Matrix Reloaded


About two months ago, there was a system failure in yet another Matrix version. The new version is being reloaded and updated now. Georgians will have to live with the updated version, but it will be interesting to see what updates Matrix software programmers have in store for the health care sector.

The word “health” denotes such a state of wellbeing that it tends to alleviate whatever anxiety we may naturally have about the foreseeable future. “Illness” is an opposite condition. My definition of those two terms is a little different: I see health as the safety of our most valuable private property – life – while illness is the threat to that private property. The health care system is the industry which helps people protect their valuable private property from outside threats.

One of the key priorities of the new Matrix is better protection of our health. Naturally, each of us is interested in what rules will be established for those entrusted with protection of our most precious property. I am grateful that the Open Society Georgia Foundation has given me an opportunity to participate in discussions about a new health care policy with members of the team working on its development.

Politicians, representatives of media and health specialists all agree that the existing health care system needs reformation. The political arguments – the need for better coordination, improved health services, higher efficiency, greater accountability, etcetera – are not new. When falling ill, people should never be afraid of dying because they lack the means to pay for treatment or worry about going broke because they have to spend all their money to get well. Everyone agrees that a significant increase in state functions and intervention in the health care market, as well as centralized planning of the system, are all needed. It is just a pity that a large segment of so-called health care experts, not to mention politicians and media representatives, think that it is somehow possible to plan and to manage the health care system.

Any one of us can fall ill from any number of causes. We see myriad symptoms and diseases played out each week on television medical dramas. Watching a few episodes of “House, M.D.” or “Grey’s Anatomy” will suffice to convey a sense of how many different health threats there are out there. Consider the following:

1) Catching flu is commonplace and actually needs no treatment – drinking hot tea and taking over-the-counter medication to alleviate symptoms are usually sufficient – but many people still die each year from flu-related causes;

2) Receiving medical service at a hospital, quite often, costs the equivalent of about what the average worker earns in two months (GEL 1200 – GEL 1300). For many, that cost is not particularly problematic, but for a significant number of our citizens it is prohibitive;

3) Life is unpredictable and, over the course of our lives, we run the risk of contracting a serious disease or sustaining serious injury in an accident. When that happens, even the big salaries of large company directors may be insufficient to save their lives or to keep out of health care debt;

4) The more we grow older, the more the threat of illness and the need for constant medical assistance increases. At the end of the day, we will all die – it is just a matter of time. For now, we are all buying time.

One may be a strong opponent of any form of state intervention in the free market and may have no faith in capacities of the state bureaucracy to produce any beneficial outcomes. That does not mean that one should close off discussions on what a reasonable government should take into account – if for no other reason than for its own interest alone.

If not for the “care” provided by the government, health and financial risk insurance industries would be able to offer individuals a broad choice, along with increased personal responsibility:

1) Individuals, in routine cases, would pay out of pocket for blood and urine tests and also for over-the-counter pain relievers/fever reducers such as paracetamol because those financial costs are negligible;

2) Individuals would decide, based on their personal incomes, what financial risk to assume and what insurance package to buy;

3) Health service providers would spare no efforts, under conditions of market competition, to offer the best combination of services, cost and quality. The price and quality of services at any given moment would be compatible with the general degree of welfare;

4) People would take better care of their health because they would have more information available about health risks and the costs of those risks;

5) Individuals who still make mistakes or fail to tackle their health problems themselves would then have to rely on family, friends and informal institutions. And if individuals acted especially irresponsibly, they would run the risk of a premature death.

It is difficult to claim that the overall health care policy of the former government was very consistent, but it did not overstep certain limits of arbitrariness. Main characteristics of that policy were:

1) Differentiation of citizens according to welfare levels. The poor received higher funding from the government than people who were better-off financially. As a result, those who could afford it started buying voluntary health insurance;

2) The government gave state insurance beneficiaries the freedom to choose among insurance companies, thereby promoting competition on the market with companies initially engaging in fierce rivalry for clients. The situation regressed after that, however. Until hospital rehabilitation projects are completed in 2013, competition in the regions can be expected to remain restricted. That is because of the political priority given to those projects and the exclusive insurance rights granted to those insurance companies that committed to building hospitals in specified regions;

3) The public funding share of total health care costs increased from 15-25% during an eight-year period. That was most unfortunate, from my subjective viewpoint, but it was not a catastrophic increase either;

