The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Private health insurance is “not a viable, sustainable model” for many Bahamian companies, an outspoken businessman has warned, revealing that this costs him more than insuring his multi-million dollar business assets.

Dionisio D’Aguilar described the $13,000-$14,000 monthly premium for 25-30 Superwash staff as “one of the largest expenses on my P&L (profit and loss statement)”, and added: “I pay more to insure them than I do to insure my 12 buildings, 20 vehicles and millions of dollars in equipment.”

The former Chamber of Commerce president told Tribune Business that group health insurance premiums were increasing by 6-8 per cent per year, but little of this increase was flowing to Bahamian health insurance underwriters.

Recalling his time on Family Guardian’s Board of Directors, Mr D’Aguilar said insurers “don’t make much money” on their health insurance portfolio, with average margins standing at 2-3 per cent.

Certain quarters, particularly the Government, may interpret his remarks as backing its efforts to revive its long-promised National Health Insurance (NHI) scheme. Dr Perry Gomez, minister of health, last week announced the creation of a steering committee to oversee the plan’s implementation.

Mr D’Aguilar’s comments may come as a shock to many private sector executives and observers, given that he has often been highly critical of many government initiatives and perceived failings in the past.

However, his remarks to Tribune Business stopped well short of endorsing the Government’s proposed National Health Insurance scheme, for which few details have been released.

Still, Mr D’Aguilar said Bahamian health insurance reforms were essential to preventing companies dropping group coverage for employees - and sometimes their dependents - and sending increasing numbers of Bahamians to an already-over burdened public health system.

“The current system as is is not viable for businesses,” he told Tribune Business. “Your health insurance costs go up every year by 6, 7, 8 per cent, and at some point it becomes unsustainable.

“It’s probably one of the biggest expenses on my P&L. What happens is that companies have to increase their deductible, but that doesn’t make much of a difference.

“More and more companies simply can’t afford it, so they drop their plan. To grow profits, the insurance companies have to put up rates, more people drop off, and they have to raise rates again.”

Questioning whether the per annum premium increases were going to doctors, private clinics or hospitals, Mr D’Aguilar said the money was not reaching the bottom line of Bahamian health insurance underwriters.

“I sat on the Board of a health insurance company,” he told Tribune Business. “They don’t make much money; the claims are horrendous. The yield for health insurance companies is very small; the margins are just 2-3 per cent.”

Both Colina Insurance and Family Guardian have, in recent years, re-priced much of their health insurance portfolio in a bid to match premium to risk and an ever-increasing claims experience. Their efforts appear to have met with some success, as Colina, for example, recently revealed it made a more than $10 million profit on its health portfolio in 2012.

Having described the ‘vicious circle’ resulting from rising healthcare and associated insurance costs, Mr D’Aguilar added: “Companies drop their healthcare insurance, and people have to go on to self-insurance or pile on to the Princess Margaret Hospital and the Government healthcare system.

“That’s free, it’s better than nothing, but [private health insurance] is just not a viable model. It’s not sustainable. To a certain degree, healthcare is becoming a problem because of the escalating cost of insurance.

“Something has to be done, but I am cognisant of the fact we are a very unhealthy people. The vast majority of people are overweight, and have poor diets. A lot of people die because they can’t take care of themselves. We are trending the way Americans are; out of shape, poor diet and, when they get sick, they want everyone else to pay for it because they’ve not looked after themselves.”

Mr D’Aguilar indicated that this, and the high prevalence of non-communicable diseases in the Bahamas, might be a factor behind relatively high health insurance premiums. The greater risk attached to such persons, and the costs involved in seeking medical care, meant insurers had no choice but to raise premiums to match.

“It is a vexing problem, and most countries in the world have a form of socialised medicine,” Mr D’Aguilar said, in an apparent nod towards the Government’s NHI plan.

“It’s not going to be ideal, but in my opinion the current system is not working. You can’t keep jacking up the rates year after year and expect people to pay.”

He told Tribune Business: “I have 25-30 people on my health scheme, and I’m paying $13,000-$14,000 a month. It’s ridiculous. I pay more to insure 20-30 people than I pay to insure the 12 buildings that I own, the 20 vehicles that I own, and the millions of dollars worth of equipment that I own.

“If you add that up, it still doesn’t come to as much as I pay to insure 20-30 people. The current system is unsustainable.”

Mr D’Aguilar suggested that the private sector and the Government work together to develop “an insurance scheme for businesses looking for something that reduces that expense”.

Whether the proposed NHI plan will achieve that is currently anyone’s guess. Winston Rolle, now running his own IT business but the Bahamas Chamber of Commerce’s president when the scheme first surfaced under the inaugural Christie administration, agreed that “something has to be done to manage the true cost of healthcare”.

He added, though, that the private sector’s concerns over NHI were unlikely to have changed much from those put forward between 2005-2007.

While the private sector, under the Coalition for Healthcare Reform, had “supported every Bahamian having access to healthcare”, Mr Rolle said it was vital to “have the proper infrastructure in place” to support NHI.

Hinting that “inefficiencies in the public sector”, such as at the National Insurance Board (NIB), called this into question, Mr Rolle said the private sector had also wanted to understand the benefits offered under NHI and its costs, and make sure it was implemented through a “phased-in approach, and in a viable, sustainable way”.