Op-Ed: Health Care System: ‘Free’ Ideology vs Sobering Reality, Part 3

A Historical Overview, Implications, & Recommendations


FIRST, the delayed US recognition of American Samoa explained the US unpreparedness to administer the territory after securing the Pago Pago Harbor from Britain and Germany in the Treaty of Berlin. This reflected the slow, piecemeal, and episodic development of the health care system during the first seventy years of the territory. 

Perhaps such was not as unreasonable a predicament as one could have had expected for an “unorganized and unincorporated” US territory. I don’t know. But here’s one thing I am certain about — the AS free medical care mandate was a local invention. In 1968, our policymakers, gifted with great ingenuity and bold imagination, carved out of the Deed of Cession, with a free health care system for the people of AS.  Our policymakers understood that free health care is an ideology every nation dreams about for her people; unfortunately health care, like other societal needs, is a function of economics. Hence, not free. Life is priceless, health care costs.    

SECOND, the euphoria exuded from the modern transformation of AS between 1960 and 1970 (which no doubt influenced the enactment of the AS free medical care mandate) began to dissipate when the DOI’s self-sufficiency policy was introduced in the early 1970s (which stands to this day). 

We have all witnessed the watering down of our Deed of Cession-inspired free medical care law over the years in the face of the more resilient DOI self-sufficiency policy and the omnipresent laws of economics. In other words, after US/AS government subsidies, Medicaid, Medicare and other insurance reimbursements are applied to the AS health care equation, we as patients need to pay our share of the health care cost.

THIRD, the current health care crisis presents an opportunity for policymakers to administer the needed amendment to our diluted yet stubborn “free” medical attention law to reflect the economic reality and subsidized nature of our health care system. 

In none of the 50 states of the union is health care mandated as free. Even the Obama Care Law passed in 2010 with a safety net for the poor is formally known as the Patient Protection & Affordable Health Care Act.  As long as we maintain our “free” health care system, we will always experience shortages at LBJ Hospital.  And it’s invariably the low income and poor people who suffer, which we are experiencing live (right now) in the territory. 

“Free” health care is not necessarily a good term for the people at the lower end of the totem pole.    

FOURTH, “reasonable” facility fees as stated in the free medical attention law are a function of government subsidies, Medicaid grant, and insurance reimbursements.

That is if government subsidies aren’t paid or underpaid, Medicaid grant will decrease; given other insurance reimbursements, “reasonable” facility fees will increase. The term “reasonable” is relative in that if LBJ Hospital is on the brink of bankruptcy (as it is now), the current 300% to 400% increase in facility fees cannot necessarily be considered as unreasonable according to the laws of economics (which is the only set of laws that’s matters now). 

When ASG doesn’t pay or underpays the LBJ subsidy, facility fees gravitates towards the true costs of providing health care which renders the “free” medical care irrelevant (which has been the case for the past 30 years).

The desirable amended law should read “affordable” care (lose the word “free”) and mandate the timely payment of the ASG subsidy so as not to jeopardize the Medicaid grant which is the safety net for the low income and poor residents of AS.    

FIFTH, the significant increase in patient fees as a source of revenues for LBJ and the high uncollectible patient fees every year for the past 20 years strongly imply the need for a risk pool (pre-pay self-insurance plan). 

Risk pool is a more efficient tool for low income people (everyone for that matter) to pay for their health care as it takes several years of savings to pay for a catastrophic hospital charge; and Samoans are not known as savers.

In other words, self-insurance transforms the uncertainty (low probability) of suffering a catastrophic financial loss due to severe illness or injury into a certain but small loss (premium or tax) by pooling medical risks (financial contributions — premium or tax — from many people). 

From several World Bank sponsored research in developing countries, risk pooling mobilizes resources low income people are willing to pay for their health care. Further these studies show significant health outcomes for participants in risk pools relative to non-participants.

From our research, 90% of ASG employees said they would buy into a government sponsored risk pool or self-insurance plan; and 70% of surveyed private businesses would allow their employees to buy into such government sponsored plan via payroll deduction. 

In short, patients receive health care they need, and LBJ Hospital collects its fees from the insurance pool. As mentioned above, this concept was first proposed in 1981 by the DOH as a result of the ASHPDA sponsored research conducted by Siegel & Associates.

In our 2007 CAAS Project Report, risk pooling was proposed to address the high uncollectible patient fees. There were similar proposals between 1981 and 2007, and all are collecting dust somewhere in government buildings.   

SIXTH, the Medicaid Program we have today, as mentioned above, was the result of 1981 ASHPDA sponsored research by Siegel & Associates. The intent was to provide for the health care of the poor residents of the territory.  As it is exists today, the Medicaid program also benefits everyone at the higher end of the totem pole. 

