Considering that Bermuda bills itself as the world's risk capital it doesn't help the brand when the Premier of said island makes the following statement about health insurance costs:
Dr. Gibbons interjected: "If you have three times the number of people enrolled in something, it's roughly three times the cost."But Dr. Brown said: "It's statistically dangerous to assume the second set of people who come into FutureCare will carry the same statistical likelihood of disease."
Say what? Statistically dangerous to assume that large pools of individuals have similar risk profiles?
Um, that's not 'statistically dangerous', unless you mean dangerous to weak political arguments. That's statistically sound. Law of large numbers and all.
Unless Dr. Brown intends to start screening Future Care applicants for pre-existing conditions, or weighing them, or taking their blood pressure, there is no reason whatsoever to assume that the next 5,000 entrants will look any different in medical profile than the first 5,000. None.
I'd go so far as to say that the projections of the Future Costs of Future Care being used today are going to end up being vastly underestimated.
As one of my readers emailed me today:
Christian, one thing you might want to remember. In 1966 Medicare cost $3 billion.
At the time the Ways and Means Committee estimated that it would cost $12 billion in
1990 - instead it cost $107 billion (a factor of 9).I don't know what sort of analysis the PLP has done of this program (apparently none) but even if they had why should anyone be confident that any such estimate is more accurate than the one that the US used when it introduced Medicare.
Government is terrible at projecting and controlling costs on the simple stuff. The horror stories of capital project overruns are well documented.
This unreal and optimistic attitude to planning and costing out Future Care is worse because as crazy as the construction overspends have been at least when the job ends the costs stop (and the lawsuits end).
A poorly planned and politically oriented public health insurance plan will see costs compound at an astronomical rate with no way to put a lid on them.
You can't blame the local insurers for this debacle. The first rule of business is don't compete with the Government. Hence they pulled out of the over 65 market. After all they weren't just competing with Government, but Government offered to take the most expensive clients off their books.
The Minister said that the local Insurance providers had a responsibility to the public, saying that they work almost as a monopoly on the Island.
No. They have an obligation to their policy holders and shareholders. Government has a responsibility to the public. When Government offers free insurance to the highest risks, an insurer would be nuts to try and compete. How do you make money competing with free.
Dr. Brown is a medical doctor who owns private clinics. Dr. Gibbons is part of a family that owns a health insurer and sits on its board.
Setting interests aside, who do you think has a better understanding of the long term costs of insurance?
I'd say it's the guy cutting the cheques, not the one mailing the bills.
