Scratching the surface
“Symptomatic treatment” is the phrase medical professionals use to describe attempts to treat the symptoms of a problem rather than its cause.
In her newly announced health insurance reforms, Kim Wilson may have fallen into this trap.
The health minister unveiled last week what is being described as the first step in the most ambitious reform of health insurance in decades. There will be further measures to come, which may make for a more well-rounded approach than what was on offer at her press conference.
Nonetheless, this change appears to be the heart of the Government’s reform programme, and it takes on what most agree is the biggest and most intractable problem in healthcare — its soaring cost.
The Government’s solution is to increase the benefits available under the Standard Health Benefit, which is the mandatory minimum level of services that can be offered as a health insurance policy and the minimum that employers must offer their employees under the law. At the same time, the premium would increase as well, from about $355 a month to about $530 — a 50 per cent increase.
It should be noted that as the cost of health insurance has jumped, more employers are offering the SHB to staff rather than the more expansive — and expensive — packages such as “major medical”. Indeed, according to the 2016 Census, about 4,500 people dropped out of major medical. At the same time, 2,500 people took up the SHB, while a further 2,000 opted to have no insurance at all — bringing the number of people in that desperately at-risk category to 5,300, or 8 per cent of the population.
That is roughly the same as in the United States.
So Ms Wilson and the health ministry are right to conclude that the present system is not working.
However, the Government’s proposal, while no doubt welcome to many, does not solve the fundamental problem of healthcare affordability.
Healthcare costs are rising for two interconnected reasons: Bermuda’s rapidly changing demographics and how and why insurance is priced.
First, it is no secret that Bermuda has an ageing population. In 2000, there were 6,722 people aged 65 or older, and they made up 11 per cent of residents. By 2016, there were 10,755 people over 65 and they made up 17 per cent of the population. By 2026, that number is expected to increase by 50 per cent to 15,000 when those over 65 are expected to make up 25 per cent of the population.
At the same time, the number of people aged between 15 and 44 is expected to drop from about 23,000 to 20,000 and to fall from 36 per cent of the population to 32 per cent.
Why does this matter from a health insurance perspective?
It is obvious that older people will tend to have more health needs than younger people, and this means that health services are likely to be used more. But that does not explain why prices will tend to rise as a result. After all, if more people buy cereal this year than last year, the price of cornflakes does not go up — in fact, it might go down as the manufacturer finds savings through economies of scale.
But health costs do not work that way because of the way insurance works.
When Bermuda had a smaller proportion of elderly people and a larger population of people in their twenties and thirties, the number of claims, often made by older people, against the premiums paid by people who were unlikely to have need of extensive healthcare, was roughly in balance.
Now, as Bermuda has a larger elderly population both in actual numbers and as a proportion of the population, and a smaller population of young people, both in number and proportion, the system is cracking under the strain — claims are multiplying at the same time that the number of people paying premiums is static or shrinking. That results in premiums rising, making them unaffordable for people who either reduce their benefits or drop their insurance altogether — creating a vicious downward spiral.
But this is also why Ms Wilson’s proposal to widen the benefits available under the SHB — and the price — is unlikely to work.
Certainly, some of the benefits proposed, such as home-based healthcare and subsidised doctor’s visits — which are both cheaper than visits to the hospital — will help to contain costs. But the overall approach is, to abuse another medical cliché, like applying a Band-Aid when surgery is required.
It will not do enough to reduce the increase in usage by an ageing population on its own. Nor, by increasing the cost of the premium, will it help those who are already without insurance, or who can only just manage the existing SHB premium. It may help those individuals and businesses who are struggling to pay for major medical, but this is not a long-term solution.
Ultimately, it appears that the Government wants to move to a fully taxpayer-funded universal health system.
But this is likely to be highly complex and politically difficult, especially when the tax ramifications become clear.
It would be better if Bermuda first launched a revolution in the way we live.
That is because many of the acute and chronic illnesses that Bermuda suffers from and which result in soaring insurance premiums — heart disease, hypertension and diabetes, to name only three — are exacerbated and sometimes caused by lifestyle choices. And the cost of treatment falls on everyone.
The Government made a start with the sugar tax and its eye-watering increases in customs duty on items containing sugar. But much more can be done to reduce cigarette and alcohol use, and to encourage healthy eating and exercise. These can be approached through a combination of tax and insurance incentives and deterrents, as well as extensive and aggressive public-awareness campaigns.
A public-awareness campaign is what is missing now from the sugar tax initiative and, if this process is extended, it has to be used to persuade people to change their other unhealthy habits.
That will cost money and will not be easy, but it is the only real solution to Bermuda’s healthcare woes.
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