GERMAN INSANITY

This week in Berlin, the government will be advocating a series of health care reforms similar to Gordon Brown's unsuccessful and over-bureaucratic attempts to reform the UK National Health Service. One of the more draconian proposals is a "bonus malus" penalty system for doctors who prescribe too many expensive drugs to German patients. This new system is designed cut public expenditures for prescription drugs by making physicians personally liable if they exceed their quarterly budgets. For instance, physicians will have to cover 50% of the excess spending out of their own pocket if they exceed their budgets by more than 30%.

At first glance, making anyone stick to a budget may sound like sound financial policy. The problem is that in this case the budget does not necessarily reflect real world demand. The allocation of funds for medicine is not driven by patients and doctors but by politicians – much like the production targets for Soviet tractor factories were set by bureaucrats in Moscow with little regard to the needs of Russian and Ukrainian farmers.

Germany will be on its way to a shortage of medicine if the government gets its way. The government's goal is to reduce the annual pharmaceutical costs by 400 million euros starting in 2007, and German patients are already receiving too little medicine. For example, only 30% of Germans with osteoporosis receive treatment, and the German sick funds do not cover preventive medicine for osteoporosis patients. This means that middle aged and elderly women with osteoporosis often have to experience a debilitating hip or other bone fracture before they receive the medicine they need.

A shortage of medicine means that patients will no longer be able to trust doctors to prescribe them the medicine they need. The medical needs of the individual patient will take second place to the budgetary considerations of the doctor. One possible consequence is that patients will be inclined to exaggerate the symptoms they have in order to move up on the doctor's list of priorities; and doctors will tend to dismiss more patients as hypochondriacs. These diverging interests will lead to distrust between patients and their doctors and undermine the open doctor-patient dialogue that is required for early detection of health problems and successful treatment.

The lower use of drugs and the worsened doctor-patient relationship could end up costing the German economy more than the 400 million euros the government hopes to save. Without the right medicine, patients are more likely to spend time in expensive hospital care and to be absent from work due to health problems. Add the time and resources that will be wasted on legal expenses and handling objections from doctors and patients, and it becomes evident that managing German health care like a Soviet tractor factory is not very cost-efficient.

In addition, there are long-term costs to consider. Germany has more medical students per capita than any other European country. What will these future doctors think about working in a system that penalizes them for doing the job they have been trained for, namely curing patients? Providing second class care to patients and being denied access to the latest advances in medical research is hardly a very encouraging prospect. Chances are that the best and brightest of Germany's future physicians will add to the brain drain and join the 400,000 European researchers that currently live in the United States. When the brains leave, so do the prospects for investments in research and development. Without such investments, Germany will have to rely on old economy products based on heavy industry. Again, the Soviet tractor factory comes to mind.

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At long last: Australia recognizes the only solution to substandard foreign doctors from India and elsewhere

The Commonwealth Government is to spend $250 million to train more doctors and nurses over the next four years. Prime Minister John Howard said today that extra funding will pay for 400 new medical school places a year, with some starting in 2007 and the full 400 in 2008. Mr Howard said 120 places would go a new medical school at Deakin University in Victoria with Monash University's new Gippsland branch receiving 40 additional places. The remaining 240 places will be distributed among all the states and territories, including Victoria.

Mr Howard told the Victorian Liberal Party's state council he expected the state governments to match the funding and pay for the training of new nurses, care assistants and Aboriginal health workers. "I make this announcement today so that universities can prepare to introduce these places without delay," Mr Howard said.

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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