The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Insurance Association (BIA) was yesterday accused of “comparing apples with oranges” over its estimates of National Health Insurance’s (NHI) total costs, a key government adviser suggesting it was resistant to “dramatic but necessary change”.

James Cercone, president of Sanigest Internacional, the consultants charged with developing NHI, told Tribune Business that the BIA’s latest $947.3 million estimate was based on Aruba’s Expanded Benefits Package - something that the Bahamian NHI scheme will not be offering in its formative years.

Mr Cercone said that NHI instead will be focusing on a Vital Benefits Package, the basic level of health insurance, which Sanigest has priced at around $400 million and believes is a sum that can be covered by the Government’s Consolidated Fund.

Mr Cercone was responding after the BIA, in a July 27 letter to the Ministry of Health’s permanent secretary, Marco Rolle, said it came up with an annual NHI cost of $947.3 million by using the Government’s own healthcare example of Aruba.

The BIA obtained data from a presentation by Aruba’s chief medical officer, which showed 2012 healthcare system spending was equivalent to $197.4 million in US dollar terms.

Given that the Bahamas’ population is 3.6 times’ greater than Aruba’s, the BIA told Mr Rolle that multiplying the $197.4 million by this figure meant “we in the Bahamas should expect annual healthcare expenditure of approximately $713.8 million”.

And, taking the National Insurance Board’s (NIB) administrative costs as a percentage of contribution income, 24.65 per cent, the BIA came up with $947.3 million as the total annual healthcare expenditure under NHI.

This figure falls in the middle of the BIA’s previous $895 million to $965 million cost estimates for NHI.

Mr Cercone, though, told Tribune Business: “They’re comparing apples with oranges.”

He explained that the BIA’s calculations were based on a benefits package which, including unlimited overseas care, was far broader and more expensive than that which will be offered by NHI in its formative years.

Mr Cercone added that Aruba’s figures already contained administrative expenses, implying that it was incorrect for the BIA to add near-25 per cent to its $713.8 million calculation.

With NHI expected to cover 85 per cent of the population, Mr Cercone said the $550 million cost for the Expanded Benefit Package - the ultimate goal - based upon Aruba’s numbers was in line with Sanigest’s own $633 million estimate.

“Since we are not proposing to cover the expanded package, and there are many exclusions that are not covered under this plan but are by Aruba, it is well in line that our cost estimates are actually correct for the Vital Benefits Package (VBP) at around the $400 million figure, which is commonly cited as the estimated base cost for the VBP,” Mr Cercone added.

“I know where their numbers are coming from. We asked them to provide the basis of their calculations. They haven’t done that. They’ve extrapolated on a linear basis from their existing plans and reimbursement rates to cover the whole population, and added on 25 per cent. They’re clearly not the assumptions we’re making.”

Mr Cercone said Sanigest was not using the private health insurance sector’s reimbursement rates for its NHI calculations and modelling, while the scheme would use generic drugs as opposed to the branded equivalent financed by private insurers.

The BIA’s July 27 letter also referred to Dr Perry Gomez’s Budget communication to the House of Assembly, in which he said annual joint private and public healthcare spending totalled $800 million.

Mr Cercone and Sanigest, though, yesterday said the true sum spent on the provision of healthcare services was closer to $620 million annually.

They added that the $800 million figure included items such as vector control, the Department of Environmental Health Services and capital spending on infrastructure and physical assets - items not covered by NHI. There was also the $70-$100 million spent annually on overseas healthcare.

The Sanigest Internacional chief explained that NHI would be rolled out in stages from January 2016 onwards, with the first three months of next year devoted to registering Bahamians in the scheme.

Primary health care services “free or charge” will start in April, with NHI registrants able to access both private and public healthcare providers accredited to the scheme.

“You’re opening up the private sector, which is too expensive for

The third phase will involve the provision of catastrophic health insurance coverage, with NHI registrants able to access services such as radiotherapy and MRI scans.

Describing 2016 as a “transition year” for the NHI scheme, Mr Cercone said all this would be financed from the Government’s existing taxes in the Consolidated Fund.

The existing public health system infrastructure, and its staffing, are being addressed via a parallel process, but Mr Cercone told Tribune Business that the introduction of the Vital Benefits Package was “likely to happen after 2017”.

He added that while 50 per cent of Bahamian households had at least one person covered by private health insurance, just 30 per cent of the population - some 120,000 people - enjoyed this benefit.

Etoile Pinder, a Sanigest consultant, said this meant that all other members of the household were exposed by the absence of private health insurance coverage, even if the main breadwinner had this protection via their employer.

And Mr Cercone suggested that many Bahamians were unable to take advantage of private insurance coverage because they could not afford the policy’s deductibles or co-payments, which amounted on average to $3,000 per year.

The Sanigest chief said equitable access to quality healthcare for all Bahamians was NHI’s ultimate objective.