Thursday, February 7, 2019
By NEIL HARTNELL
Tribune Business Editor
The National Health Insurance Authority’s (NHIA) defence of the scheme’s $130m price tag yesterday raised more questions than answers, with even a Cabinet minister admitting it needed “clarification”.
Dr Duane Sands, minister of health, told Tribune Business he had “the same question as you do” after NHI’s supervisory body seemingly revealed in a statement that the $130m would only cover the 160,000-170,000 persons not included the “employer mandate”.
The NHI Authority’s statement, issued in response to fears voiced by Jeffrey Beckles, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, that the private sector will be forced to fill any funding gap if the scheme’s sums and cost estimates were wrong, made a clear distinction between those persons and working Bahamians.
The latter, some 206,000-strong, will finance their annual $1,000 Standard Health Benefit (SHB) premium - NHI’s minimum level of care - through a combination of 1.5 percent of their annual gross salary and employer contributions. This cost, yesterday’s NHI Authority release suggests, is separate and on top of the $130m price tag its managing director quoted last week.
Graham Whitmarsh, besides unveiling that figure, also revealed that the “employer mandate” part of NHI was originally projected to cost $106m. He split this into $53m contributed by employers; a further $33m from employees; and a $20m balance from the Government to cover civil servants and public sector workers currently privately insured.
While recent revisions were said to have reduced the burden on both employer and employee, and increased the Government’s contribution to $22m, yesterday’s NHI Authority release implies that the scheme’s true costs can be calculated by adding the “employer mandate” contribution to the $130m required to cover those outside this.’
Taking the original $106m price tag for the employer mandate, and performing this calculation, seemingly takes NHI’s total cost to $236m - well within the $200m-$300m range suggested by Mr Beckles and the Chamber.
“Here are the facts about how much this programme will cost,” the NHI Authority statement said yesterday. “First, for businesses required to provide health insurance to their employees under the new employer mandate, the NHI programme will cost $1,000 per employee per year or about $84 per month.
‘“These businesses will be permitted to recoup up to 1.5 percent of an employee’s full wages (inclusive of gratuities, overtime and bonuses) to share in the cost of the premium. This means for an employee earning over $66,667, they will pay 100 percent of the premium.”
The statement then asserted that “this is not a tax” on the basis that the premium will be “paid to private insurers, not the Government”, although many observers will likely disagree given the similarities to the payroll tax that finances National Insurance Board (NIB) contributions.
“In return, employees will receive private health insurance with minimum benefits prescribed by the Standard Health Benefit (SHB) under NHI. It is estimated that the employer mandate will cover approximately 206,000 people, a portion of which are already covered under some form of insurance by their employers,” the NHI Authority continued.
Then, turning to those Bahamians who are not working, the statement said: “Second, for everyone else not covered by the employer mandate, which includes senior citizens, children, indigent, unemployed or employees of exempted businesses (businesses with less than $250,000 in annual turnover), they will be able to receive the SHB coverage from NHI at no cost.
“When launched on July 1, 2020, it is estimated this segment will consist of between 160,000 to 170,000 people. In order to provide these benefits for these individuals, we estimate it will cost approximately $130m for the fiscal year starting July 1, 2020. This is completely separate from the employer mandate, which is covered by private insurers.”
Neither Dr Robin Roberts, the NHI Authority’s chairman, nor Mr Whitmarsh, returned Tribune Business’s phone calls and messages seeking an explanation before press time last night.
Dr Sands, when initially contacted, said he was only aware of the $130m cost estimate. “The greatest number I heard was the $130m,” he told this newspaper. “I’ve not seen this latest statement, but I’ve never seen a price tag of more than $130m.
“Based on the last discussion or presentation I would have gotten from them, and that was last week, I don’t recall as such. That would be news to me.” Contacted later after Tribune Business e-mailed him the NHI Authority’s statement, Dr Sands replied on the scheme’s total cost: “I have the same question as you do. It needs clarification.”
He declined to speak further as he was awaiting a response from Dr Roberts.
The NHI Authority statement, meanwhile, 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.
Still, the NHI Authority rejected Mr Beckles and the Chamber’s fear that NHI may cost as much as $200-$300m as “completely arbitrary and not based on evidence, analysis or facts”.
“Simply put, there is no basis for this number,” it added. “It is not a number that has ever been quoted by the NHIA as it relates to the policy proposal costs to employers, and there appears to be some confusion on the overall programme costs.” Indeed.
For some employers and employees, especially those whose group medical plans already include the benefits covered by the SHB, there will be relatively little change under NHI. Those whose insurance does not include all the SHB’s benefits will have to adjust their coverage to ensure it does so, potentially increasing premium costs.
However, data unearthed by previous NHI-related research found that around 110,000-120,000 Bahamians are currently covered by private health insurance. Based on 206,000 persons being covered by the employer mandate, this suggests the employers of some 80,000-90,000 working Bahamians will now have to part-finance health coverage on their behalf.
Mr Beckles yesterday reiterated his and the Chamber’s concerns that the private sector will be increasingly leaned upon to finance escalating NHI costs if the $1,000 SHB premium proves insufficient to fund the scheme.
He added that working Bahamians covered by the “employer mandate” will effectively have to pay twice for NHI, given that their taxes will also be financing those not included in this segment.
“I’m happy my comments caused them to come out and be more specific on the actual costs, which is a good thing,” Mr Beckles told Tribune Business. “Based on what they’re saying in this release, the figure [$200m-$300m] seems to be appropriate.
“It doesn’t matter what they call it; they have to pay for that. If they think that number will fall into No Man’s Land and some godfather will pay for it... it’s coming out of the taxpayer’s pocket whether they like it or not. That was part of our concerns. They’re going to default to the public sector or have to come for taxes.”
Mr Beckles added that continued uncertainty over NHI costs would impact private sector planning for 2020, when the scheme launches and contributions start, and could result in some companies laying-off staff to compensate.
“We want to know that going into our planning, especially since any company - inside and outside the Chamber - are uncertain about whether they can hold the line on current costs which seem to be increasing,” he said.
“The last thing we want to hear businesses say is that they have to streamline or say they have to cut back to offset the increased costs. It breeds a level of negativity and lack of confidence in the economy.
“The better the opportunity for business owners to know what they’re facing, the better it is for planning and they can better hold the line on employment numbers going forward. The last thing we want is someone saying we have to take these measures to offset increasing costs.”
The NHI Authority yesterday admitted there was “always a risk that costs may be higher or lower than estimated”, but said it had developed a “national SHB fee schedule” to control provider costs - although this has yet to be discussed and agreed with doctors and healthcare facilities.
“The approach NHI is taking to adopting value-based payments for health services will ensure more effective use of health spending,” it added. “This is already being demonstrated in our current programme, with NHI delivering its current services below budget and to an over 90 percent patient satisfaction rating.
“Universal access to healthcare in The Bahamas is long overdue.... We have heard overwhelming support from Bahamians throughout the archipelago. The NHI proposal shares the costs more equitably between government, individuals and businesses, and seeks to remove the burden of out-of-pocket payments for health care services through a prepayment insurance plan. It represents an investment in human capital to propel the economic development of The Bahamas and a better quality of life for all.”