By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A key Government adviser yesterday said it was “absolutely absurd” for Bahamian private health insurers to fear that the proposed National Health Insurance (NHI) scheme would result in the ‘complete nationalisation’ of their industry.

James Cercone, president of Sanigest Internacional, the consultants charged with developing NHI, told Tribune Business the scheme would actually create “a more competitive and dynamic” health insurance market than presently exists.

He explained that Sanigest had pushed the Government to approve a ‘multi-payor’ model for NHI, where the existing private health insurers will compete alongside a yet-to-be created public insurer, all offering the same plans and benefits.

And, with NHI bringing the 70 per cent of Bahamians who currently lack private health insurance into the market, Mr Cercone argued that underwriters could both expand their market share and profitability by selling supplementary benefits packages to these persons on top of what the scheme offered.

Describing NHI as “a big win” for the Government, Bahamian people and private health insurance industry, the Sanigest president queried whether the opposition from the Bahamas Insurance Association (BIA) and its members was driven by a dislike of having to compete with a publicly-owned insurer.

He suggested that existing insurers wanted to continue dominating the market, and there was “much opportunity to collude” given the Bahamas’ relatively small size.

Referring to a recent meeting with KPMG’s worldwide healthcare specialist, Mr Cercone said the message he delivered was that the Bahamas “is the healthiest market in the world for health insurance profit”.

He added that 25 cents out of every $1, or one-quarter of all private health insurance premiums, went to cover costs such as commissions and administration, as opposed to direct health care services - all implying that private insurers’ prices and costs are too high due to the ‘profit motive’.

“The idea that we’re nationalising private health insurance is absolutely absurd,” Mr Cercone told Tribune Business. “There’s absolutely no imposition in that sense with the implementation of NHI.

“The notion of nationalisation is absurd because we’re expanding the market, giving choice to the population, and we’re probably going to increase their [private insurers’] margins, as we’re taking a bunch of risk off their beneficiary population.”

The NHI framework, as shown to Tribune Business, envisages the creation of a National Health Insurance Commission (NHIC), which will be responsible for administering and supervising the scheme.

It will also determine premium price and costs, and receive and administer the NHI scheme’s financing. This, in the initial stages at least, will come solely from the Government’s consolidated fund.

The funding will support the Vital Benefits Package, the basic level of health insurance, which will be offered by both the private underwriters and the proposed public health insurer. The former will be able to sell supplementary insurance packages to all NHI participants, and to continue offering existing plans to clients.

“There’s competition across the board with the same packages, the same prices, the same provider network,” Mr Cercone told Tribune Business.

“We advocated strongly that we can’t go the single-payor route. We want competition, we want private insurers to participate. We lobbied Cabinet to approve the multi-payor idea, which they did in March.”

Mr Cercone clarified previous comments by Marco Rolle, the Ministry of Health’s permanent secretary, which seemed to suggest that group and individual clients of Bahamian private health insurers would be unable to keep their existing plans once NHI was introduced.

Mr Rolle, in a July 25 letter to the BIA, said that while clients would be able to stay with their existing insurer, their plans would “be composed of the mandatory Vital Benefits Package and supplemental plans at their discretion”.

This prompted a stinging response from the BIA, but Mr Cercone said the only NHI “mandatory” requirement was that all existing private health insurance clients enroll for the Vital Benefits Package.

He added that individual and employer-sponsored group plans would still have the right to maintain their existing comprehensive insurance policies, and did not have to use NHI’s Vital Benefits Package.

“We’re not getting rid of their ability to sell comprehensive health insurance,” Mr Cercone added.

The Sanigest Internacional president, though, questioned whether any clients would want to maintain policies where annual premiums cost between $10,000 to $12,000 per person when they could receive 80 per cent of those services/benefits under the Vital Benefits Package at a much lower cost.

The BIA and its members have called for NHI to be administered by the private sector, which Mr Cercone yesterday said translated into the “privatisation of health insurance” in the Bahamas.

“What they’re saying is that they don’t want a publicly regulated health administrator - a public insurer,” he told Tribune Business.

“What they’re saying is: ‘Our proposal is that we exclusively manage the market’. ..... Since they’re all profit motivated, it’s a small market and there’s a lot of opportunities to collude.

“We don’t see why they oppose competition from a public insurer. If they’re so efficient and competitive, they should be willing to allow a public insurer to provide health insurance to those not covered by private insurance.

“I don’t see how the market can operate without that healthy competition. I don’t see what the problem is from their perspective.”

Mr Cercone said the concerns and opposition to NHI from the Bahamas Insurance Brokers Association (BIBA) also appeared to be motivated by its members’ desire to retain existing commissions.

“It’s clear why BIBA is taking such a strong stance in this regard, because a lot of the money they’re making on existing high rates of commission is putting very little added value into the healthcare system,” he added.

Still, Mr Cercone suggested that BIBA and its members would have a role to play in a post-NHI implementation environment.

He added that they could help certify that healthcare facilities were up to NHI standards, plus “go after” the supplementary market, “tailoring packages to be more competitive” in that area.

“We see there’s going to be big change, but health insurance should become more dynamic and competitive. I think the market needs to become more dynamic and competitive,” Mr Cercone told Tribune Business.

“I think it [NHI[ will create a much healthier insurance market. There are problems with the current market, and we want to correct those. It will be a huge win; good for the Government, good for the Bahamian people, and good for the private health insurers.”

Whether Mr Cercone’s concerns on ‘collusion’, and suggestions that private health insurance is overpriced and inefficient, will endear NHI to the BIA and its members remains to be seen.

Rhonda Chipman-Johnson, the BIA’s co-ordinator, expressed fears in a July 27 letter that NHI amounted to “a complete nationalisation” of the private health insurance industry and would make its members “totally redundant”.

She wrote then: “:The BIA notes that the Ministry of Health does not support the underlying philosophy of our position, which is to ensure equity, choice, efficiency, effectiveness and maintain the role of the private sector as the primary driver of employment in the Bahamian economy.

“The disagreement on this fundamental principle makes the Ministry’s subsequent concurrence on some points in our proposal redundant and of no effect.”

Ms Chipman-Johnson said the Ministry of Health had only agreed on items contained in the 2006 NHI Act, and reports by its own consultants, and its disagreement with the three points in the BIA’s proposal “does not demonstrate good faith and shows your unwillingness to engage in any meaningful discussions”.

She added: “This only supports the notion that the Ministry endorses an approach that places full control of healthcare, health insurance as well as funds associated with them, in the hands of Government.

“This is a complete nationalisation of the private health insurance sector in the Bahamas. Your proposal makes private health insurers totally redundant.”