The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The National Health Insurance (NHI) plan’s architects yesterday forecast that the scheme would generate almost $160 million in annual benefit savings by 2025, pledging that its impact would be “fiscally neutral”.

James Cercone, a consultant with Sanigest International, the Government’s Costa Rican NHI advisers, told a Bahamas Institute of Chartered Accountants (BICA) conference that the scheme aimed to cure “a dysfunctional market” for healthcare services.

In particular, Mr Cercone said the NHI plan aimed to drastically slash the “$200 million-plus” that Bahamians were having to spend annually “out of pocket” on healthcare.

This represents money Bahamians have to find themselves, from either their own incomes, efforts or other resources, to cover their medical costs because they lack private health insurance.

Projecting that the NHI scheme would generate net present value (NPV) savings of $653.3 million over the 10 years between 2016 to 2015, or $85.2 million on an annual basis, Mr Cercone said the savings would accrue almost immediately in three key areas.

He, and Sanigest, are projecting that NHI will cut Bahamians’ ‘out of pocket’ healthcare spending by $29.9 million in 2016, the targeted date for the scheme’s implementation.

Savings in this area will increase to some $104.6 million by 2025, Sanigest is forecasting, implying that the amount of money Bahamians will have to find themselves to cover their medical costs will almost be cut in half within 10 years.

Mr Cercone’s presentation suggested other savings would come in ‘mortality avoidance’, with a $13.9 million saving in 2016 increasing to $16.9 million by 2025.

And it projected that NHI would also produce ‘lower healthcare costs growth’, with savings in this area rising from $1.1 million in 2016 to $35.7 million by 2025.

All told, the Sanigest forecast is that the NHI scheme will deliver $156.8 million in total benefit savings by 2025, the scheme’s proposed 10th year.

Mr Cercone yesterday said the Bahamas was “significantly underperforming” other countries, and getting “very low returns”, given the total amount of money it spent on healthcare annually.

This came to $810 million annually, with the Government footing $420 million or some 52 per cent of the bill, split between direct funding (48 per cent of the total) and the National Insurance Board (NIB) at 4 per cent.

Private health insurance covered 25 per cent of this nation’s healthcare spending, with ‘out of pocket’ spending accounting for the remaining 23 per cent.

The Sanigest consultant said ‘out of pocket’ healthcare spending in the Bahamas, while low by regional standards, was “significantly higher” than the World Health Organisation’s (WHO) 15-20 per cent benchmark, impacting middle and low income families.

And other nations, such as Turkey and Belize, had seen much more dramatic life expectancy improvements despite spending a lower proportion of their GDP on healthcare in comparison to the Bahamas.

Mr Cercone said NHI would aim to tackle inequitable access to healthcare, based on island location and income, while also combating “bureaucracy and waste” and “money leaking away from the Bahamian healthcare system”.

However, he then effectively warned the Government that NHI was not a panacea or solution to the Bahamas’ healthcare issues by itself, but merely a means to get there.

And, while it was all well and good for Prime Minister Perry Christie to say 2016 was the target launch date, Mr Cercone said NHI was “unlikely to achieve the transformation” sought unless the Government first strengthened existing healthcare infrastructure.

The Sanigest consultant told the BICA seminar that the NHI scheme would be “fiscally neutral”, meaning it would not add to the Government’s costs.

“It shouldn’t cost the Government any more to do this. We should try to work within existing resources,” he said.

It is unclear, though, how this can be squared with the more than $600 million price tag that Prime Minister Perry Christie placed upon a fully rolled-out NHI scheme when he spoke to BICA members the previous day.

Set alongside Sanigest’s $420 million figure for existing government healthcare spending, it appears NHI will thus usher in an increase. However, it is possible Mr Cercone is referring to the total $810 million bill, which would effectively mean a government-run takeover of healthcare.

Mr Cercone’s presentation also failed to touch on several crucial areas, while leaving more questions than answers in others.

In particular, there was no mention of whether the Bahamian economy, which may at that stage be starting to recover from Value-Added Tax (VAT) and other tax/fee and bureaucratic burdens imposed on it, will be able to absorb NHI and its increased costs on top of that - especially as early as 2016.

Mr Cercone’s presentation, though, suggested how Bahamians could pay for medical care via savings on their electricity, food and auto bills.

He suggested these could be reduced by 10 per cent, 15 per cent and 20 per cent respectively, via thermostats and energy-saving devices (electricity), and bulk buying (food). These suggestions are likely to be met with raised eyebrows by some Bahamian consumers, at the very least.

There was also very little mention of how NHI will be financed, who will pay for it, and how much they will pay.

Most persons are assuming that it will be financed by a combination of increased employer and employee contributions to NIB. The best Mr Cercone could offer was: “The million dollar question everybody asks is: Can we afford it? It’s a question of balancing payments and costs.”

By this he meant that few people paying would equate to a tiny range of healthcare benefits, with more contributors leading to expanded NHI coverage.

Mr Cercone was also somewhat vague on the relationship between public and private sector healthcare providers under NHI, and what role private healthcare insurers would have.

He said Sanigest’s proposal, which has been presented to the Cabinet in final form, was for a “plurality market” featuring private and public sector insurers/practitioners.

Responding to audience questions, Mr Cercone said the role private insurers would play once NHI was introduced had “been considered” and was “a key issue” for the scheme’s design.

However, no final conclusion had been reached, and Mr Cercone said: “There definitely will be a change in the way private health insurance companies offer services in the Bahamas. What that will be, I can’t say.

“The solution will be as inclusive as possible, and we’re trying to create a win-win-win situation for everybody.”

Mr Cercone said that based on 2013 estimates, some 102,000 Bahamians - between 25-33 per cent of the population - lacked private health insurance.

The average Bahamian household spent $4,000 per year on average on healthcare, representing a major financial burden, and Mr Cercone said those with private health insurance were not immune due to all the deductibles and co-payments that policies required.

Pointing out that treatments such as MRIs and cancer care cost $2,000 and $15,000 respectively, Mr Cercone said the likes of social services and NIB would only pick up between 15-20 per cent of the bill, forcing Bahamians to turn to churches, cook outs and family and friends to fill the gap.

And, while the Bahamas was ahead of the likes of Canada and Turkey in number of MRI machines per head of population, and in line with the OECD average, it only had more scans per 1,000 persons than Chile.

This pattern was repeated with CTU machines, and Mr Cercone said: “This is something we see over and over again. Bahamians are using fewer services than we’d expect because one-third of Bahamians do not have access to health insurance or free care.

“The machines are there, but the utilisation is not there, because people cannot pay $2,500 for an MRI.

“This is part of the dysfunctional market we see today, and hope we can resolve, particularly with the help of NHI.”

Mr Cercone said there was “lots of opportunity for improvement on the operations side” in healthcare, with the average patient length of stay at Princess Margaret’s Hospital (PMH) 30-40 per cent longer than comparable facilities in other countries.

This resulted in higher costs and not as many persons being treated.

“These are good examples of things that need change,” Mr Cercone said. “We think NHI can compress a lot of these and squeeze a lot more out of the system.”