By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Up to 40 per cent of funds spent in the Bahamian public healthcare system go to waste, the Grand Bahama Chamber of Commerce’s president yesterday arguing this made it impossible to have “a fully functioning” National Health Insurance (NHI) or any other scheme.

Kevin Seymour told Tribune Business that this wastage needed to be “immediately reduced” before moving into NHI’s April 2016 post-registration phase, disclosing that the ‘40 per cent figure’ was revealed during last week’s presentation by former National Insurance Board (NIB) actuary, Derek Osborne.

Based on the $274.094 million allocated to the public healthcare system in the 2015-2016 Budget, that statistice indicates as much as $109.638 million is not spent for intended purposes.

Mr Seymour, meanwhile, said Grand Bahama Chamber members, following Mr Osborne’s address, expressed scepticism about NHI’s likely costs, and felt the private sector and middle class Bahamians would ultimately be “saddled” with the burden of financing it.

He emphasised that the general mood among Chamber members was that they wanted to know NHI’s true medium and long-term costs “upfront”, in order to prevent new taxes “being heaped on them at the 11th hour”.

Further scepticism was expressed about the Government’s promise that NHI’s first year could be funded entirely from its Consolidated Fund, with no contributions by workers and the private sector, on the basis that there are “no free lunches”.

Mr Seymour also called for a phased approach to NHI implementation, and said the Bahamas needed to be mindful of its “affordability”, since the constant demands on the Government and Public Treasury meant the country was “not out of the woods yet”.

Recalling the responses from Grand Bahama Chamber members to Mr Osborne’s presentation, Mr Seymour said: “One of the concerns expressed was the first phase, which is the primary care, is expected to be no cost to the consumer.

“That invited quite a number of questions, as most people appreciate there’s no free lunches.”

Mr Osborne explained that if the Government’s existing healthcare expenditure via the Public Hospitals Authority (PHA) and Department of Public Health were “properly channelled” through those avenues, the 2016 NHI roll-out would not impose extra costs on taxpayers and companies.

Yet Mr Seymour told Tribune Business: “One of the things that kind of flew in the face of that explanation was that 40 per cent of the funds in the system [go to waste].

“If that is in fact the case, I would probably think we need to come up with certain programmes to control and bring the waste out of the system, because if we have that level of wastage, irrespective of how much money we are able to re-direct or raise, we are still going to have a very inefficient system.”

Explaining that this tied into questions surrounding NHI’s affordability, and who would ultimately pay to finance it, and how much, Mr Seymour said: “If the rate of wastage is as high as 40 per cent, steps need to be taken immediately to reduce wastage in the system before we talk about taking it [NHI] into phases two and three.

“We really cannot have a fully functioning system with that level of waste.”

Waste and inefficiency are factors that will undermine any initiative, including healthcare reform, and there has been little sign to-date of how the Government plans to tackle leakages from the existing public healthcare system prior to NHI’s implementation.

In NHI’s case, these problems will only increase the scheme’s costs - something that will rebound on all Bahamian taxpayers and businesses.

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

This produced s sharp riposte from Sanigest Internacional, the Government’s consultants on the scheme, 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.

Sanigest 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.

Mr Seymour conceded to Tribune Business that Grand Bahama Chamber members were “a bit sceptical about the cost” of NHI, and wanted the Government and its consultants to be fully transparent from the outset about how much they would ultimately have to pay to finance the scheme.

“They felt the businesses and middle class would get saddled with the cost of this, ultimately,” he said, emphasising that the private sector would not be fooled by “the carrot” of an initially ‘free’ NHI.

“I believe people would be more receptive to understanding the costs upfront, rather than a sleight of hand where they say one thing, and then change the system later after you have started receiving services,” Mr Seymour said.

“Let’s understand the problems, and if the cost is such that you cannot do it in one fell swoop, a phased approach would be the better way to go.”

Acknowledging that universal health coverage was needed, Mr Seymour warned that using NHI to finance should not be done at the expense of the greater national good.

“The sobering point is that we have to advance with caution, because a lot of the consumers and businesses are already feeling they are heavily taxed,” Mr Seymour told Tribune Business, “whether by any of the indirect taxes they have to pay, or other fees and contributions they have to make.

“They want to be in a position to know upfront: ‘What are my costs?’ so nothing is heaped on them at the 11th hour, where they suddenly have to pay this.”

Mr Seymour said Larry Albury, Freeport Jetwash’s general manager, had told the gathering that the Government needed to provide significant advance warning of when NHI was going to a contribution phase, as his firm budgeted a year in advance.

Calling for NHI to be viewed in an overall national context, the Grand Bahama Chamber chief added: “We’re not out of the woods yet.

“While we felt VAT would help us pay down the deficit and pay down the debt, there are some things coming out of the woodwork that the Government did not anticipate having to look at.”

He cited the $185 million Family Island airport upgrades as another essential project that needed financing, with the Government “grappling” with how to finance this - either via the Treasury or public-private partnerships (PPPs).