The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE National Health Insurance Authority’s (NHIA) managing director yesterday voiced optimism that the cabinet’s concerns over National Health Insurance’s (NHI) funding mechanisms have been satisfied.

Graham Whitmarsh, confirming that the NHI Authority is set for another presentation, told Tribune Business: “We have collaborated with the Ministry of Finance as they asked. I wouldn’t want to preempt anything cabinet decides, but with regards to funding for NHI we have got a number of different potential funding sources.

“We wanted to make sure that they all come together in a way that can give the government confidence that funding mechanism is a sustainable one. I don’t think much has changed. We have been through cabinet. They wanted us to work with the Ministry of Finance on the funding mechanisms. We have been doing that as recently as the meeting today (Monday).

“I think that conversation is just about concluded. We at some stage will go back to cabinet,” he continued. “Ultimately it’s a decision for cabinet. When this journey sort of started to revamp NHI, the government wanted it to be more affordable, they wanted it to be implemented incrementally, to share the cost of delivering NHI more broadly and a sustainable funding model.

“We’re really working on the final one of those now, and we’re going to go back with a presentation with how we propose to do that and go from there.”

Dr Duane Sands, minister of health, had revealed to Tribune Business last month that the NHI Authority must “give it another go” after failing to win cabinet approval for the scheme at the first try.

He disclosed to this newspaper that the government wants answers to multiple questions raised during its first presentation to Cabinet on the reformed health care financing plan.

While not providing specifics on the queries raised by Cabinet, Dr Sands indicated there needed to be further testing of the “assumptions” that the NHI Authority has made to support how it has chosen to structure the scheme’s financing, operational and administrative mechanisms.

One of the major queries raised by both healthcare providers and employers is how the NHI Authority has been able to price the scheme, and cost the SHB’s annual premium at $1,000, when it has yet to agree a fee schedule with both doctors and medical facilities - the basic determinant of how much healthcare will cost.

The greatest fear raised by the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) and others in the private sector is that if the NHI Authority gets its calculations wrong, and the $1,000 SHB premium severely undervalues the scheme’s price tag, businesses and their employees could be burdened with ever-increasing levies to finance its escalating costs.

Proposed NHI financing mechanisms include VAT levied on health insurance premiums; a reallocation from the existing Public Hospitals Authority (PHA) budget; and a so-called “sin tax” on sugary drinks.

Tribune Business revealed last month that NHI’s true cost was closer to a range between $200m to $236m, with the much-touted $100m-$130m price tag only covering “the government’s exposure” to the scheme.

Healthcare for the 206,000 persons covered by the employer mandate will be financed through their annual $1,000 Standard Health Benefit (SHB) premium, NHI’s minimum level of care, which is to come from a combination of 1.5 percent of their annual gross salary and employer contributions.

This cost is separate, and on top of, the $130m that will be incurred by the Government (Bahamian taxpayer) in financing NHI coverage for the 160,000 persons not covered by the employer mandate.

The NHI Authority has said the $130m cost for persons outside the “employer mandate” will be financed via “a diverse mix of revenue sources”, one of which is NHI’s “existing budget allocation” that stands at $20m.

That leaves a further $110m to be located, but the NHI Authority said it would come from VAT paid on private health insurance premiums; a “reallocation” of resources from the Public Hospitals Authority’s (PHA) existing $216m budget to cover services NHI will now provide; the $8-$10m that a “sugary drinks tax” may raise; and the scheme’s own “risk equalisation” method.

However, neither the “sugary drinks tax” or the reallocation of VAT on health insurance premiums has been legislated or approved. And some 80-90 percent of the PHA’s budget goes on staff costs, with the Princess Margaret Hospital operator also consistently facing an annual $30-$40m funding shortfall.