NHI: Gov’t warned on ‘significant error’

The Government is “making a significant error” over National Health Insurance (NHI) by allowing the initiative to become potentially “divisive”, a well-known businessman warned yesterday.

Franklyn Wilson, the Arawak Homes and Sunshine Holdings chairman, told Tribune Business that the Government needed to apply to the NHI process the same consultative template that it had employed for Value-Added Tax (VAT).

He argued that it needed to hire “a credible individual” to act as the NHI consultation ‘point person’ and liaise with the private sector, answering all its queries and providing reassurance over the scheme’s impact and how it would work.

Mr Wilson said John Rolle, the Ministry of Finance’s financial secretary, who is also now the acting VAT comptroller, had fulfilled such a role on tax reform and helped to ensure it was implemented more smoothly than many had anticipated.

“We don’t need another divisive thing,” Mr Wilson told Tribune Business. “Now the private sector is getting geared up to fight this NHI, when it seems to me the Government is making a significant error in dealing with this.

“VAT worked in part because the Government put out to the public a credible individual in John Rolle, who met with the private sector and explained things to them.”

Mr Wilson’s comments came after the private sector on Wednesday warned that a 3 per cent payroll tax will not be sufficient to cover the proposed NHI scheme’s total costs, and that sticking to a January 2016 implementation will create a “challenging sprint to the finish”.

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, said the Government needed to explain where the “balance” of NHI funding would come from if it went with a payroll tax.

And he warned that the Bahamian business community needed to be “absolutely comfortable” with NHI and how it will work before the scheme is implemented.

Speaking after Dr Glen Beneby, the chief medical officer, gave an extremely vague Monday presentation on how NHI will be financed and structured, Mr Sumner said there “too many unknowns” for the private sector to provide proper assessments and feedback to the Government.

Emphasising that it was “still too early to tell” whether the Government would opt for a payroll tax as its main NHI financing mechanism, Mr Sumner said questions also remained over the rate and who would pay it - employer or employee, or a combination of both.

The 3 per cent ‘maximum’ payroll tax suggested by Dr Beneby is less than that called for by the initial NHI proposal, which was developed under the 202-2007 Christie administration and suggested the scheme be funded by a 5.9 per cent increase in National Insurance Board (NIB) contributions - split 50/50 between employer and employee.

That would have financed a scheme priced at $235 million, yet the Government appears to be suggesting a lower rate payroll tax for an NHI plan that will cost between $362 million to $633 million - sums 50 per cent to almost three times’ as much.

Hence Mr Sumner’s concern over what will need to accompany a payroll tax in financing NHI. He yesterday pointed out that the economic environment faced by the first Christie administration was completely different to today’s, as unemployment was relatively low and the 2008-2009 recession had yet to hit.

“We know in the past that a payroll tax was identified as one of the most viable options,” Mr Sumner told Tribune Business.

“Things were different back then, the economy was different, an we were not having to deal with VAT and the shift in taxation structure.”

He added that he would be “interested in finding out” NIB’s position on the new NHI plan, given that it was being driven by the Ministry of Health, and seemed to be focusing on healthcare as opposed to its financing.


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