The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s Value-Added Tax (VAT) policy towards healthcare could result in “catastrophic disaster”, Tribune Business was told yesterday, as it was seemingly designed to drive more Bahamians into an “already over-burdened” public system.

Dr Duane Sands, the Opposition’s deputy chairman, and several private sector executives, suggested the Christie administration’s decision to apply different VAT treatments to public and private healthcare services was directly linked to its proposed National Health Insurance (NHI) scheme.

Under the revised 7.5 per cent VAT proposal, health services provided by a public health care facility, such as Princess Margaret Hospital (PMH) or the Government-run clinics, will be treated as VAT ‘exempt’.

This means that patients will not have to pay the 7.5 per cent rate on top of their bills, although the health services provider in question will be unable to recover the tax paid on their inputs.

Yet in the case of private healthcare services, such as those provided by BISX-listed Doctors Hospital and private physicians, these activities will be considered ‘VAT-able’.

This means that patients will have to pay the 7.5 per cent VAT on top of their medical bills, although the provider will now be able to recover the tax paid on their inputs.

Yet Dr Sands hinted that, when added to the fact health insurance premiums would also be hit with 7.5 per VAT, the effect of the Government’s ‘discriminatory’ tax treatment would be to further raise private healthcare costs in comparison to their public counterpart.

The increased costs will likely make private health insurance, and private healthcare, increasingly unaffordable for more Bahamians and businesses, driving them towards the public system.

Dr Sands suggested this was designed to make Bahamians more accepting of the Government’s planned NHI scheme, which it intends to implement on January 1, 2016.

“It’s an obvious strategy to usher in a totally public healthcare system,” the FNM deputy chairman and well-known surgeon told Tribune Business.

“It puts an immediate 7.5 per cent premium on private healthcare. Healthcare is expensive enough as it is, probably too expensive for many, and once you increase the cost, then there’s clearly going to be a....... move into the public healthcare system.”

Suggesting that the Government-run system would be unable to cope with such a patient influx, Dr Sands told Tribune Business: “Certainly, in the absence of critical improvements in public healthcare, it would be a catastrophic disaster.

“If you have a public healthcare system that has been unable to get the Critical Care Block right; just that, and now you are going to force more people into an already over-burdened system?”

Suggesting that the Government’s VAT approach towards healthcare was “no accident”, the FNM deputy chairman added: “It’s an interesting approach.

“It’s a tax and spend, tax and spend policy. Let’s tax the wealthy, the business class, the private sector until there’s nothing left, and bloat the public sector.

“I guess that’s a philosophical strategy, but an unfortunate philosophical strategy. It is likely to devastate the economy of this country, not to mention create challenges in the delivery of healthcare,” he added.

“It’s clearly a decision [the VAT tax treatment] that’s not accidental. It was clearly deliberate..... It becomes self-fulfilling that the best plan, the most affordable plan, is the Government plan.”

Dr Sands said the combined effects of the Government’s NHI plan and VAT tax treatment for healthcare services was likely to produce unintended consequences.

“I can only hope the Government’s healthcare policy accrues to the benefit of the people,” he added. “I doubt seriously whether this move does that.”

Edison Sumner, the Bahamas Chamber and Employers Confederation’s (BCCEC) chief executive, yesterday acknowledged the “deterioration” that might occur in private health insurers’ portfolios as a result of the sector’s revised tax treatment.

He agreed with Dr Sands, though, that the ‘discrimination’ between private and public healthcare in their VAT treatment seemed designed to play into the Government’s NHI plans.

“That certainly would be a concern,” Mr Sumner said of the Government’s decision to make private healthcare and associated insurance premiums VAT-able. “But it also plays into the Government’s plans to implement NHI in 2016.

“Naturally we’d be concerned with any level of deterioration with the private health insurance carriers, which have already expressed concern over the implementation of NHI.

“It’s something we have to look at - the implementation of the NHI scheme and how VAT affects that.”

Mr Sumner said that as a member of the NHI steering committee, he would ensure the matter was raised and discussed by it.

Further backing for DR Sands came from Nassau Institute executive Rick Lowe, who said of the VAT healthcare approach: “It looks like they [the Government] figure they’re taking over the health business through NHI, but is that going to improve the service we have, putting more people into the system?”