The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Tax Coalition co-chair yesterday warned the Government “the suit has to fit the cloth” with its proposed National Health Insurance (NHI) scheme, adding that implementing it so soon after tax reform risked imposing an unsustainable burden on consumer and business.

Gowon Bowe urged the Government to be “prudent and wise” with its new January 2016 implementation deadline for NHI, warning the scheme had to be affordable for both itself and the Bahamas at large.

Warning that “you can’t have the golden plan if you can’t pay the golden price”, Mr Bowe again suggested the Bahamas follow New Zealand’s lead in passing a Fiscal Responsibilities Act.

This, if it followed the New Zealand model, would require the Government to ensure any major spending plans had the necessary funding to back them, with all spending details provided to Parliament.

In other words, the greater transparency and accountability this would in theory create will prevent ‘pork barrel’ government spending projects, and would - in the case of NHI - ensure the scheme was not under-funded.

And Mr Bowe was backed by Dr Duane Sands, the deputy FNM chairman, who, in even more forceful language, questioned “how in the world” NHI could be financed given the Bahamas’ current macroeconomic climate.

“How are you going to fund it, particularly given the fact that the potential tool for raising revenue was supposed to be VAT, and the earliest the Prime Minister announced that would come on stream is in six, nine, 12 months from now?” Dr Sands asked.

“VAT in the first two years is revenue neutral. How in the world, with 0.7 per cent economic growth rates and a debt-to-GDP ratio at an historically high level, are you going to fund this huge service or entitlement programme.”

The total cost, and who would finance it, were among the key concerns raised when NHI was first unveiled by the 2002-2007 Christie administration.

The initial cost was pegged at $235 million, but the private sector pointed out at the time that the Government’s own Blue Ribbon Commission report had said total healthcare spending in the Bahamas was some $343 million in 2001 - some six years earlier.

Apart from this seeming $100 million-plus funding gap for the universal healthcare scheme, concerns were also expressed that financing NHI through increased employer and employee contributions to the National Insurance Board (NIB) would create an unsustainable burden for the private sector and consumers alike.

Mr Bowe yesterday told Tribune Business that notwithstanding the ever-increasing demands made of government, the Bahamas needed to adopt the New Zealand approach and ensure “frugality” when it came to public spending.

This, he added, meant the Government had to realise there were some spending plans that “can’t be afforded at this time”. And Mr Bowe also pointed to the examples in Canada, the UK and Europe, where similar universal healthcare plans were incurring “substantial costs” and experiencing funding difficulties.

While NHI might be “a political promise”, the Tax Coalition co-chair said that as a relatively small nation, the Government had to implement something the Bahamas could afford.

“We must fix the current fiscal situation before we implement this large expenditures,” Mr Bowe told Tribune Business. “I would caution the Government to be very prudent and wise in assessing the expenditure, and ensure it has the funding in place.”

Pointing out that NHI’s new target implementation date would come ‘back to back’ with major tax and fiscal reform next year, Mr Bowe added: “To add another form of taxation, whatever is required to fund NHI, is going to put a significant burden on government coffers and the population, and government has to be mindful of that.

“That does not mean an NHI scheme cannot be done, but the suit has to fit the cloth. We can’t do something larger than we can actually afford.”

Urging the Government to be completely transparent on the projected costs and financing mechanisms for NHI, Mr Bowe said the key was whether any proposed scheme was viable from a social as well as economic perspective.

Bahamian companies went through the same difficulties in financing, and designing, a group healthcare plan for staff, and the Tax Coalition co-chair told Tribune Business that the Government needed to ensure an NHI plan was viable for the long-term, not just one to two years.

Noting New Zealand’s Fiscal Responsibilities Act, Mr Bowe added: “That Act required every government spending initiative to be presented to Parliament, with projections of funding and expenditure, to justify whether it’s feasible.”

Dr Sands, meanwhile, told Bahamians “don’t hold your breath” for NHI, given that the implementation date has been pushed back two times - from 2013 to 2014, and now to early 2016.

“This is yet another goal post move, and if I were you, I wouldn’t bank on it,” Dr Sands added, saying there were no plans announced on how NHI would be funded, administered, or how the existing healthcare infrastructure would be brought “up to speed”.

Suggesting that the Government was likely to come up with cosmetic reforms to the existing public health system,,and just stick an ‘NHI’ label on it, Dr Sands said the Christie administration’s decision-making currently appeared to be focused on a ‘no risk’ approach that was stalling investment.

“That is inherently troubling for the economy,” he said.

Cabinet was given a presentation on Tuesday by the Costa Rican consultants it has hired to design the NHI scheme’s benefits, and detail accompanying costs.