The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Insurance Association’s (BIA) chairman yesterday argued that the bid document for the National Health Insurance (NHI) scheme’s public insurer is “skewed” in favour of foreign companies.

Emmanuel Komolafe told Tribune Business that the tender document “appears to favour” foreign providers of management services for Bahama Care due to “restrictions” placed on the successful bidder’s ability to offer health insurance policies outside NHI.

Suggesting that the evolving NHI scheme was akin to ‘death by a thousand cuts’ for the private Bahamian health insurance sector in the long-run, the BIA chief said such restrictions appeared designed to “discourage” bids from local underwriters.

“The Request for Proposal (RFP) is structured either intentionally or unintentionally to make it hard - and extremely unlikely - that a local company could be successful,” Mr Komolafe told Tribune Business.

“It appears to favour overseas bidders, which may not be in the best long-term interests of Bahamians from an economic development and employment standpoint.”

Explaining the rationale for his analysis, the BIA chairman added: “Provisions that place restrictions on the selected third party contractor in relation to the provision of the package of benefits under the NHI Plan and supplemental coverage appear to discourage participation by the local private health insurance industry.

“Based on an assessment of the proposed range of services (and others) to be provided by the successful entity per the RFP in comparison to the business models of local private health insurers, it appears that the document was designed and skewed to favour a non-local provider.”

Being able to provide products known as ‘supplemental’ or ‘top up’ insurance policies, which offer greater benefits and coverage than NHI, is seen by the private sector as potentially providing a key earnings stream beyond the proposed government-run scheme.

However, the management services Request for Proposal (RFP) stipulates that the public insurer, which will be called Bahama Care, cannot offer such policies.

And, while the public insurer is restricted solely to offering NHI benefits packages to the Bahamian public, the selected management/operating partner is also barred from providing these policies separately via its existing network.

“The public insurer.... is precluded from offering supplemental insurance, and can only offer the package of [NHI] benefits exclusively,” the RFP says.

“The third party contractor will be prohibited from offering the package of benefits under the NHI Plan separately from the public insurer.”

The RFP then says that while the winning bidder is unable to privately offer NHI benefits packages, it “may be allowed” to offer supplemental health insurance once regulatory approval is obtained from the Insurance Commission of the Bahamas (ICB).

The tender document acknowledges that acting as the public insurer’s management/operating partner, while also privately offering ‘supplemental’ health insurance, is a potential “conflict of interest” for the winning bidder.

Calling for all bidders to “address” this in their proposals, the RFP adds: “Although the third party contractor will not be eligible to provide benefits under the NHI plan as a private RHA (registered health administrator), the third party contractor may be allowed to provide supplemental insurance in the Bahamas subject to regulatory approval, provided that the third party contractor is a long-term insurer and the provision of supplemental insurance is independent of the public insurer.

“The third party contractor is required to indicate ways to address and mitigate potential conflict issues it may face regarding delivery of the services under this RFP in the aforementioned manner.”

And the RFP also indicated the Government’s intention to shift the 20,000-strong civil service, including the 12,000 who currently enjoy existing private health insurance coverage, to the public insurer.

“There are approximately 20,000 public sector employees in the Government (excluding corporations and statutory bodies), of which approximately 12,000 have some form of private insurance coverage,” the RFP said.

“The Government intends to enter into discussions with public sector employees regarding their enrolment with the public insurer during an initial transition period.”

This, too, did not escape Mr Komolafe’s attention, who argued that such a move was a further demonstration of the Government’s “inconsiderate” approach to the private health insurance industry via NHI.

“The RFP notes that the Government intends to enter into discussions with public sector employees regarding their enrolment with the public insurer during an initial transition period,” the BIA chairman said.

“This has the potential to impact these individuals and displace them in a bid to push significant services to the public insurer.”

Mr Komolafe added that the RFP’s requirement for the public insurer manager to “involve intermediaries”, such as brokers and agents, in the provision of its services conflicted with the proposed amendments to the Insurance Act.

“Where feasible, the third party contractor will be expected to involve local intermediaries in the provision of the services as set out in this RFP,” the tender document said.

However, Mr Komolafe said: “While the RFP seeks to accommodate intermediaries by trying to find a role for them in the administration of the NHI scheme, it is unclear how this will be achieved, especially in light of the proposed amendment to the Insurance Act whereby intermediaries are to be excluded in the sale of the NHI plan.

“However, the RFP is generally inconsiderate to the local private health insurance sector.”

Mr Komolafe added that the private health insurance industry’s future looked bleak, when all publicly available information on NHI was pieced together and analysed.

“As we look at the details of the proposed scheme as they are revealed, and put the various pieces of the puzzle together, it is becoming apparent that the scheme could be described as the proverbial ‘death by a thousand cuts’ for the private health insurance sector in the long run,” he told Tribune Business.

“Consequently, the private health insurance industry will face major headwinds in the medium to long term as the NHI scheme unravels and is expanded.”

Suggesting that the public insurer RFP’s content and release timing “raises queries and eyebrows”, the BIA chairman added: “We understand the Government’s need to be seen as acting and getting the process moving.

“However, there are major concerns regarding how the NHI scheme has been designed to potentially eliminate an existing sector that has contributed significantly to the Bahamian economy and created thousands of jobs over several decades.”

Mr Komolafe again urged the Government to restrict itself to its traditional role as legislator and regulator for the insurance industry, rather than engage in direct competition with the private sector through its ownership of the public insurer.

“The industry believes that a public insurer isn’t required, and that it is likely to be expensive and inefficient,” Mr Komolafe said.

“Our view is that the same objectives for establishing the public insurer can be achieved by leveraging the existing infrastructure within the private sector.

“The private health insurance industry in the Bahamas has expertise and infrastructure which could be used to bring universal healthcare to Bahamians, but the Government has continued to ignore the industry.”