cover by the state if they cannot afford it.

The French model of compulsory insurance for all, with both public and private providers, is ranked by the World Health Organisation as the most efficient health service in the world. France spends 11 per cent of its GDP on health; yet its infant mortality rate, life expectancy and mortality rate for cardio-vascular illness are all better than either the United States or Britain.

Comments

[Rick Lowe]

Well written as usual Larry:
Here are some numbers that were compiled for the Nassau Institute recently.

GDP: $7,564,000,000 (and dropping)
Health Expenditures: $271,533,000
Social Benefits & Services: $99,434,000
Other Community & Social Services: $28,857,000
Total expenses 2008/9 $399,824,000 for 5.29% of GDP

The country is running serious deficits now, so how can we afford we afford to double health care expenditures which is what it will take for a universal plan?

I still maintain this can save the Bahamian taxpayers a lot of money by issuing vouchers to the needy and those that cannot get their own insurance.

Countries inevitably get into rationing health care. There's no choice.

There is no panacea.

[las]

where do you get those figures? this is from the budget: in the 2009/10 Fiscal period, $226,023,376 or 15% of the recurrent budget has
been allocated for health services.

We are running serious deficits because of the drop in tourism and because we are a low-tax country. I am willing to pay for a properly done national health programme that would give me security.

[Rick Lowe]

The numbers come form the Central Bank and the Government's budget.
See this article and review the spreadsheet: http://www.nassauinstitute.org/articles/article839.php
But you have insurance no?
By the way, we were running serious deficits before he economic crisis.

[larry smith]

Those GDP figures appear to be for public spending on healthcare-related services. They do not include private spending. The figure I have for 2006/7 is 7% of GDP.

[Rick Lowe]

That's correct.
Imagine what total spending is?
If we cannot sustain the public sector costs, which is what the current changes are about, how can government handle the whole thing?

[larry smith]

There needs to be a national mandatory insurance plan that operates as a public private partnership - taking the best approaches from other countries and trying to avoid the pitfalls - all phased in gradually.

This excellent PBS documentary offers some interesting perspectives from other countries.

http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/

[Rick Lowe]

1. What makes us want to believe the government can avoid the pitfalls?
2. What makes us believe that we can decide the price for the fruits of other peoples labour?
I watched the PBS documentary you refer to. While it was professionally done, I felt it was skewed in favour of socialised medicine.
There seems to be a number of things in play, so we need to define what we wish to achieve.
Is the objective to take care of the poor and those that cannot get insurance for some reason?

[larry smith]

What makes us believe that the private sector can address the pitfalls that currently exist?

The risks falling on the public sector are increasingly those who are sicker, poorer patients with chronic illnesses, those who have been excluded from private cover, retirees who fall outside the private insurance schemes, and those who require long-term care and post-traumatic rehabilitation.

Therefore the public sector is in the position of having to provide increasingly costly services without a sufficient revenue base.

The cost of physician services in the Bahamas - despite the growing numbers of doctors - is very high and i understand that insurers have difficulty negotiating discounts.

On the other hand, the biggest chunk of money in the public sector apparently goes towards salaries and admin costs, and transparent management does not exist. Likewise, there is no accountability in the private sector either - as the insurers and doctors can do largely as they wish.

I think that those conditions make some form of public private partnership essential going forward.

[larry smith]

The PBS programme reviewed healthcare systems in comparative countries in an attempt to draw lessons for the US debate.

If it was skewed it is because those are the systems that apply in all other rich countries.

[Rick Lowe]

Like those before us that came up with the idea of Socialised medicine we will be dead and gone and the generations after us will face not being able to continue to fund the perfect health care system that we created like so many of those countries you refer to.

[larry smith]

well I guess in the long run we are all dead.

However, it is worthwhile noting that more money per person is spent on healthcare in the United States than in any other nation, and the US also spends a greater share of total national income on healthcare than any other nation except East Timor. Medical debt is the principal cause of personal bankruptcy in the US - about 700,000 bankruptcies a year.

[Rick Lowe]

It boils down to who you trust with your health care. A doctor you can choose or a state bureaucrat.
I choose the former. How about you?
If the day comes I am locked out, I'll have to deal with the consequences I guess, as unpleasant as that might be.
For example, my bother in law cancelled his insurance because he could not afford it. Now he goes to PMH and the government clinic to get the free health care and medication they provide now.
What gives any of us the right to decide that he should be treated privately because we decided health care is a right?
Now if we are all agreeing to help those that cannot get insurance or are locked out of the market, that is a different matter.
One last time, my point is the government can fund those people with vouchers. They do not need to takeover the health care business as they are doing with the drugs for current chronic non-communicable diseases.
When they price control items etc innovation in service and availability are impacted.
Thanks for the discussion.

[larry smith]

Does that mean you have the last word?

What's the difference between a government bureaucrat or an insurance company clerk?

Why should your brother-in-law get free 'socialised' medical care?

[Rick Lowe]

Of course not. This is your blog so you can have the last word.
Medical savings accounts can deal with the "insurance clerk" issue.
That's a whole other issue and is part of the problem that the economists I follow have highlighted.
Insurance has taken our personal decision making out of the process, highlighting the issue of why we need to accept personal responsibility for these things.
But I asked about your doctor.
I can't answer why my brother in law should receive treatment free.
I don't advocate that.

[drew Roberts]

Does anyone know if we have an mutual insurance companies here?