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Gov't Warned: 'We Can't Take Another Shock' With Nhi

The Government was yesterday warned that National Health Insurance (NHI) would not succeed without private sector buy-in, one executive warning: "The economy cannot take another shock."

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chief executive, told Tribune Business that an unsustainable NHI programme could have "catastrophic effects for a fragile economy" that was still bedding down Value-Added Tax (VAT).

While backing the concept of universal health coverage, Mr Sumner said there were too many unknown details to currently make an informed judgment of the Government's NHI proposal.

He explained that the private sector was especially interested to find out NHI's total price tag; who would finance it and how much they would have to pay; the likely benefits package that the scheme would offer; and its likely impact on the wider economy - especially for the insurance industry and employers/employees who already have private coverage.

Mr Sumner told Tribune Business that both the BCCEC and wider private sector "have to be concerned" about any proposal to finance NHI via a payroll tax, given that this would follow swiftly behind - and on top of - VAT.

"If one of the financing mechanisms for this is going to be through any kind of payroll tax, we would have to be concerned about that, and all employers in the country would have to be concerned about that," he said.

"All the employers have to determine if that can be absorbed and what that will look like. Understand that we have just absorbed VAT implementation, and this [NHI] so shortly afterwards after that happening, there may need to be some thought and reconsideration of this."

The Government's Costa Rican consultants, Sanigest Internacional, recommended a payroll tax as a key NHI financing mechanism in their report to the Christie administration last year. And the initial Blue Ribbon Commission that assessed NHI's viability also called for such a tax, via an increase in National Insurance Board (NIB) contributions.

The BCCEC, in its NHI position paper unveiled over the weekend, also urged the Government to assess NHI's economic impact against its plans to raise the minimum wage.

"Putting together an increase in the minimum wage, the taxes associated with NHI and costs associated with implementation and administration of VAT, will increase the payroll liability of private sector employers in the country to possibly unsustainable levels," the BCCEC warned.

"Obviously, this could result in the unintended consequence of a rise in the level of unemployment."

The Government has yet to formally announce how it intends to finance the NHI scheme, which it wants to introduce on January 1, 2016 - a date many believe is unattainable give the amount of work still required to support the Christie administration's ambitions.

It is unclear whether some of the $200 million budget enjoyed by the Public Hospitals Authority (PHA) will be redirected to NHI financing, and Mr Sumner told Tribune Business that the scheme could not be financed by a payroll tax alone.

"Where are you going to get the rest of the money?" he asked yesterday. "You can't expect to fund NHI from a payroll tax? Where are you going to source the rest of the fund to sustain this programme?"

Emphasising that the sustainability of any NHI scheme was another major private sector concern, Mr Sumner warned the Government to avoid any further actions that would "lead to the shocking of the economy".

"The economy, at this point, cannot take another shock," he told Tribune Business. "We cannot take another shock to our economic outlook."

The BCCEC chief executive warned that an unsustainable NHI initiative would threaten the progress that led to the International Monetary Fund (IMF) recently predicting that the Bahamas would lead the Caribbean's growth momentum.

"We don't want to see that deteriorated by putting in new systems of taxation, where it attracts contributions from employers and working people that cause us to go back into a tail spin," he told Tribune Business.

This was echoed by the BCCEC's statement, which added: "Given all the other costs associated with doing business in the Bahamas, the implementation of yet another tax is not palatable at this time if not properly thought out and assessed through economic studies.

"Failure to properly plan and source sustainable funding for NHI could result in catastrophic effects on a still fragile economy."

Sanigest has given the Christie administration three NHI options, ranging in price from $362 million to $505 million and $633 million, depending on the breadth of the benefits package to be offered.

However, the BIA said that based on claims and membership data submitted by five of its health insurer members, the figures provided by Sanigest were likely a gross underestimate of NHI’s ultimate cost, and the burden it will impose on working Bahamians and their employers.

It pegged the total cost of the most comprehensive package at nearer $1 billion, saying: “The health industry believes that Sanigest’s NHI cost estimates may be as much as a third below the actual cost - a significant difference of some $300 million.

