The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Chamber of Commerce’s president is seeking ways to ease the potential National Health Insurance (NHI) “double whammy” faced by small businesses.

Mick Holding, pictured, told Tribune Business in a recent interview that he planned to meet with entrepreneurs in the sector “to understand the degree to which they will be impacted”, and then make recommendations for lessening this to the NHI Authority.

He said “some phasing-in” of NHI’s employer mandate would likely be beneficial for small businesses, given that many will be required to purchase health insurance for their employees for the first time, thereby imposing an additional cost burden in a still-difficult economic environment.

Besides the “strain” this might impose, Mr Holding said many small businesses will employ staff earning below the $25,000 annual salary threshold where contributions for NHI’s Standard Health Benefit (SHB) are split 50/50 between employer and employee.

As a result, he explained that small businesses may have to pay the majority of the annual $1,000 SHB annual premium for their staff, resulting in a disproportionate burden compared to larger companies where most staff were earning above $25,000.

Mr Holding was particularly struck by similar suggestions from the Bahamas Insurance Association (BIA) and Gowon Bowe, the Bahamas Institute of Chartered Accountants (BICA) president, that the proposed two percent “payroll tax” for financing NHI be phased in.

Both had recommended a starting rate of 0.5 percent, which would double to one percent in the scheme’s second year, before finally rising to the two percent rate in year three. Mr Holding said this could be the answer to small business concerns, along with an increase in the annual revenue threshold below which companies will not have to buy NHI coverage on their staff’s behalf.

The Chamber chief, whose two-year term in office is due to soon end, said the impact on small businesses was “the only concern” that emerged during a series of public consultations between the NHI Authority and Grand Bahama businesses and residents.

He argued that the Government should stick to its current NHI roll-out timetable rather than subject it to further delay, given that providing access to healthcare for Bahamians who cannot afford it was “a high priority” equal to economic growth.

Recalling the eight NHI consultations on Grand Bahama, six of which were held with Chamber members, Mr Holding told Tribune Business: “The only concern that came across was those small businesses, with less than 100 employees, that do not provide insurance are going to have to start to bear a cost that, in a particularly difficult economic climate in Grand Bahama, could put a strain on their business.

“And if they’re paying people less than $25,000, and quite a few of these businesses probably are, they will have to make up more than 50 percent of the balance of the employee’s 2 percent.

“Quite a number of those small businesses may have employees earning below that $25,000 a year, which is the figure where contributions are split 50/50 with employees. It’s a bit of a double whammy for them,” he added.

“They might be paying more than those with employees earning more than $25,000 a year, and at the moment the economy is difficult.”

The NHI Authority’s consultation paper on the revised scheme already proposes to phase-in the so-called “employer mandate”, with contributions by companies with 100 employees or less - including small businesses - only taking effect in January 2021.

While NHI’s SHB funding mechanism is progressive in the sense that workers with lower incomes contribute less to their premium than those with higher salaries, this results in their employer having to pay more. For example, Bahamians earning $25,000 per annum or more will split contributions 50/50 with their employer, each paying $42 per month.

However, while workers earning $10,000 and $15,000 will have to pay $17 and $25 per month, respectively, their employers must pay the $67 and $58 balances. As a result, the increased labour costs may result in some companies electing to shed their most vulnerable employees - those on the lowest incomes - and disincentivise them from new hires.

Mr Holding told Tribune Business that the current NHI proposal “could well result in that” impact for Bahamian employees, and he added: “It’s my intention, having heard the concerns of the smaller business owners, to get together with them and maybe write to Dr [Robin] Roberts and his NHI team highlighting their concerns because this isn’t a done deal yet.

“It’s really a draft. It may well be that there’s some flexibility. The idea of sitting down with those businesses affected is to understand the degree to which they will be affected and, through that, develop some sort of policy. I need to talk to the people, understand their concerns before I make any recommendations.”

Mr Holding also echoed a proposal by the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) that the $100,000 NHI exemption threshold be adjusted to reduce the burden on small businesses.

While the Nassau-based Chamber believes this threshold is “way too low”, and should be raised to $500,000, Mr Holding instead suggested that it start higher but be progressively lowered to $100,000.

“It may well be that the threshold, instead of being $100,000, start at $200,000 and then be decreased to $150,000 and then to $100,000 so people will not be immediately impacted,” he told Tribune Business.

The GB Chamber president said that while he understood calls for the revised NHI scheme to be further delayed, given the impact on business costs and worker incomes so soon after the 60 percent VAT rate hike, the need to provide all Bahamians with affordable, accessible healthcare was just as pressing.

Arguing that the two demands needed to be balanced, Mr Holding told Tribune Business: “I can understand that, but on the other hand we’ve got people that cannot afford healthcare and that’s also a high priority to do something about.

“This is not purely economic. There’s a huge social side to it. One has to balance these two things. I’d be inclined to stick to the timescale but require some phasing-in to help the small business community.

“It depends on where you sit in the economy. It’s s difficult issue. Some businesses can afford it and others may find it very difficult. I don’t think you stop the while thing because some businesses are finding it difficult; you just find a way to help them with the implementation.”

Mr Holding praised Dr Roberts and his team for doing “an excellent job” in consultations that were attended by 50-60 Grand Bahama Chamber members.

“I think the general consensus was that this was an excellent plan,” he said. “It’s going to help those people that currently may be denied medical care on the basis they cannot afford it.

“It was generally supported that this was very much a move in the right direction. Nobody had a word of criticism about the product itself. Everybody thought it was a good idea that companies will have to take out insurance through the insurance companies.”