By NEIL HARTNELL
Tribune Business Editor
The Bahamas is “unique” among countries looking to adopt a national health insurance scheme because private insurance penetration is relatively high, leading the Government’s consultants to recommend that the sector be incorporated into proposed reforms.
Sanigest Internacional, in its October 2014 report to the Christie administration, said the fact that some 114,517 Bahamians - or more than one-third of the population - were already covered by private health insurance had “important implications” for the planned National Health Insurance (NHI) scheme.
The report suggested that this is one of the highest private insurance penetration rates among countries seeking to implement a socialised healthcare scheme, and effectively warned the Government that the move to NHI would create private sector job losses.
Analysing the implications from existing high coverage levels, Sanigest said: “This has important implications for NHI policy-making decisions, as it shows that over one-third of all Bahamians already have some form of private health insurance coverage.
“This is unique amongst most of the countries moving towards an NHI or other universal health care system, where the majority would have very low penetration of private health insurance.”
Then, in heavily coded language, the Sanigest report warned the Government to be careful about consequences for private health insurance industry employment if it moves to a fully-fledged NHI scheme.
“This has consequences in the Bahamas in terms of high expectations, as well as implications for human resources employed in the private health insurance industry,” Sanigest said of the wide level of private cover.
“With a market of over $270 million and 100 employees, private health insurance in the Bahamas represents over 3 per cent of GDP.
“The high level of private health insurance within the country must be considered in many aspects of the design towards universal health coverage, from the design of the benefits package to purchasing functions.”
The report then admitted that the 100 employee figure was likely an under-estimate in terms of those likely to be impacted by the switch to NHI.
It conceded that the figure referred only to those employed by the underwriters, and excluded brokers and agents whose livelihoods depend - at least to some extent - on selling private health insurance.
Sanigest added that health coverage represented 50 per cent of the Bahamian long-term insurance market, and reiterated: “During the progression to NHI, the unique nature of the Bahamas and its current level of private health insurance penetration must be considered.”
Such assessments by the Government’s own consultants are likely to cause some Bahamians to question why it is rushing to implement NHI, given that private health insurance coverage appears more widespread in this nation than others.
The ‘if it ain’t broke, don’t fix it’ argument will likely resonate strongly with some, especially those that have private health insurance, but the Government will likely retort that an almost-equal number of Bahamians - some 102,000 - have no such coverage.
However, one private sector source yesterday warned that health insurance coverage was no guarantee against death or life-changing illnesses and injuries.
The Sanigest report found that some $270.114 million worth of private health insurance premiums were paid in 2013, comprised of $212.949 million received from individuals and groups, and $57.164 million worth of government policies.
Total private health insurance premiums paid had increased by 4.4 per cent between 2011 and 2013, even though total policies had decreased from 85,605 to 68,803.
The report said there were four main health insurance underwriters in the Bahamas, each doing more than $25 million in annual premiums.
Although it did not identify the carriers, these are likely to be Colina, Family Guardian, Atlantic Medical and Generali. These companies were underwriting policies that ranged in number from 165 to 41,126, and portfolios valued at between $29.079 million and $68.892 million.
In comments that are likely to be construed as faint praise of the Bahamian private health insurance sector, Sanigest said: “There is a wide range of types of policies offered, from lower cost policies with limited benefits and high deductibles to higher cost executive packages which offer greater services, more flexibility with providers and no deductibles.”
Focusing on the $212 million worth of private health insurance premiums paid in 2013, Sanigest said just 58.1 per cent or $123.79 million of this sum was used to pay claims.
It said some $52.61 million went on paying insurers’ administration, taxes and commission costs, plus profits, with administration costs alone pegged at 17 per cent of premium volumes.
Sanigest used this figure, and related ones, to blast what it termed as “high wastage” within the Bahamian private health care industry, although its administration costs as a percentage of top-line revenues is lower than the National Insurance Board’s (NIB).
This is significant because NIB will likely be used to administer the NHI scheme and collect the payroll tax that will finance it.
“Administrative costs of the private health insurance plans range from 14 per cent to 26 per cent, and average 18 per cent,” the Sanigest report said. “NIB had an a administrative cost as a percentage of contributions of 22 per cent in 2011.
“Together, these areas of high wastage must be addressed within the design of NHI through competition, capped administrative costs, improved electronic systems and other measures in order to increase the value for money that the health system is producing.”
Admitting that its analysis was based on ‘estimates’, Sanigest said that out of the $270 million spent on private health insurance premiums in 2013, some 24.7 per cent or $66.71 million went on administration and broker commissions.
And of the $203.99 million paid out in claims, the report suggested just 70 per cent - some $142.88 million - went to Bahamian medical providers.