The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

PricewaterhouseCoopers (Pwc) projections for the National Health Insurance (NHI) ‘funding gap’ are almost a $38 million under-estimate, due to the plan’s basic coverage expanding to a $400 million package.

PwC’s May 2015 report was based on the original $362.6 million price tag attached to the Vital Benefits Package (VBP) in the original October 2014 report presented to the Christie administration by its consultants, Sanigest Internacional.

Yet Marco Rolle, the Ministry of Health’s permanent secretary, confirmed in a July 25 letter to the Bahamas Insurance Association (BIA) that the price tag attached to the VBP had subsequently risen to $400 million.

This was backed by Sanigest president, James Cercone, in an August 2015 interview with Tribune Business.

It all suggests that the VBP ‘funding gap’ has increased, not decreased, since the PwC report was delivered to National Insurance Board (NIB) director, Rowena Bethel, on May 20.

For if the accounting firm’s forecast that the Government can re-allocate between $228.3 million and $252.1 million in existing public health spending to NHI is accurate, then the increased $400 million ‘price tag’ means that the funding gap has risen from $110.5-$134.3 million to $147.9-$171.7 million.

The PwC report’s findings provide emphatic backing for the NHI concerns raised by the likes of the Medical Association of the Bahamas (MAB), Bahamas Insurance Association ((BIA), Bahamas Chamber of Commerce and Employers Confederation (BCCEC) and other private sector healthcare players.

It effectively validates all the points they have raised, so it is not surprising that the Christie administration has yet to officially publish the PwC report and its contents - since doing so would have undermined both the NHI scheme and its own credibility.

Indeed, the Government’s actions suggest that it has decided to ignore the report and shelve its findings, given that it seems hell-bent on forging ahead rapidly with an NHI plan that contains far too many ‘unknowns’.

For starters, PwC said it was impossible to “verify” the $362.6 million VBP cost estimate in the original Sanigest report because the Government had yet to decide which healthcare services would be covered under it.

And Prime Minister Perry Christie admitted several weeks ago that the Government has yet to place a final ‘price tag’ on NHI, or determine which services to include in the VBP.

The PwC report said information provided by the Ministry of Finance showed that the Government spent almost $300 million on healthcare during the 2014-2015 fiscal year.

Of that sum, two-thirds or just over $200 million went to the Public Hospitals Authority (PHA), with insurance premiums for public sector employees the next-largest line item at $50.831 million.

Of that latter sum, PwC said a portion would be available for re-allocation to NHI - but only the portion that goes to services included in the VBP. To maintain the existing coverage quality for some civil servants, the report added that the Government would have to purchase ‘supplementary’ insurance from private underwriters.

PwC said Sanigest’s own report suggested that $228.3 million could be re-allocated to NHI, comprised of $38 million spent on private health insurance for government employees, plus $30 million and $160 million from the Department of Public Health and PHA, respectively.

The latter two figures represented 85 per cent and 90 per cent, respectively, of the Department and PHA’s existing annual budgets. However, PwC said it had been unable to confirm whether these spending percentages could actually be transferred to NHI.

Mr Cercone previously told Tribune Business that the $400 million for the VBP would come from the $260 million allocated to the Public Hospitals Authority (PHA) in the 2015-2016 Budget; the $30-$40 million received by the Department of Public Health; and the $60-$70 million currently spent by the Government on insurance premiums for civil servants and public sector workers.

This, though, would still have left a $30-$40 million ‘funding gap’. And PwC suggested that total private health insurance costs for the public sector were much lower than Sanigest’s $60-$70 million, pegging them at $47.24 million.

“We have not been able to verify the amount of the total payment of $47.24 million, which may be reallocated to NHI,” PwC said. “However, we understand for the private health insurers that typically 33 per cent of paid claims are for overseas treatment which will not be covered by NHI.

“Using that amount as a proxy for the amount of premium that may still be required for incremental coverage once NHI is introduced means that $15.6 million of the total premiums to PHI may still be required to provide extended benefits to public servants.”

PwC added that the Ministry of Finance’s own estimates showed some $269.5 million could be allocated from existing Government healthcare spending in the 2015-2016 Budget to finance NHI.

That figure included $25 million in administrative savings, plus the $13.5 million granted to the Ministry of Health. The remainder came from the $201.1 million granted to the PHA, and Department of Public Health’s $30 million.

“The amount of money currently spent by the Government which may be reallocated to NHI is not sufficient to fund NHI,” the PwC report warned.

“This amount is likely to be further reduced as it is unlikely that much, of any, of the Ministry of Health budget could be reallocated, as the Ministry of Health will continue to operate its programmes and services once NHI is established.”

As a result, PwC estimated that some $230.6 million may be available to finance NHI using the Ministry of Finance’s estimates.

The accounting firm recommended that the Government had three options - ‘cut its cloth to fit’ by reducing the services covered under the VBP, bringing them into line with available funding; raise taxes to finance NHI; or increase government spending to achieve the same objective.