The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is allocating $31 million to cover National Health Insurance’s (NHI) first three months, while somewhat bizarrely suggesting all sides’ first phase cost estimates “fall within a similar range”.

The Government’s briefing notes for Monday’s meeting with the Medical Association of the Bahamas (MAB), obtained by Tribune Business, state that the forecasts by Sanigest, PricewaterhouseCoopers (PwC) and the private health insurance industry are broadly aligned.

Responding to the MAB’s concerns over NHI’s total cost, the Government’s discussion paper states: “The total cost of the first phase has been repeatedly estimated, and the numbers all fall within a similar range.

“This includes PwC actuarial estimates, Sanigest original estimates and calculations based on PHI (private health insurance) claims.”

This assessment seemingly ‘flies in the face’ of PwC’s first NHI report, which warned that there was a $110.5-$134.3 million ‘funding gap’ between Sanigest’s $362.6 million cost estimate for the Vital Benefits Package (VBP) and what the Government could allocate to cover this from existing public healthcare spending.

Sanigest’s president, James Cercone, told Tribune Business in August that the ‘price tag’ attached to the Vital Benefits Package had increased to $400 million, seemingly widening the ‘funding gap’ between itself and PwC.

Mr Cercone previously told Tribune Business that the $400 million would come from the $260 million allocated to the Public Hospitals Authority (PHA) in the 2015-2016 Budget; the $30-$40 million received by the Department of Public Health; and the $60-$70 million currently spent by the Government on insurance premiums for civil servants and public sector workers.

This, though, would still have left a $30-$40 million ‘funding gap’. And PwC suggested that total private health insurance premiums paid for public sector workers were much lower than Sanigest’s $60-$70 million, pegging them at $47.24 million.

And while the Bahamian private health insurance industry currently collects around $270 million in premiums annually, its NHI cost estimates are radically different from those produced by Sanigest.

The Bahamas Insurance Association (BIA), though, initially estimated that NHI would cost between $895-$965 million to implement as a comprehensive scheme, compared to Sanigest’s $633 million estimate for the Expanded Benefits Package.

It is difficult to see how a $262 million difference can be described as “falling within a similar range”. The BIA later projected that the Vital Benefits Package would cost $947 million, as opposed to Sanigest’s $400 million figure.

The Government discussion paper prepared for the meeting with the MAB details the budget to cover the initial primary care costs, which will be the extent of NHI’s first phase.

A figure of $25 million was described as a “sufficient” budget to cover NHI costs for the first three months, while a further $6 million will be held as a ‘reserve’.

That phase covers the period April-June 2016, which is also the final quarter of the Government’s 2015-2016 fiscal year.

“The reserve fund of $6 million for the last quarter will provide a buffer if necessary within the established range. The $25 million budgeted for PHC (primary health care) in the last quarter represents sufficient funding,” the Government paper said.

The Christie administration is aiming to launch NHI as planned on January 1, 2016, by registering all Bahamians and legal residents for the scheme. That phase is targeted to last until early April, at which point the Government is hoping to achieve an 85 per cent registration level.

The next step is to allow registrants to select their primary care provider (doctor), from either the public or private sectors, and the provision of those services via NHI.

Catastrophic health cover and services will follow after that, with the fourth step involving the launch of the Vital Benefits Package.

The Government’s discussion paper also reveals that it is proposing an annual $24 million fund to cover the costs associated with specialist healthcare and treatments.

Patients, though, must be referred for such treatments by their primary care doctor to ensure the services are covered under NHI.

Responding to MAB queries, the Government wrote: “We have proposed an initial reserve fund equivalent to $24 million per year that could be used to cover some extended specialist services on a medical-needs basis. Only through referral from a PCP (primary care provider)under NHI could the services be covered.”

The paper, which was designed to set the agenda and guide discussions for the meeting with the MAB, listed the services to be covered by the $24 million fund as “some cardiovascular-related treatments”; oncology services for the likes of breast, prostate, colon and stomach cancers; lower respiratory infections; “some diabetes-related care”; end-stage renal disease; and “some” MRI/CT treatments according to “disease priorities” - such as cancer, trauma and oncology.

It is unclear how the Government plans to finance NHI beyond the $25 million, plus $6 million reserve, allocated for the first three months of primary care services provision.

Those three months take it into its 2016-2017 fiscal year, and the final Budget before an expected general election that is likely to be held in 2017.

Given the impending election, and Prime Minister Perry Christie’s pledge not to do anything that would harm the Bahamian economy so soon after the introduction of Value-Added Tax (VAT), it is unlikely that the Government will introduce new and/or increased taxes to finance NHI in the May Budget.

However, given PwC’s report and the financing required for the Vital Benefits Package, it is probable that the 2017-2018 Budget will include NHI funding measures - provided the Progressive Liberal Party (PLP) wins the election.

Those ‘measures’ will likely be an increase in the National Insurance Board (NIB) contribution rate, split 50/50 between employer and employee.