By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government cannot finance National Health Insurance (NHI) from internal savings because waste and inefficiency is too "entrenched" in the public sector, a Cabinet minister has admitted.

Dr Duane Sands, minister of health, told Tribune Business that it was simply unable to cut "significant waste" in the public healthcare system fast enough to produce savings that could then be reallocated to fund the revised NHI model.

Dr Glen Beneby, former chief medical officer, previously estimated this waste was costing Bahamian taxpayers some $100m per annum, a sum equivalent to 25 percent of the public healthcare budget, but Dr Sands said the Government was unable to abandon much of this "without penalty".

Suggesting that a substantial proportion was linked to existing contractual obligations, the minister added that NHI faced competition for any savings from the increased compensation demands of doctors and nurses, plus critical infrastructure upgrades at facilities such as the Princess Margaret Hospital (PMH) and South Beach clinic.

Acknowledging calls for the Government to finance NHI through internal savings, rather than levying a new tax on Bahamian employers and workers, Dr Sands told Tribune Business: "The rate of reduction of waste and inefficiency is not going at a rate where we will eliminate waste and inefficiency by next month.

"I believe there's still significant waste in the system, but a lot of it is very entrenched. There are system challenges, process challenges, a lot of them that are contractual commitments built in that we cannot just walk away from without penalty.

"If we want NHI, and people have said they want it, to the best of my understanding with what exists right now it's going to require different things, and the savings and re-purposing of funds will have to go to renegotiating contracts with doctors, improved terms for nurses, repairs at PMH and South Beach," Dr Sands added.

"Some of the funds that are in the system that could be repurposed for NHI are being hypothecated to other things."

The "wasted" $100m previously identified by Dr Beneby equals Dr Sands' recent estimate for how much the revised NHI scheme will cost. Besides the proposed levy on employers and employees, mirroring the National Insurance Board (NIB) payroll tax contributions, other financing options include between $4-$10m from a "sugary drinks tax" and a reallocation of VAT levied on health insurance premiums.

The Minister, meanwhile, said the Government's revised scheme was a marked departure from the "something for nothing" promises of the former Christie administration.

"That's not what I'm promising," Dr Sands told Tribune Business. "I'm promising Bahamians honesty, transparency and value, and showing you how we got from this to that. Either people say they want this, and are willing to pay for it, or they say no.

"The argument I'm hearing is that we want it, but take the money from somebody else. Or we don't believe these added services should involve an additional cost on people making less than $20,000, $15,000, $10,000 a year.

"There's merit to a progressive system of charging and taxing," the Minister continued. "The question is: At what point is it good enough for any particular individual. Some might say that $42 a month for an individual making $25,000 a year is pretty good.

"I'm hearing arguments from some quarters that people making less than $25,000 a year shouldn't pay any premium. This is the nature of politics, and you look at the dialogue and find the morsels that are tasty, the bits that are useful for advancing and progressing, but some of it you dismiss because it is not helpful."

The NHI Authority's proposed taxation/contribution structure already has progressive elements, with workers earning just $5,000 a year expected to contribute just $8 per month towards the Standard Health Benefit (SHB) - the scheme's minimum level of coverage - with employers picking up the $75 balance of the $83 monthly payment.

Employees earnings $10,000, $15,000 and $20,000 per annum will be required to pay monthly premiums of $17, $25 and $33, respectively, with only workers earning $25,000 - The Bahamas median income - and over contributing $42 or half the monthly amount.

Dr Sands, meanwhile, said numerous studies worldwide had shown that Universal Healthcare Coverage (UHC) schemes, such as the one that The Bahamas proposes to finance via NHI, generate more in GDP growth and productivity than what a country spends on them.

Besides slashing the money families have to fund to care for those who have pre-existing illnesses, or are uninsurable, the Minister suggested NHI would strengthen the healthcare system's overall infrastructure by reducing the amount Bahamians spend on healthcare in south Florida and elsewhere in the US.

"It further strengthens the capacity of The Bahamas to repatriate some of the funds spent elsewhere," he told Tribune Business. "The 800-900 pound gorilla in the room is Bahamians spend $200-$300m a year in south Florida on healthcare, and we cut our own throats in terms of taking care of our own.

"We make it very difficult to invest in technology, certain levels of professionals to improve healthcare locally. If we change the model a bit and shift patients from the public system, we have an opportunity to grow our healthcare system to standards that exist elsewhere or better."

Dr Sands continued: "The return on investment is very clear. I can cite countless studies that investment in UHC more than returns in GDP the amount spent. An investment in healthcare brings more than the dollar amount in return or growth in GDP.

"That's proven over and over. It gets down fundamentally to the question: Do we believe in insurance, yes or no? Most of us have a problem with insurance until we need it. The language, and I'm not going to quibble over it, is really intended to evoke an emotional response to it. Most of the media is calling it a 2 percent tax. OK."

Dr Marcus Cooper, the Medical Association of The Bahamas (MAB) president, told Tribune Business last week that the body was still assessing the revised NHI model, although he hinted at unhappiness that neither it nor its members had been consulted by the Government to-date.

He said: "We've not had any meaningful consultation withe the NHI Authority or Dr Sands. We'd been hoping that would be done by now. We hope to have some definitive answers to questions we have."

Rick Lowe, an executive with the Nassau Institute think-tank, echoed concerns that the revised NHI scheme's launch is especially ill-timed following the recent VAT rate increase.

"It's just another nail in the coffin to slow things down again. The evidence is in study after study. The more you raise taxes, the more you slow the economy and it takes a while to adjust," he said.