The Tribune

Bahamian workers could see their contributions to employer-sponsored health insurance plans increase by between $40 to $100 per month once premiums are subjected to Value-Added Tax (VAT) from July 1.

Lynda Gibson, Atlantic Medical Insurance’s executive vice-president and general manager, told Tribune Business: “In most companies, the employer pays a portion - if not 100 per cent -of the employee-only coverage. The employees have to pay for their dependents.

“Whatever portion an employee has to pay of their insurance, the Government is charging 7.5 per cent on to that because it belongs to the consumer. I have seen that going anywhere from $40 more a month to $100 more per month. The average person cannot afford to pay anything more.”

All insurance products will be exempt from VAT until July 1, 2015, after which life insurance, annuity insurance and savings plans will remain exempt. Underwriting and reinsurance services relating to these services will similarly be exempt, along with any associated broker or agent fees.

Non-life insurance services, including property, health and casualty insurance, will be subject to the standard 7.5 per cent VAT rate after July 1. Insurance services supplied to persons or businesses outside the Bahamas are normally zero-rated.

Although insurance companies will not charge VAT on premiums before July, they must effectively eat the cost of VAT-able services in the meantime. Insurers have questioned the Government’s decision to levy VAT on health insurance if it intends to make healthcare more affordable and accessible for Bahamians, and expressed concern that many consumers - both employers and individuals - will simply opt to drop their coverage when costs increase.

Mrs Gibson, who is also a member of the Bahamas Insurance Association’s (BIA) National Health Insurance committee, told Tribune Business that insurers were not opposed to the Government’s push for universal health care.

But she added that despite the competitive nature of the industry, insurers have come together to voice their concerns surrounding the proposed implementation of National Health Insurance (NHI) and its impact on the industry.

“One of the things that we have done as an industry is that we have come together. The industry is very competitive but we have come together because we have realised that unless we come together the whole industry is going to go up in smoke,” said Mrs Gibson.

“We won’t be able to get health insurance, and can’t depend on the public system because it’s already overloaded. If it’s no longer accessible none of us will be able to afford universal health care.

She added: “We are not against universal health care. I think it’s a good thing, because it will create a broader base for health insurance. You won’t have all this anti-selection. When you have more people, the risk will spread and we can remove the pre-existing condition limitations we have on policies.

“It will bring down the cost. In other jurisdictions where my company operates and they have mandatory health insurance, because it is mandatory everyone must have it, and we’re not selected against.”

Mrs Gibson urged the Government to first fix the existing healthcare system and infrastructure before it launches NHI. “The Government is not even billing the private sector properly,” she said.

“They need to look at what they are supposed to bill the private sector for. The billing system in the public hospital is awful. Neonatal is one of the most expensive areas that they are not billing for. The private hospitals can teach them a lesson on how to submit bills to the private sector.

“In other words, they have money out there that they are not even collecting. They are introducing this into a broken system. All we are saying is fix what you have.”