Journal Highlights: Roads I Have Traveled ... Excerpt #3 Ukraine and Atlanta, 1997

(continued): Ukraine/Atlanta: January, 1997: Dr. Mark not only got the right Ukrainians lined up to make the trip—even on such short notice—but was also able to raise almost $7,500 in twenty-four hours to cover the airline tickets from Kiev to Atlanta. In addition to Dr. Ballantyne, we were able to secure Dr. Michael Tanner of the Cato Institute, a prestigious, conservative think‑tank organization from Washington, D.C., and Mark Litow, a consulting actuary from Milliman and Robertson in Brookfield, Wisconsin. We are going to have a powerhouse symposium!

Dr. Mark was relentless on the phone, and I was tempted to buy some stock in AT&T as I watched his international telephone bill escalate. But everyone was amazingly available, and all the speaking participants were willing to come and charge no fee at all!

Friday, January 10

I arrived in Atlanta about 3:00 this afternoon and checked into the Sheraton Gateway Hotel. Before long the rest of the group began arriving. Our chosen group from the Ukraine includes Dr. Fedir G. Burchak, head of the Committee for Legislative Initiatives and the personal confidant of and legal advisor to the president of the Ukraine. Accompanying Dr. Burchak is his wife, Raisa, a very intelligent Ukrainian lady and editor for an encyclopedia company. Also attending the symposium are Dr. Alexander Korotko, the deputy minister of health for economic affairs, and Dr. V. G. Nicolaev from the R. E. Kavetsky Institute of Experimental Pathology, Oncology, and Radiobiology. He is also head of the academy of artificial organs and biomedical engineering as well as a member of the board of directors for the National Academy of Sciences of Ukraine. Additionally, there are three Ukrainian translators.

The speakers for the symposium include Dr. Paul Ballantyne, head of the economics department of the University of Colorado, Colorado Springs; Dr. Michael Tanner of the Cato Institute, Washington, D.C.; Dr. Mark Litow, consulting actuary for Milliman and Robertson in Wisconsin; Dr. Miguel Faria, editor of the Medical Sentinel and author of Vandals at the Gates of Medicine; and yours truly, Dr. James W. Jackson, representing Project C.U.R.E.

It is absolutely a miracle to have arranged for all these important people to get together in one place in the world. It is an even greater miracle to have gotten them all together on such short notice. Who would have dared to think it was possible.

Saturday, January 11

This morning we all met together and hit the ground running. Tape recorders were set up to capture the audio portion of the symposium.

Dr. Ballantyne had the responsibility of handling the first session of the symposium. His assignment was to explain the basic principles of economics in terms that can not only be understood but can also be conveyed to members of the Ukrainian Parliament. It will probably be the first time anyone has ever taken the time to explain the basic concepts of free-market capitalism to the Ukrainian delegation.

I was so confident of Dr. Ballantyne’s ability to share the simple, basic rudiments of economics that I found myself relaxing and thoroughly enjoying the presentation. He began by talking about wealth versus poverty and the importance of production factors like land, labor, capital, and the entrepreneur. He explained the gross domestic product (GDP) concept and asked why it is possible for the United States to produce $25,000 per person per year in output while the Ukraine produces only $1,600 per person per year. He went on to explain how the market system works as it does and how people benefit through voluntary exchanges.

He then explained the economic trilogy of scarcity, choice, and cost and drew a graphic of the supply-demand curve, discussing how to determine “just the right price” for a commodity or service. Dr. Ballantyne, as usual, was nothing less than brilliant in his presentation. He has always had the ability to take complex concepts and make them extremely easy to understand and remember.

When Dr. Ballantyne finished laying the economic foundation for the free market system, Dr. Michael Tanner took over. He began to slowly build on the foundation Dr. Ballantyne had formed. I could see where he was going and chuckled inside. He methodically presented the concepts of health care as they relate to basic economics. He explained logically why long lines of people wait in the Ukraine to receive health care. He also showed with simple economic graphs why their system pushes people into criminal activities on the black market. He then presented the three necessary elements of a successful health-care delivery systems: (1) the recognition of the self‑interest factor, (2) the need for encouraging competition, and (3) the absolute necessity of including and honoring freedom of choice. He pleaded with them to allow into their new health-care system the right for patients to legally contract with the doctors of their choice so that there would be an accountable relationship established between the doctor and the patient rather than the doctor and the government, which would ultimately leave out the consideration of the patient. 

Dr. Tanner recommended the inclusion of three main elements in the new Ukrainian health-care system:

1. Ensure the right of contract between the patient and the doctor. 

2. Reform how payment is made (i.e., have the patient pay the doctor rather than having the government paying the doctor). 

3. Develop some rational formula for the people to purchase adequate health care.

By that time the Ukrainians were really beginning to understand the benefits of a free-market-system approach to health-care delivery. Dr. Tanner carefully explained the formula Va (actual value) and Vi (value to the individual) = C (cost). When both values (Va and Vi) are equal to the cost, the patient will purchase the optimal health care available. The Va (actual value) could be zero if the Vi (value to the individual) is equal to the cost. For example, if the doctor is very pretty, you may pay for the visit even if there is no actual medical value to you at all. The big problem is when the Va and Vi are greater than the cost, which encourages people to use too much health care. Then the people who really need the health care will be excluded because of the long waiting lines to see the doctor.

Dr. Tanner told them that when the formula for health care has to be reformed, there are really only three ways to do it:

1. The traditional way: The government intervenes and rations health care (e.g., “You can only see the doctor once a month.”) 

2. Managed care: The insurance company steps in and says, “You can only come in and see the doctor once a month.” 

3. Cost Increases: Take the control away from the government or the insurance company to arbitrarily increase the cost and allow the individual patient to pay with his or her own money for the cost of the service.

Several times the speakers cautioned the Ukrainians not to design their new health-care system after the current US system. The Ukrainians agreed. They had already proven that the centralized system of more government does not and cannot work over the long term. That’s why they are now demanding free-enterprise reform.

Dr. Tanner then patiently taught the group the concepts of insurance. The Ukrainians quickly agreed that they had been thinking of insurance as simply another way to prepay and finance their old centralized government system rather than seeing it as a way to spread out the risk among many people. The Ukraini­ans said they would have used insurance funds to cover known and routine problems rather than uncertain eventualities.

In recapping his session, Dr. Tanner encouraged the inclusion of four factors in the new re­form:

1. Link all the monies for payment of health care in some way to the patient. 

2. Allow patients the freedom to establish a contract with the doctor of their choice. 

3. For routine care and voluntary care, raise the cost of treatment and have the individual pay for part of it. 

4. Develop a private insurance market for spreading out the risk among a large number of people for high cost and nonroutine procedures.

By the time Drs. Ballantyne and Tanner were through with their first sessions, the concepts they had presented were making a world of dif­ference in the minds of the Ukrainian delegation. They began asking questions about the possibilities of including the creation of medical savings accounts for individuals and families. 

Next Week: Changing a nation's health care system. 

© Dr. James W. Jackson   

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