The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A “privately managed” public insurer as proposed by the Government under National Health Insurance (NHI) is likely a “meaningless distinction” according to Bahamas Insurance Commission (BIA) chairman Emmanuel Komolafe, as he reiterated concerns over political interference and unfair competition.

The NHI policy paper released last week stated that there will be “no qualifying distinction” between BahamaCare and private insurers under NHI. BahamaCare will be publicly owned but managed by a privately operated regulated health administrator which was one of the recommendations by the government’s NHI consultants KPMG and will only offer health insurance. The BIA has long opposed the establishment of a public insurer, citing that it would be a great expense and waste of taxpayer monies by the Government, given that its role would be duplicated by the private sector.

Mr Komolafe reiterated those concerns in a statement yesterday and said that despite what has been outlined in the policy paper, the BIA remains resolute in its opposition to the establishment of a pubic insurer. “It has always been the view and position of the BIA that based on the population of The Bahamas and number of private health insurers in The Bahamas - seven in total - there is no need for the Government to establish a government-owned insurance company. The general view within the private sector has been that the Government should maintain its traditional role of enacting appropriate laws, regulating and supervising the activities of the private sector. However, should the Government proceed to create a public insurer, there should be a level playing field. That being said, the extent to which there could in fact be a level playing field in practice is questionable judging by the experience of the local airline and banking industries where the government-owned entity receives preferential treatment and taxpayers funds not available to its private sector competitors,” said Mr Komolafe.

“We note that the Government has indicated that the public insurer will be subject to the same rules as private health insurers. Our expectation is that this will include corporate governance, capital, solvency and other prudential requirements that are currently imposed on private health insurers. There are concerns within the industry as to how this will work in reality seeing that the NHI Authority, Insurance Commission and the public insurer are or will be either government and/or quasi-government agencies. Hence, the boards of these entities will predominantly consist of individuals appointed by the Government. Additionally, the agencies are or will be wholly owned by the Government which gives the Government effective control and total or significant influence over the operations of these establishments. The proposed structure (as has been stated by the BIA in the past) could lead to a flawed system and generate financial losses – defeating the purpose of a Public Private Partnership (PPP) that is set up for the purpose of ensuring operational efficiency, limiting subsidies and minimizsng reliance on the public purse,” he added.

Mr Komolafe said that while the public insurer will be wholly-owned by the government but privately managed, in reality, this is likely a “meaningless distinction”.

“If the entity is run like a completely private entity, then this simply increases the number of health insurers to eight without otherwise changing the nature of the private health insurance industry. It seems to be the case that the government wants its own health insurance company so that it can exercise control over its operations and with that comes responsibility for its failures as well. Given the track record of our government-owned companies, we have every reason to believe that if the public insurer fails, the government will step in and give it taxpayers’ money and other benefits which would not normally be available to a private company. This is not a level playing field. A privately managed but government-owned insurer might try to be efficiently run but will still be challenged with potential political influence,” said Mr Komolafe.

Mr Komolafe said that while the management company will presumably be paid a fixed management or administrative fee for its services, this does not necessarily address the sustainability of the public insurer based on its financial performance.

“However, the public insurer will have a competitive advantage over its private sector counterparts in that it will possess the perceived unlimited financial support from the Consolidated Fund and by extension taxpayers. In the final analysis, it is difficult and arguably impossible for a private company in general and private health insurers in this instance to effectively compete against the government. We remain resolute in our view that the Government should reconsider its position on the establishment of a public insurer for all the obvious reasons noted above. However, if the government is intent on moving forward in that regard, we suggest that the framework be modified vis-à-vis the constitution and delivery of service proposed by the public insurer in the interest of the consumer to ensure the best access to quality healthcare services,” he concluded.