4) The government said “no” to providing services when it sold hospitals to private owners. That was such a correct and bold step that – I sheepishly admit – even I did not believe that that would actually happen in due time. I was afraid and even supported retaining several hospitals under the state ownership;

5) The government delegated the responsibility of managing large portions of public monies to the private sector. That political step resulted in such a reduction in the scale of systemic corruption that the bureaucracy groaned whereas EU and WHO [World Health Organization] experts let out piercing screams of joy;

6) Relaxing compulsory requirements (regulations) in some spheres of the pharmaceutical and service-provider sectors had such a huge effect that only a fool or someone entirely uninformed could believe today that the pharmaceutical market is monopolized;

7) The government yielded to doctors. It did not dare fight against them. It did not abolish senseless and harmful rules regulating medical education.

One may wish for better achievements, but compared to so-called reforms implemented in other countries, we have achieved results that many foreign experts consider amazing.

Now let’s see what the Dreaming Matrix administrators and their followers are planning:

1) In their opinion, the population is very unhappy with the current state of the health care system. They also say that the former government ruined that very system.

2) They think that it is fair for the poor and the rich to receive equal services from the state. They claim that distinguishing rich health care users from poor health care users would cost five times the amount that it would cost to finance health services for identified poor. True, it could cost more – that is, if the aim is to calculate that cost with such precision that auditing the property status of each family would be a task challenging even for the Big Four firms.

3) In their view, seven percent of the income tax paid by employed people should go to a health care fund as a “contribution” instead of tax. But do not assume that the contributor of that money would necessarily also become a beneficiary of that contribution. The 600,000 taxpayers would have to cover a GEL-4,000,000 cheque – that is, each individual taxpayer would have to pay for seven persons who do not contribute. No problem if the taxpayer contributions turn out to be insufficient to cover all those other people because they say that they will then cover the difference from the state budget. If anyone can explain to me what the essence of such an action is other than justifying reinstatement of the state fund (which required considerable toil and suffering to abolish) and resurrection of the bureaucratic machinery, I would be very grateful. Moreover, it sounds ridiculous for them to call it – for what reason, I don’t know – “the Bismarck model.” They say they can hear the voice of the late Otto Eduard Leopold calling from the mausoleum. Prince von Bismarck must be falling out of his coffin in convulsions of laughter and clashing against the walls of his grave.

4) To eradicate “monopoly” (in their lexicon), they think (though, fortunately, have not decided yet) to dismantle those companies which are simultaneously engaged in health, pharmaceutical and financial risks management businesses. If memory serves me well, they also had promised that business would be inviolable.

5) They are worried that we lag behind the European Union in terms of state interventions in the market and they dream about the time when the proportion of population and public expenditures will reverse and instead of the current 75%-to- 25% ratio, respectively, it will become 25%-to-75%. Trebling the scale of power is a perfect solution – except why not increase it to 100% and instantly have that same wonderful old Soviet health care system we used to have;

6) They refer to the earlier conclusion of the Chamber of Control that insurance companies received “super profits.” I was going to include that in the list of idiotic actions by the former government but – being a biased person – I conveniently forgot to do that. I refrain from assuming that they will interpret differently any action undertaken by that same Chamber of Control toward their leader and current Prime Minister. They therefore think that they should purchase directly from medical institutions that portion of services which will be financed by the government. It was clear anyway; that is why they need to reinstate the state fund.

A simple explanation for all that is that these people either know nothing about health care and fairness or they merely want access to easy money.

It would be correct for me to write the following generality: “Every government sees a problem because problems are an integral part of peoples’ lives. When a government claims that it is competent to tackle that problem and thereby creates several new problems even more difficult to tackle, and so on and so forth, it becomes the problem.” That would be a correct statement, but I still cannot believe that the owner of a fortune estimated at USD 6.5 billion would knowingly issue such a glaringly open invitation to return bureaucratic corruption to the health care system. From the 1990s to 2003, our health care system was organized almost in the form these people are again advocating – and the situation in that sector was catastrophic back then. Why would it be any better now? The folly of such a policy would become apparent even before expiration of that year-and-a-half term limit that Prime Minister has set for himself and his exit from Georgian politics.

Should we so obediently entrust our most valuable “personal property” to Matrix? Let’s hope that there will be a health care sequel – Matrix Revolution.



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