Patients facing the daunting and ridiculous prospect of having to pay up front to have their babies delivered and for other surgical procedures can, apparently rest easy again after Government announced on Friday that a settlement had been reached between insurers and physicians.

But this "settlement" does not constitute a final agreement, merely a ceasefire while a new fee schedule is worked out. That means that doctors and insurance companies may again disagree on what constitutes fair payment for their services.

But the row is a chilling sign of how fragile the Island's health insurance system can be and how easily it can be turned on its head. And it is worrying that the dispute could have led to a person being denied an essential medical service because they could not pay up front.

It did not come to that, and it is difficult to imagine a physician actually taking this dispute that far; but the possibility nonetheless remained.

While the argument between the physicians and the insurance companies has been the most public dispute, it is only one of the potential flashpoints in the health care system.

Health Minister Nelson Bascome said on Friday that the health system has worked well, and for the most part he is correct.

No one in Bermuda is denied health care. The young and the elderly receive high quality basic care at little or no cost, while Government's Health Insurance Plan (HIP) does the same for people of working age. The private insurance companies provide higher levels of service to people who are employed.

The hospital and Government's other health clinics provide a high standard of care, especially given the Island's size.

This mixture of public and privately funded health care has served Bermuda well, as Mr. Bascome said. It has avoided the worst problems of 100 percent publicly funded health care, like the years-long waits for "non-emergency" surgery that have come to epitomise Britain's National Health Service. It has avoided the inequities of private health care, as epitomised by the refusal of some US hospitals to treat uninsured patients.

Nonetheless, Bermuda's system does face a number of challenges. Clearly, the question of how much insurance companies are prepared to pay physicians is one issue that has to be resolved.

More seriously, the issue of elderly patients whose access to major medical health insurance is cut off then they retire has to be addressed, either in conjunction with pension schemes or via some other from of group health insurance.

But the notion that a person can pay health insurance premiums for upwards of 40 years, only to be cut off when they most need insurance is invidious.

The problem of skyrocketing medical costs is next. Generally speaking, medical costs have risen at three or four times the general rate of inflation in the last five of six years.

That's why physicians are arguing with insurers and it is why the insurers are arguing with the hospital, it is also why the hospital runs at a deficit every year and, finally, it is why the consumer keeps having to pay more for health insurance and health treatments.

While Mr. Bascome needs to resolve the question of a new rate of payments between the insurance companies and physicians, he needs to solve the more serious issues which are looming for health care.