“Based on our analysis of insurance industry data and administrative costs for the National Insurance Board (NIB) in 2011 and 2012, we have estimated that the Government’s proposal will cost between $895 million and $965 million to implement, with the higher number being the cost to cover the entire population.”

But with the Government likely dependent on the private sector to finance its NHI ambitions and "drive the process", Mr Sumner said any NHI scheme that excluded business community involvement in its design was bound to fail.

"VAT could not have been implemented without private sector involvement," he told Tribune Business. "There's no way you can develop a plan for NHI and universal coverage without the BCCEC and insurance industry not being involved in the process from the start.

"It's important that we're engaged in this every step of the way. If we're engaged like VAT, we can assist the Government significantly in how this is done."

Mr Sumner said the private sector had "not been involved to the extent we'd like" with NHI efforts to-date, with the BCCEC's concerns further exacerbated by recent, unannounced changes to the Government structure overseeing the process.

The BCCEC had been represented on the NHI advisory committee, which was part of a three-committee structure working to develop the initiative. The other two committees were a so-called 'lead team' and a committee that was working to strengthen the existing public health system.

But, despite receiving no formal communication from the Government, Mr Sumner said the BCCEC understood this structure had been replaced by a new committee called the 'Elite Team' or committee. The BCCEC and private sector are not represented on it.

"We still don't know the full story," Mr Sumner told Tribune Business. "We think at this point in time that, for this to be successful, we have to engage with the Government, and the only way that is going to happen is if we're involved in the consultation process.

"If the private sector is not engaged in this process, it is not going to be a successful venture. If that does not happen, you're likely to see some resistance from the private sector."

He added that the previous three-committee structure, on which the BCCEC was represented, appeared to be a good governance model for the NHI scheme.

The BCCEC, in its statement, urged the Government to account for "lacklustre" economic growth and high unemployment levels when designing and evaluating NHI.

It warned that while Bahamians spent a larger portion of their incomes on healthcare compared to other countries, this did not necessarily "translate into better health outcomes".

The BCCEC has formed its own NHI review sub-committee, headed by former National Insurance Board (NIB) actuary, Derek Osborne, and it called for the existing public healthcare system to be strengthened via the "more efficient and cost effective delivery" of care prior to NHI's implementation.

"The BCCEC fully agrees that the healthcare system in the Bahamas must be upgraded to match the benefits received for the level of funds currently being spent," the Chamber said.

"Waste and inefficiency in the public healthcare systems can drive up the cost of healthcare in the public sector. In addition, if the public system is perceived as inferior and inefficient, and Bahamians do not have choices when NHI is implemented, there very well can be further excess demand placed on the already inefficient public sector, which could lead to less effective service in both public and private sectors."

The BCCEC backed the Bahamas Insurance Association's (BIA) suggestion that NHI's management and administration be outsourced to private health insurers, who already possess the necessary expertise and infrastructure. This, it argued, would also help to reduce health insurance costs.

The two organisations are also in agreement over the need to better consult the private sector, and fears that the Government's NHI plan could decimate the private health insurance sector and the jobs it supports.

Comments

Economist 3 years, 10 months ago

Until the waste and inefficiency in the PHA is resolved, and clearly resolved there can be no NHI.

It is not economically viable and will further erode an already bad economy.

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TheMadHatter 3 years, 10 months ago

Yeah, Mr. Sumner says all of that - but does he have the GUTS to pull his members together for a nationwide strike !!!!!!!!!!!!!!!!!!!

No, he will just buy more Vaseline and bend over and take it - just like we have always done - and let our country sink into the ocean.

Why not get all of his members to get ALL of their employees (and friends a family) to have a BUYING STRIKE on Thursday July 9th. Nobody buy anything - except medicine, bus fare to get to work, and TRUE necessities. DON'T SPEND money that day. Send a message that we cannot afford NHI - by showing that we cannot afford to spend (for one day). Do it now before the reality of NHI makes it where you really don't have any money to spend and then you'll have a buying strike cause you ain't got no money anyhow.

TheMadHatter

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thomas 3 years, 10 months ago

I agree...let's show them what they refuse to hear

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