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Private Sector Fearing ‘Extinction’ Over Nhi

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

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.”

Comments

Economist 3 years, 9 months ago

They say universal health BUT the real reason is because Government is paying out too much for the Civil Servants.

Add the fact that the PHA, due to a total lack of any management, looses more money than Bahamasair.

Government just wants more money from the public to throw away on money losing operations.

Universal health is just a smoke screen for taking more money to waste.

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Well_mudda_take_sic 3 years, 9 months ago

The Chamber of Commerce just doesn't seem to realise that Perry Christie has no interest in creating a thriving private business sector......he just wants every one sucking away on his _ _ _ _ !

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Sickened 3 years, 8 months ago

When you say everyone, you mean... Brave and Fred in particular. I hear they love it and just can't get enough!

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Hotelier 3 years, 9 months ago

The government wants first world services on a third world tax base.

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Stapedius 3 years, 9 months ago

Well said. They are throwing money at a broken system. There is gross inequality in the current system, coupled with run down resources and lack of personnel. This NHI is a recipe for disaster and will become a financial black hole. I have no problem with NHI in principle, but the planning is poor and there are other factors that should be considered when talking about putting together a well run health system.

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Chucky 3 years, 8 months ago

Isn't it hilarious that the Insurance industry is fearing that the government plan will cut into their profits. I suggest that we shouldn't care about them at all, insurance industry is a crooked industry just like the banks. They have the most expensive and best real-estate in any city, they have huge profits, and they rip you off. Notice how they love to know the value of your home or car, so they can charge you for insurance based on that value, the higher the value the more you pay for insurance. Yet when you have a claim , the first thing they do is tell you that you car isn't worth that much, the repairs on your house should not cost this much, or even more pathetically they tell you you are not covered for this "type or medical care". These rotten scoundrels deserve to go extinct..........

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Reality_Check 3 years, 8 months ago

Insurers are the worst.....they prey on your fear to pick your pocket and lobby government to impose insurance requirements where none should exist. They are useless, ruthless and greedy intermediaries, wedging themselves between patients and their healthcare providers, and also their governments which should be providing essential health services on a universal basis as a fundamental right and entitlement for everyone. The operating costs and profits of insurers, especially healthcare insurers, represent funds and other resources stolen from the people that could be much better deployed in providing actual health services to all those in need.

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sealice 3 years, 8 months ago

Christie taking personal charge of it - so NHI will wind up like Bahmar and just cost Bahamians their livelihoods.....

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ohdrap4 3 years, 8 months ago

i hardly feel sorry for the private insurance leeches.

i get car insurance to avoid a fine thet costs more than the car insurance, but, health, i dropped.

i laugh when i see the insurance guys shed crocodile tears. they remind me of Phagan from Oliver Twist.

they barked a whole lot a while ago, but now are quiet.

the civil servants, make them pay. they started paying for the national insurance, after years fo reduced contributions and it worked.

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