The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Bahamas Insurance Association (BIA) has urged the government not to waste taxpayer funds to create an “expensive and unnecessary” public insurer, warning that it would be “unwise” for it to create such an entity in light of the International Monetary Fund’s (IMF) warnings about the problems related to state-owned enterprises.

In its most recent statement regarding comments by James Cercone, president of Sanigest Internacional, the consultants charged with developing National Health Insurance (NHI), the association said that the public has good reason to believe that the proposed public insurer touted by Mr Cercone will be a burden on the treasury.

“This belief is based on the track record of state-owned companies that have consistently provided poor service while needing regular transfers from the public purse. Unlike struggling private companies, these failing state-owned companies are not shut down or sold, but rather are propped up with taxpayer money, decade after decade. This comes at a great cost, as it reduces the money that could otherwise be used to improve our national security, our education system and our public health services,” the BIA said.

The association noted that the IMF has advised the government to dramatically reform state-owned enterprises (SOEs) as they “continue to record sizeable financial losses as a result of their public service mandates, operational inefficiencies and inadequate enabling regulatory framework”.

“The Bahamas Insurance Association believes it would be unwise for the government, in the face of the IMF’s warnings about the problems related to state-owned entities, to create yet another such entity that will almost certainly compound the problem. Furthermore, competition is not fair when the game is rigged. A public insurer will distort the market for health insurance resulting in an uneven playing field whereby private health insurers who lose money will go out of business, while the public insurer gets a free pass to hire and spend as they choose at taxpayers’ expense,” the association argued.

“We believe it would be imprudent for the government to use its power to tax and spend, and under the cover of permitting private sector participation, to effectively elbow private health insurers out of a market that it has served for decades. Should that happen, there would be private sector job losses, as well as losses to Bahamian shareholders of health insurance companies. We would also lose that element of choice and healthy competition that the government’s consultants themselves say is important to maintain. We do not understand why the government’s consultants think that a public insurer makes sense for the Bahamas. They have criticised the BIA’s position, but have yet to put forward a rational case for the creation of a public insurer. With sensible regulation and oversight, private health insurers are more than capable of providing NHI benefits to the Bahamian public,” said the BIA.

The association said that while it supports the goal of universal healthcare, it believes that “every dollar counts when implementing such an expensive undertaking”.

“The BIA asks the government not to waste taxpayer funds by creating an expensive and unnecessary public insurer,” the BIA said.