Friday, January 30, 2009

the great "Americare" emulators still scheming

Already in the early 1990s I remember talk in the Czech media about how the Czechs should emulate the U.S. in all things policy-related. I'm talking education, health care, whatever America was doing was admired.

I recall watching a roundtable of pundits swooning over the U.S. healthcare system, in particular, arguing that the Czechs should adapt a similar scheme. Back then already I found myself shouting at the television and shaking my fists high in the air: "What a terrible idea!"

Privatization of all state assets was on the agenda way before communism toppled. The concept of market liberalization Washington-Consensus style is largely what drove the movement for a "democratic" Czechoslovakia in the late 80s. Healthcare reform, or more accurately, the wholesale auctioning off of public healthcare assets, has been in the works for nearly two decades. The transfer of public assets into private hands began right after the fall of communism, but did not take shape as rapidly as in many other Eastern Bloc countries.

Interestingly, a study published this month has shown a correlation between rapid health care privatization and disastrous effects on countries' health and mortality rates:

The researchers examined death rates among men of working age in the post-communist countries of eastern Europe and the former Soviet Union between 1989 and 2002. They conclude that as many as one million working-age men died due to the economic shock of mass privatisation policies. Following the break up of the old Soviet regime in the early 1990s at least a quarter of large state-owned enterprises were transferred to the private sector in just two years. This programme of mass privatisation was associated with a 12.8% increase in deaths. The latest analysis links this surge in deaths to a 56% increase in unemployment over the same period.

The Czech Republic apparently did much better than Russia, for instance, whose rapid privatization was responsible for unemployment tripling and number of male deaths rising by 42% in three years. However, at the current rate of privatization, seeming to be approaching a feverish pitch, it wouldn't be too far-fetched to say that, compounded by the global financial crisis, the situation could get worse and result in a much more devastating scenario. Unemployment is rising rapidly, access to social services and healthcare is becoming more limited due to cost restrictions and cuts in funding for social programs. Experts are warning that as a consequence of the economic changes, mental health issues and domestic violence will likely become much more rampant.

What can go wrong with privatizing the health care sector? What has happened in the United States as a result of a health care for-profit industry orientation should have become enough of a warning. When profit comes before people's health and well-being, leading to health care becoming unaffordable and health insurance companies and facilities cutting corners and denying care to make profit as in the U.S., the consequences can be dire.

In the Slovakia, on which the Czech reform was modeled, the changes led to worse patient care and a mass exodus of physicians out of the profession and abroad. Slovak physicians warned the Czechs before the reform to not follow the lead of their privatization pioneers. The European Federation of Salaried Doctors also warned the Czech Minister of Health about the dangers of American-style managed care.

In the Czech Republic, as a result of the reforms, at the core of which is profit, the salaries of health care professionals have been stagnating, causing large numbers of professionals to flee the field. In 2008 alone, 20,000 healthcare workers, that is 8% of the workforce, left the healthcare sector and not nearly enough new professionals, especially nurses, are entering the field.

The health care reform has unfolded more slowly than in many other parts of Europe, yet already by the end of 1991, only two years after the Velvet Revolution, 28 percent of healthcare facilities had been privatized. By the year 2000, more than 95 percent of physicians, all of whom worked in state facilities prior to the revolution, were working in private practice.

As Jiří Schlanger, president of the Union of Health Service and Social Care of the Czech Republic, writes:

At the beginning of the nineties, when rightist political parties came into power, the first wave of privatization in the healthcare sector was started on their decision. The first to be privatized were the services of pharmacies, general practitioners and healthcare specialists, and also transportation of patients with the exception of emergency ambulance services. . . Privatization of services was accompanied by privatization of property. Only a few policlinics and surgeries became property of municipalities, most property became private ownership of physical persons or legal entities. . . At the same time, an attempt was made to privatize regional hospitals. A list of about a hundred general hospitals was drawn.

"Luckily," writes Schlanger, "the pace of privatization slowed down and in the end trade unions succeeded in persuading the Minister of Privatization and then the whole Government that privatization of hospitals should be stopped."

That was nine years ago. The pace has seemed to increase again. The reformers are busy. Fortunately, as can be seen above, the privatization process has not been met with silence. In 2007, for instance, the selling off of a group of regional hospitals sparked off a wave of protests, alas to no avail. In fact, more and more facilities are being sold and converted into for-profit ventures. Just over a year ago, demonstrations took place across the country to try to stave off the announced Ministry of Health reform, implementing copay payments at the doctor's office and in pharmacies. Despite the outcry of patient advocates, trade unions, and left-wing parties, payments went into effect in January 2008. The dominant argument in support was -- and still is -- that without these fees, the health care system will go bankrupt. Others counter that free health care to all citizens (excepting insurance payments) is a right guaranteed by the Czech constitution.

The people spoke up decisively in the 2008 parliamentary elections, responding to one of the key platforms of the left-leaning Czech Social Democratic party, ČSSD, promising the abolishment of the patient fees. In every single district, ČSSD won majority of seats. Now the newly formed parliament is expected to deliver on its promises. As of February, in some regions of the Czech Republic, it has already been decided that the copay and pharmacy fees will be scrapped.

The last phase of the premeditated health care reform is the privatization of state-run health insurance providers. In the spring of 2008, former Minister of Health Tomas Julinek came out with a proposal to convert public insurance agencies, all ten of them, into joint-stock companies. The proposal met with a wave of protests. The transformation of the insurance sector is still being debated. It is well-known that the insurance agencies' profits are currently at a record high. Clearly somebody's got an eye on that sweet deal.

Another example of a recent pet reform project is this: last year, the health minister's proposed reform unleashed a fierce debate when it surfaced that he was pushing for privatization of some of the last public health facilities - university hospitals, a once unconscionable, idea. The health workers' unions demonstrated and bought some time. But, based on the privatization pattern thus far, there's no indication this coveted sector will be spared. The world financial crisis makes for the perfect excuse to choke and slash the bulk of the remaining government funding in all the most "sacrosanct" spheres, including health, education, and social services, much like what President Barrack Obama has signaled will be happening in the U.S. under his directive.

Yes, in addition to health care, the public education department and the state-managed pension fund sector have been getting a lot of heat these days. They too are poised to soon be undergoing drastic reforms. Far and wide, America's influence in the realm of free market reform is felt. Foreign firms are clambering at the doors, recession or not, slobbering over the opportunities for profit and more than enough politicians seem ready and willing to facilitate the process. Maybe the Czechs could learn a thing or two from the French and organize on a more massive scale to curb the destructive plundering of public assets and social protections?

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