By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

National Health Insurance’s (NHI) top executive yesterday admitted “we have work to do” to convince the government its “financing model” will not result in multi-million dollar shortfalls.

Graham Whitmarsh, the NHI Authority’s managing director, confirmed to Tribune Business that the assumptions underpinning the scheme’s proposed pricing and costs were being assessed in conjunction with the Ministry of Finance to ensure they were accurate.

Describing this as “healthy” and “part of the process”, Mr Whitmarsh said the government wanted to get it right rather than risk burdening the economy, employers and working Bahamians with an unsustainable universal health coverage (UHC) funding mechanism whose costs were ever-increasing.

He told Tribune Business: “The way I view this is when I started the process of developing a new policy framework for NHI, there were two real things the Government said. They said that they wanted a programme that was affordable, and wanted a programme that could be implemented in line with what the economy here can afford.

“That is what we have been doing. We have been working through various situations with the Government, refining policy and getting feedback from them. The final process is figuring out the financing of it and making sure we are able to fund it. That is what we are doing right now.

“We have been working with the Ministry of Finance to explain our financing model to them. We have been making really good progress on that. We have done a lot of detailed work on the costing. We have been refining it continuously and will continue to do that.”

Mr Whitmarsh spoke after Dr Duane Sands, minister of health, revealed to Tribune Business last week that the NHI Authority (NHIA) 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.

“I see this as naturally part of the process,” Mr Whitmarsh said yesterday. “It’s welcomed because we all want to make sure that we have the best and most accurate numbers going into it. We have a very detailed cost model for NHI; for the cost of delivering services both to the beneficiaries of NHI and the cost of delivering it to those who have private health insurance through their employer.

“What we are doing now is starting to explain that to the Ministry of Finance in a lot more detail; how did we get those numbers; the assumptions used; the possible risks and variances; which numbers we are comfortable with and uncomfortable with.

“There is a huge amount of data we have worked through. We’re doing that and making good progress. I’m pleased that the Government wants clarity on this before they take a huge step on the way forward. I accept that we have work to do, but I think this a healthy process,” continued Mr Whitmarsh.

“We have numerous important stakeholder groups moving this forward. We continue to work with them all. I think everyone is getting a better understanding of what we’re proposing, and this is going to continue.

“We have done a lot of work with the doctors around prostate cancer. We have started the work on cervical cancer and just completed the work on kidney disease. I’m pleased with how the oncologists have engaged on this, but all of this will continue until the point that we implement.”

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 - split between employers and employees - 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 and cover any shortfall.

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.