You can’t put a price on health
Imagine a world where buying groceries worked like this:
Each month, you pay a certain amount into a fund, call it a food premium fund, to cover most of your grocery-buying expenses.
If youíre employed, you have to join with your work colleagues in a buying group and pay a premium company chosen by your employer. This is supposed to help to keep your food premiums down by averaging out how much everyone spends.
For some kinds of food, you need to get special permission to buy them.
Depending on how much money you put in the fund, you may not have to pay anything more for these items at the grocery store, but sometimes you will.
There are also several grocery stores you can buy from. Some are very large and offer a huge range of services.
Others are smaller, and are limited in what they offer although the food is often cheaper there.
Their opening hours tend to be more limited as well and you will probably have to make an appointment.
The biggest grocery store also has a rule that it will not let anyone starve, so if you havenít paid your food premium and are hungry, you can go there and get some basic foods which you donít necessarily have to pay for.
However, you may get billed later for some of the food and if you canít afford to pay the bill, you will get taken to court.
A lot of the shops, including the really big ones, do not display their prices. But you donít mind since youíre not really paying anything at the point of sale.
Some of the people in the group also tend to use up everything they are entitled to, even when they donít really need that particular brand or those expensive jars of caviar.
If the people in your group really use a lot of services, this will be reflected next year when your food premium goes up by much more than most other prices, and much more than any increases in the actual prices of the food you buy.
Clearly, no one would buy food like this. But it is, in a crude way, how we finance healthcare in Bermuda.
Of course, and this is a critical difference, you do not find yourself unexpectedly going to the grocery store and buying an emergency $20,000 list of food as you might when, for example, you are involved in a major accident causing serious injury, have to be air ambulanced to an overseas hospital for a heart attack, or have a premature baby.
Nonetheless, how we pay for healthcare is complex and opaque. These complexities add to the cost of health owing to its multiple players and service providers.
The absence of pricing means patients use very little judgment when ďbuyingĒ medical services and have very little incentive to shop around for the best price. Nor is there any real way of knowing who provides the best service.
So itís no real surprise that the Government wants to look at ways to change how we pay for health. But does the Governmentís solution, to reduce the number of private insurers offering basic health insurance to a single payer and raise the cost and level of benefits of the Standard Health Benefit, going to make the system less opaque and more affordable?
Certainly, there will be some minor reductions in cost as administrative duplications are eliminated.
The Government also hopes that by putting all privately insured people in one basket that this will reduce the overall level of risk, but it is likely that the demographics of insured people with the three private insurers are essentially the same, so this may not turn out to be the case.
At the same time, the proposal to raise the SHB to $500-plus a month and then to allow people to buy supplemental insurance for the extra services they get at present under a Major Medical policy means that the overall cost of that category of care will rise.
The other goal is to make healthcare more accessible. But if there are 5,000 people in Bermuda who cannot afford the cheapest insurance now on offer, a bare-bones SHB policy that costs about $350 a month, how will they afford the new $500-a-month policy without financial assistance?
Even if these concerns did not exist, the fundamental problems of the system, the fee-for-services model, which incentivises medical providers to load up on unnecessary diagnostic and medical procedures and its lack of price transparency, will still exist.
More to the point, there is no real consensus on where healthcare as a public service stands.
There are many who believe healthcare should be a right, in the same way that taxpayer-funded free public education is now.
Most people would agree that all of society benefits when people enjoy basic standards of health and is not ravaged by the health crises of previous centuries.
Indeed, pandemics today such as Ebola and the epidemic of severe acute respiratory syndrome are notable because of their rarity.
Nonetheless, even if the desirability of good standards of health is a given, the question of what level of basic healthcare should be available to all remains an open question, not to mention what constitutes affordable healthcare, what sorts of accessibility, including wait times, are deemed to be acceptable and when and how other services should be paid for and by whom.
Where there is a consensus, is that the present system is not working well.
Bermuda has had a hybrid system until now. Certain levels of care for children and the elderly, the most vulnerable members of society, are provided at little or no cost and, for the elderly, the Government subsidises health insurance for other services.
Employers are mandated to provide at least a basic level of health insurance and to pay for at least half of it. The hospital also is required to turn no one away, regardless of ability to pay.
For the most part, this system worked until the recession began after 2008, although it was showing signs of strain. But blessed with full employment and a population with plenty of young people who placed less demand on health providers than their elders, the system was essentially sound.
Since then, the population has aged rapidly, a consistent level of unemployment has been a constant and many young people have left Bermuda.
The result is some 5,000 people with no insurance, galloping health insurance costs for those who have it and persistent problems with chronic problems such as diabetes, hypertension and heart disease.
And despite spending some 13 per cent of gross domestic product on healthcare, Bermuda produces inferior outcomes to many other countries, thus producing a crisis of confidence in the medical system.
In any discussion on healthcare, dealing these problems should be carried out in tandem with the financing of healthcare.
It may be that insurance, and this is especially heretical in Bermuda, the risk laboratory of the world, may not be the best way to fund healthcare. But until there is agreement on the fundamentals, these discussions are never going to solve the real challenges in the system.
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