SEVENTH, the average American Samoan spends 50% to 60% of income on food, church, and fa’alavelaves; and about 1% of income on health care according the 1995 income and expenditure census report by the DOC Statistics Division (the last published report I’ve seen).

The low spending on health care reflects our free health care mandate and the high uncollectible patient fees at LBJ Hospital. The high spending on food correlates to our high rate of obesity (which contributes to the high cost of care at LBJ), while the spending on church does reflect the huge churches and church halls, and the general higher standard of living enjoy by Faifeaus of certain leading denominations in the territory. The high spending on fa’alavelaves weighed heavily on the low income and poor families as well. 

Given the above, we need as a people to alter our diet and economize on food, and be sensible about giving to church and fa’alavelaves. It behooves church leaders and family chiefs to be mindful of the plight of the low income and poor members of their flocks and families, and employ a contribution system that makes sense. Patient fees are now a key revenue source for LBJ Hospital and won’t go away. They have to be paid, or we won’t have a hospital or one that treats patients.

EIGHTH, NCDs (non-communicable diseases), otherwise known as life style diseases (diabetes, hypertension, obesity, smoking related illnesses, etc…) constitute 80% of all health care costs. 

To rein in the costs of health care in the long run at the demand side of the health care equation, we need to control the NCDs more effectively. To help control long term health care costs at the supply side of the health care equation, AS needs to invest more into its nursing program and reopen the Fiji School of Medicine pipeline (or Samoa, Papua New Guinea, or the Philippines). We need to develop our homegrown resources or we will spend more money to attract human capital from overseas.


The following list of policy recommendations are based on the above discussion:

First and foremost, amend the “free” medical attention law;

Secondly, consider and legislate a pre-paid self-insurance plan to be administered by ASG or an agency of ASG for all users of the medical facility as recommended by several studies;

Thirdly, consider an immigration bond (pre-paid) to pay for immigrants health care while awaiting employment in the territory;

Fourthly, render the Medicaid program to maintain it’s purpose of being a safety net for the poor;

Fifthly, promote healthy AS programs and medical treatment programs at the territorial level to help control health care costs in the long run; and

Finally, develop our homegrown health care human capital as discussed above.

Final Comments

How strong a nation’s leadership capital stock is determined, is whether or not sound public policies to govern and care for her people are timely placed.

The general indifference shown by ASG leaders over the past 30 years with regards to health care financing recommendations now proves costly. The fees at LBJ Hospital increased up to 400% on Monday, and it is coupled with the ultimatum given by Governor Togiola Tulafono to return LBJ Hospital to ASG via DOH and to shoot the messengers (LBJ management and board), who have been warning ASG leaders of the forthcoming financial crisis for some time now.

The primary reason why ASMCA was established back in 1997 was because LBJ Hospital, afflicted with high debts owed to off-island vendors (hospitals, drug companies, and medical supply companies), was going under. Chronic drug and medical supply shortages were the order of the day. Because funds allocated for LBJ Hospital were co-mingled with all other government funds in the general fund before 1998, ASG was not paying LBJ’s off-island debts. The debts piled up to the point where DOI (with enough weight from Congress) stepped in, and the rest as they say was history.

Given that ASG cannot handle its own budget, and ASG’s consistent underpayment of the LBJ subsidy, I don’t think it is a good idea to entrust ASG with the territory’s only medical care facility.  Unless the two high government officials Governor Togiola has slotted to oversee the medical facility are of Divine Intervention, please leave the LBJ Hospital alone to Moananu Va and Mike Gersternberger. Just pay the subsidy, past unpaid subsidies, and the equivalent amount of Medicaid lost, and let Moananu and Mike revive LBJ Hospital back to life.

It takes leaders with the “X-Factor” to move mountains in the arena of leading and governing a nation, the likes of Mariota Tuiasosopo, fondly regarded as the “father” of the Fono, and A.P. Lutali, one of the better governors we have had. Late Senator Paogofie, well known for his quiet wisdom in settling conflicts within the Fono and between the Fono and Administration, Tuiasosopo and Lutali are sorely missed during these times of leadership crisis.

May the Good Lord bless our leaders as they try to resolve the health care crisis, may the calm and sound minds of wisdom prevail.

Finally, I would like to commend Moananu Va and Mike Gerstenberger for the great job they have done despite the apparent difficulties, and for their patience and fortitude. Thank you, Sirs.

God Bless American Samoa.   

(Keniseli Lafaele was the project manager of the “Coverage for All in American Samoa Research Project”, and says he is doing this because both the Administration and the Fono pretty much ignored the report as well as previous reports done since the early 1980s. He believes that in these reports lie the foundation of viable solutions to the health care problem facing the territory today.)




Comment Here