The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Insurance Association’s (BIA) chairman last night said accountants had been re-hired to review the proposed National Health Insurance (NHI) scheme’s costs, amid accusations the Government’s main consultants have “misrepresented” this burden.

Emmanuel Komolafe, in an e-mail to Tribune Business, said the Christie administration had again called upon PricewaterhouseCoopers (PwC) to review the NHI cost estimates put forward by the BIA and Sanigest Internacional, which are some $640 million apart.

“The BIA has met with the new permanent secretary with oversight for NHI, Mr Deveaux-Isaacs, to discuss our concerns,” Mr Komolafe said. “We have been advised that PwC has been re-engaged to conduct a thorough and independent review of the cost ‎estimates for NHI, as put forward by the BIA and Sanigest.”

He added that PwC subsequently contacted the BIA and some of its members to prepare for its review, which is set to begin shortly.

Mr Komolafe acknowledged that there had “been some progress” made in discussions between the Government and insurance industry, although he conceded “it could have been better”.

“We have communicated to the Government, PwC and other stakeholders our willingness to co-operate and assist in good faith, on the premise that there will be transparency and full disclosure by all parties going forward,” Mr Komolafe said. “After all, we all support the principle of universal health coverage.

“Our view is that we need to be clear on the potential cost, funding and financing of NHI. However, the model adopted in the implementation of universal healthcare in the Bahamas is equally as important, and will have a major impact on actual costs and the funding of the programme.

“Simply put, we need to find and implement a model that works for the Bahamas with minimal displacement and disruption to the economy. The overall goal must, however, remain real and comprehensive healthcare reform.”

Mr Komolafe’s comments were markedly ‘toned down’ from a BIA release issued just hours earlier, which accused Sanigest, the Costa Rican-based architects of the NHI scheme, of “misrepresenting the cost”.

Differences over how much NHI will initially cost exploded into the open earlier this year, after the BIA argued that the scheme would cost $947.3 million to implement.

This produced s sharp riposte from Sanigest president, James Cercone, who accused the BIA of “comparing apples with oranges” because it had based its estimates on Aruba’s Expanded Benefits Package - not the smaller, less costly Vital Benefits Package that NHI will initially employ.

The Government has applied a $400 million price tag to the Vital Benefits Package, which it expects to finance from existing tax revenues in its Consolidated Fund and the ‘re-purposing’ of existing spending.

Mr Cercone previously told Tribune Business that the $400 million 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.

Yet this does little to reassure Bahamian companies about having to fund NHI via increased taxation over the medium to long-term, especially given that Sanigest recommended that a payroll tax of up to 5 per cent be employed to finance the scheme’s $633 million expanded benefits package.

The BIA yesterday reiterated its belief that NHI’s cost projections “are grossly underestimated”, and accused the Costa Rican-based consultants of using “a bait and switch” approach to swing Bahamian public opinion behind NHI.

It added that there was still a $75 million “shortfall” if the $400 million projection proved accurate, and the Government financed the scheme as Mr Cercone had outlined.

The insurance body then warned that should its earlier $965 million estimate for NHI’s true costs prove accurate, there would be a $640 million ‘financing gap’ that the Government would likely have to fill with deficit spending - undermining the whole rationale for Value-Added Tax (VAT) and repeated promises of fiscal prudence and consolidation.

“The Bahamas Insurance Association believes that it is misleading and irresponsible of Sanigest to falsely suggest that NHI’s cost to the public and businesses would only be a payroll tax of 3 per cent [for the initial scheme],” the BIA said.

“If, in fact, the Government has decided on how to close NHI’s funding gap, we believe they have an obligation to level with the public so that the true costs are known to all of us. If not, the forthright thing to do would be to indicate that in addition to the payroll taxes, other taxes will likely be increased or introduced in order to cover the costs of NHI.

“Sanigest should not be seeking to convince the public to support their NHI scheme by misrepresenting its cost. Universal healthcare is too important for the Bahamas to permit this ‘bait and switch’ approach to financing by promoting initially low ‘teaser’ rates of taxes, which ultimately will have to be raised significantly to cover both the running costs of NHI as well as initial deficits caused by rolling it out for ‘free’.”

The BIA added that the credit rating agencies, such as Moody’s, had made it perfectly clear that the Government was in no position to ‘bankroll’ NHI without further raising tax revenues.

Yet it said Sanigest appeared to believe “there is such a thing as a free lunch”, based on its pledge that no new taxes or worker/private sector contributions would be required to fund NHI initially.