By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Bahamian insurance industry yesterday accused the Government’s key advisers of “overstating” the economic benefits from National Health Insurance (NHI) by failing to account for this nation’s strained fiscal position.
The Bahamas Insurance Association (BIA), in a written response to KPMG’s study, said funding for the $100 million NHI primary care phase would have to come from somewhere - either taxes or reallocated government spending.
Either move, the BIA said, would impact other areas of the Bahamian economy and its GDP output, thereby offsetting some of the economic impact identified by KPMG.
“The decision to spend $100 million per year on NHI is a decision to increase taxes or reduce other public services, both of which will negatively impact GDP,” the BIA argued. “By omitting this effect, KPMG has overstated the potential gain from introducing NHI.”
Continuing with this financial/fiscal theme, the Association added: “The KPMG paper fails to reference the significant fiscal challenges faced by the Bahamas. The economic impact assessment ignores key macroeconomic indicators and metrics which are vital to the implementation and success of an affordable and sustainable healthcare programme.
“No reference was made to the negative and stunted growth environment within the Bahamas over the last four years.
“Additionally, the high debt, high debt-to-GDP ratio, high deficit, continuous increase in government spending and the junk bond (credit rating) status of the Bahamas were conveniently omitted from the economic impact assessment,” the BIA continued.
“The absence of this vital information from the study is unfortunate, and puts a damper on the mood of the private sector which had looked forward to this study with great anticipation.”
The KPMG study is predicting that implementing NHI’s primary care phase now will make the Bahamian economy almost $500 million bigger in 2040 than it would otherwise be, with the larger GDP output coming from a healthier, more productive workforce that contained more workers.
It added that NHI primary care implementation would in 2030 make the Bahamian economy $248 million, or 2.7 per cent, larger than it would otherwise be if the scheme was not implemented.
And it estimated that NHI would make Bahamian GDP, or economic output, some $358 million or 3.7 per cent greater in 2035 than if the scheme was not executed. These figures rose to $485 million, or 4.8 per cent, by 2040.
The BIA, though, noted that NHI’s economic benefits, as outlined by the study, would materialise more in the medium to long-term, as opposed to the short-term.
In common with Dr Duane Sands, the FNM candidate for Elizabeth, it highlighted the KPMG report’s admission that the $485 million impact would materialise “over the course of a generation”.
Calling for publication of the assumptions underpinning the estimates and calculations in the study, the BIA also suggested that the report’s suggestion of ‘free’ healthcare being provided to all legal Bahamas residents via NHI was misleading.
It added that the NHI Act’s section 21 said something different, namely that persons with private health insurance coverage would have to exhaust those benefits before gaining access to the proposed Government scheme.
“This statement suggests that ‘free’ healthcare will be provided to all residents, and fails to clarify that individuals with primary care benefits under their private health insurance plan will not receive these ‘free’ services per the legislation,” the BIA said.
“Additionally, the report fails to acknowledge that there are no ‘modern primary care facilities’ in the Bahamas, and there is a dire need for the Government to focus on the strengthening and modernisation of their 90-plus clinics across our archipelago of islands prior to the rollout of the primary care phase.”
The BIA also described the KPMG report’s assertion that companies will see a slower rate of growth in private health insurance premiums as a result of NHI as “bold”, as it was unclear whether private coverage would remain viable and have “a healthier risk pool”.
“It is disappointing that despite several requests from the private sector as to how NHI will be funded, the costs of different options to finance this scheme were not examined by KPMG,” the Association added.
“Rather, KPMG has relied on what is currently set out in the Government’s implementation plans as developed by previous consultants..... The caveats in the document which implicitly highlight the correlation between good governance and strengthening of the public primary healthcare system are also noteworthy.”
Noting KPMG’s admission that there was a relative lack of data on which to base its projections, the BIA said assertions that more persons would be able to work as a result of better health, and that the employability of those unable to work due to sickness/injury would improve, were unproven and not supported by statistics.
And, while acknowledging that it was fair to conclude employment in the public health sector will rise due to NHI, the BIA said this did not answer questions about care quality and whether jobs will be lost in the private health sector.
It added that there was “a school of thought” suggesting that KPMG was “conflicted”, or biased, in producing the study because of its role as the Government’s chief NHI adviser.
“This viewpoint zeros in on the fact that the firm has received - and continues to receive - significant fees for extensive services provided vis-à-vis the implementation of NHI,” the BIA said.
“Hence, it is almost unrealistic to expect KPMG to objectively criticise a plan for which it is one of the main architects or suggest that the overall impact on the economy will not be extremely positive.
“In this regard, while the partnership with Cambridge Econometrics is helpful in addressing this concern, a totally independent study would have been preferable. An independent collaborative assessment with the private sector would have also dispelled the notion that KPMG was influenced or pressured by the Government to produce a document which endorses its plans in a politically charged environment and justifies the current approach.”
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