The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian insurance industry yesterday warned that the Government’s consultants had underestimated the proposed National Health Insurance (NHI) scheme’s costs by $300 million or one-third, pegging its total price tag as high as $965 million.

The Bahamas Insurance Association (BIA), unveiling its alternative universal coverage plan, called for a public-private sector partnership (PPP) to implement healthcare reform, and warned that the existing NHI proposal effectively amounted to a complete government takeover of the sector.

Emphasising that there appeared to be “no room” for Bahamas-based private health insurers and brokers/agents to operate in an NHI-dominated market, the BIA instead urged an approach that focused on the estimated 100,000 uninsured Bahamians - around one-third of the population.

The BIA said costs associated with its proposal would be “substantially lower” than those associated with the NHI scheme recommended by the Government’s Costa Rican-based consultants, Sanigest Internacional.

Sanigest has given the Christie administration three NHI options, ranging in price from $362 million to $505 million and $633 million, depending on the breadth of the benefits package to be offered.

However, the BIA said that based on claims and membership data submitted by five of its health insurer members, the figures provided by Sanigest were likely a gross underestimate of NHI’s ultimate cost, and the burden it will impose on working Bahamians and their employers.

Even excluding illegal immigrants, the BIA said: “The health industry believes that Sanigest’s NHI cost estimates may be as much as a third below the actual cost - a significant difference of some $300 million.

“Based on our analysis of insurance industry data and administrative costs for the National Insurance Board (NIB) in 2011 and 2012, we have estimated that the Government’s proposal will cost between $895 million and $965 million to implement, with the higher number being the cost to cover the entire population.”

The BIA is likely to have employed data from Family Guardian and Colina Insurance Company, two public companies, plus the likes of Atlantic Medical and Generali to arrive at its estimates.

It pointed out that total Bahamian healthcare spending in 2013 was $810 million or 9.7 per cent of gross domestic product (GDP), and added that the Sanigest financial estimates were “too low” even if provider fees were controlled.

And the BIA also questioned whether it would be “financially feasible” for private health insurers to provide benefits plans to maintain Bahamians’ existing levels of coverage once NHI came in.

Emphasising that the Bahamian health insurance industry “has been a net contributor” to the Government’s revenues via taxes, fees and other overheads, the BIA said the sector had protected many from significant financial losses related to ill-health.

Yet even though half the Bahamian population was already covered by private health insurance, the BIA said the sector had not been consulted on the proposed NHI scheme.

It added that Doctors Hospital’s 72-bed hospital and other facilities, plus 70 private clinics and the jobs of 800 physicians - plus insurance actuaries, underwriters, claims adjusters and nurses - could all be jeopardised by the NHI plan.

Warning that the proposal threatened to “disrupt an entire economic sector”, the BIA said the Government healthcare infrastructure strengthening necessary to make NHI work would essentially “duplicate” what the private sector already offers.

“We are concerned that the currently proposed NHI plans leave no room for private health insurers and intermediaries to operate within the market,” the BIA position paper said. “And, as presently proposed, the market for supplemental coverage may not be financially feasible for private insurers.

“Based on industry experiences, the BIA also believes that the proposed timeline for implementation of NHI is overly ambitious.

“The industry recognises the fiscal constraints faced by the Government, and is of the view that the NHI proposal is both costly and unrealistic.”

The BIA pointed out that both Switzerland and the Netherlands had achieved universal healthcare via a PPP, while both Bermuda and the Cayman Islands employed a mix of public and private sector insurance.

Calling for the Bahamas to employ a similar framework to maintain consumer choice and boost efficiencies, the industry also warned that the Government’s decision to levy 7.5 per cent Value-Added Tax (VAT) on health insurance premiums directly contradicted its NHI and healthcare reform agenda.

Fearing increased health insurance costs from July 1 as a result of VAT, the BIA warned: “Applying VAT to rising private healthcare costs will hurt an increasing number of insureds, and lead to a sicker population, which contradicts the key objective of NHI - to provide universal healthcare and improve health.

“Health insurers have appealed to the Government to reverse this decision on the basis that it is not in the public interest.

“Based on the challenges within the existing framework for the provision of healthcare in the Bahamas, and the increasing cost of healthcare, which is driving the cost of health insurance, the imposition of VAT is expected to further reduce public access to quality healthcare and make health insurance less affordable.”

The BIA, in its proposal, agreed that NHI should be mandatory for all legal residents, and that a basic benefits plan should be enacted into law.

While all private insurers would offer this ‘basic’ plan, whose premium would be capped, the industry urged that Bahamians be allowed to keep their existing private health insurance plans.

The BIA is also offering to administer the NHI scheme on the Government’s behalf, and gave a significant concession by agreeing that persons with pre-existing conditions cannot be denied coverage.