By NEIL HARTNELL
Tribune Business Editor
The Bahamian private sector could become “extinct” as a result of ever-increasing taxation, the Chamber of Commerce’s chief executive warned yesterday, as he urged the Government to provide more details on long-term National Health Insurance (NHI) financing.
Edison Sumner told Tribune Business that while the Government and its NHI consultants had promised no taxes would be required to fund the scheme in its first year, the medium and long-term ‘unknown’ was making it impossible for companies to plan.
And with NHI following swiftly behind Value-Added Tax (VAT) and other initiatives that have raised business costs, Mr Sumner warned that the Bahamian private sector could be “overburdened” with taxation should it be lumbered with financing the Government’s new healthcare scheme.
While supporting the general concept of universal health coverage, Mr Sumner told Tribune Business: “The more pressing concern going forward is the financing needed for NHI, and how’s it going to be funded.
“Based on discussions with the Government and Sanigest [the NHI consultants], the first year is expected to have no direct consequences for business, but that’s not letting us know what happens after the first year.
“What is going to be the ultimate funding mechanism? Is there going to be taxation on businesses, how’s it going to be applied, and what percentage of payments will be required from businesses?”
Mr Sumner was speaking after Tribune Business obtained a presentation given to the Grand Bahama Chamber of Commerce last week, which listed four “necessary ingredients” for a successful NHI implementation.
The presentation, made by Derek Osborne, head of the Nassau Chamber’s NHI review committee, listed these four requirements as “a healthy and growing economy”; “good plan design”; “efficient and effective administration system”; and “honest and responsible governance”.
Cynical observers will suggest that the Bahamas, and its government, have come nowhere to meeting the first and last of these requirements, while the ‘jury is still out’ on the middle two.
Mr Osborne, the National Insurance Board’s (NIB) former in-house actuary, and who sat on the 2002-2007 Christie administration’s NHI steering committee, listed seven concerns that the private sector has with the current version.
These include “no clear governance structure for implementation” and a “lack of ‘true’ consultation with key stakeholders”, although the Prime Minister recently said he had take personal charge of the NHI initiative and appointed Peter Deveaux-Isaacs to oversee it on a day-to-day basis.
Ms Osborne also queried whether the promised strengthening of the existing public health system and infrastructure, which the Government’s consultants have admitted is essential to NHI’s success, will take place.
Some $60 million was allocated for this in the 2014-2015 Budget, but Mr Osborne’s presentation also asked: “Can government properly administer NHI, and at what cost?”
The latter issue has yet to be addressed, with many predicting that the scheme will mirror NIB’s administration costs, which typically equate to between 20-25 per cent of its contribution income.
Pointing out that the January 2016 implementation date for NHI was just three months away, and questioning whether private healthcare providers were prepared for a likely increase in demand, Mr Osborne then addressed the most vexing issue for the private sector.
“How much will NHI really cost, and how will costs be met in both the short and long-terms?” he asked.
Differences over how much NHI will initially cost exploded into the open earlier this year, after the Bahamas Insurance Association (BIA) argued that the scheme would cost $947.3 million to implement.
This produced s sharp riposte from Sanigest president, James Cercone, who accused the BIA of “comparing apples with oranges” because it had based its estimates on Aruba’s Expanded Benefits Package - not the smaller, less costly Vital Benefits Package that NHI will initially employ.
The Government has applied a $400 million price tag to the Vital Benefits Package, which it expects to finance from existing tax revenues in its Consolidated Fund and the ‘re-purposing’ of existing spending.
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.
Yet this does little to reassure Bahamian companies about having to fund NHI via increased taxation over the medium to long-term, especially given that Sanigest recommended that a payroll tax of up to 5 per cent be employed to finance the scheme’s $633 million expanded benefits package.
“The concern we have is essentially the structure of it, and how’s it going to be funded,” Mr Sumner reiterated of NHI.
“One of the things we have to careful of and consider is that there aren’t any other taxes that are going to be imposed on the business community any time soon, as we’re still dealing with the implementation of VAT, the increase in the minimum wage and an increase in the overall costs of doing business.
“It is really a situation that we have to take in small strides, and consider how this is going to weigh on the private sector,” the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive added, “and consider how this is going to weigh on the private sector.
“While we do appreciate the concept, we have to look at how it’s going to impact on business, and our responsibility is to ensure the private sector does not find itself unduly weighed with taxes that are not funded properly, and effectively finds itself extinct from the weight of taxation imposed if not careful.”