Bahamas Moves to Implement National Health Plan

by Larry Smith

You should be careful what you wish for.

For the first time in memory the Christie government has acted decisively by proceeding to ram its national health programme through parliament over the objections of almost every interest group in the country. And the prime minister says this will be his key election plank.

The NHI Bill seeks to establish a healthcare "financing and purchasing mechanism" that will be administered by a 10-member commission under the authority of a cabinet minister. A special fund will collect a mandatory payroll tax to pay for medical services and administrative costs, and it will all be handled by the famously inefficient National Insurance Board.

This new bureaucracy will be the ultimate expression of public sector hubris - something that Bahamians have been gradually edging away from over the past few decades.

In the early years of the last century, our little population of 56,000 was served by a handful of private physicians and doctors attached to the dilapidated government hospital in Nassau. They were ably assisted by three medical officers in the Out Islands.

A big expansion of public health took place after the Second World War. The RAF hospital at Prospect Ridge became a TB ward for Bahamians, and the Princess Margaret and Sandilands Hospitals were built. Back then, the private sector consisted of a few primary care doctors and a clinic or two. Those who could afford it went to Miami for treatment.

But more recently, the private healthcare sector has exploded as scores of Bahamians returned from medical schools abroad and rising prosperity led to a burgeoning insurance industry. Today, our hybrid healthcare infrastructure includes Doctors Hospital and a growing network of private clinics and specialists, as well as three public hospitals and about a hundred or so government clinics scattered around the country.

In fact, insurers say about 60 per cent of Bahamian medical spending now stays in the country, compared to less than 40 per cent only a decade ago. That is clear evidence of the improvement in both the quality and availability of local medical services - something that has been almost entirely driven by the private sector.

As the Blue Ribbon Commission noted in its 2004 report, historically the government has been the main healthcare provider in The Bahamas. But it can no longer keep up with the demands of an expanding population for costly new drugs and treatments. So ways must be found to finance the Ministry of Health's $200 million a year budget - most of it spent on salaries and perks.

Just under half the population relies on our tax-supported facilities, often paying little or nothing for treatment. The government wants to shift the cost of this healthcare from the Treasury to a new payroll tax levied on the other half of the population - who are already paying through the nose for private insurance and generally don't access the public system.

The Blue Ribbon Commission came up with an optimistic valuation of $235 million a year in healthcare costs to be financed by a 5.3 per cent tax on salaries up to $5,000 a month, split between workers and employers, in addition to government contributions for the unemployed and indigent. But critics - including doctors - say this is completely unrealistic. And the Commission has not released any of its data to prove otherwise.

Like almost everyone, the Medical Association of The Bahamas agrees that more funding is needed, but it flatly rejects the financial projections reached by the Blue Ribbon Commission: "We can categorically state that the assumptions used to derive the conclusions are flawed," the MAB position paper says.

The Dental Association argues that use of the public health system is likely to increase exponentially under NHI and asks: "Are we as a nation able to meet these cost overruns? Can we afford to risk significantly increasing the country's already heavy debt burden, or to entertain the prospects of perpetual decreases in real wages? We implore the government to create reasonable expectations."

Health insurers will be the most directly impacted by NHI since their market can be expected to vanish overnight. At present, about 51 per cent of the population is covered by private health insurance. But margins are low, requiring close attention to administrative costs, claims management and provider fee negotiations. Once NHI is implemented, the anticipated reduction in premium levels could lead to a withdrawal of those firms that currently service the health market. The largest of these are Atlantic Medical, Family Guardian and Colina Imperial.

This, in turn, would lead to a loss of premium tax for the government of some $18 million a year, a reduction of business license fees and the loss of industry jobs. In effect, this would amount to the removal of an entire sector of the economy that is currently working well, by the Blue Ribbon Commission's own assessment.

The plain fact is that the government settled on a plan and has been pushing it ever since for political reasons. But the National Coalition for Health care Reform - a cross-section of union and employer organisations - says there has been very little genuine consultation on the NHI proposal and urges time to engage in "true, meaningful and transparent consultation to discuss the many unanswered questions on NHI.

"We believe that insufficient information has been provided to the public about NHI. We request that the government release all facts and allow for meaningful consultation before making a final determination."

Of course, almost no-one disputes the need for a restructuring of Bahamian healthcare. Equitable access to care is both morally correct and socially desirable. And since the country's archaic tax system makes it imperative to find new revenue streams, payroll taxes are the obvious way to go.

But the government's endorsement of the Blue Ribbon Commission's choice of a social health insurance scheme (similar to that in Canada and France) and its ram-rodding of legislation through parliament in anticipation of the general election early next year seem to have foreclosed any constructive debate on alternatives.

In fact, the previous government was working on a plan to insure catastophic medical costs for Bahamians in partnership with the International Labour Organisation, but partisan politics dealt a death blow to that initiative after the election of the PLP in 2002.

For evidence of NHI's fiscal unreality, we need look no further than existing state enterprises. The government currently shells out $90 million a year to subsidise uneconomic operations like Bahamasair and ZNS. And the electrical and telecoms monopolies suck up huge resources and return very little in terms of value, other than political patronage.

In a few years, the National Insurance Board (which will be administering the national health programme) will go bankrupt without major reforms. Outgo at NIB has exceeded income since the early 1990s. And the government’s proposed health plan can be expected to cost far more, because it will have to satisfy unlimited demand.

According to recent studies, NIB operates with a 17 per cent administrative burden and is overstaffed by 25 per cent. And even if NIB gets its administrative costs (read salaries and perks for officials) under control and earns some revenue on its investments (read non-performing loans to other government entities), we can all expect to pay a lot more in contributions and get less back in benefits.

As one commentator put it: “managing (the national health insurance) programme and avoiding disasters will require an efficiency no national institution displays currently.”

Doctors have said that NHI will "entrench and extend a system that is inefficient, overstaffed and so centrally restrictive that it will ultimately lead to a deterioration of healthcare in the Bahamas." They argue that the existing system has to be reformed to provide better care, not just a different way of paying for services.

And that is really the crux of the matter. It is politically correct to talk about equitable access to healthcare for everyone. It is much more difficult to tackle the harder issues of quality, accountability and sustainability.

Comments

[Rick]

Excellent as usual Larry.
This is being sold as a programme to help the poor when it is actually a hostile takeover of the health care industry.
The government should be considering a catastrophic plan for those people that are unemployed or have been locked out of private insurance for one reason or another.
Working stiffs like us should buy our own private insurance!

[larry smith]

I think that sums it up.

[nicob]

Thanks for the intelligent analysis.

But Larry (she said, rising from the dead), in what world were we inching away from "public sector hubris"?

Not in mine.

[larry smith]

The explosion of private medical services over the past 30 years, the sale of government hotels, the 8-year telecoms privatisation process, the talk about offloading Bahamasair.

I did say "edging".

[will simmons]

I am student from afamily island and have apoint for you re. the amount of times families in Harbour island have been crippled by the cost of air abulance, this will be covered by NHI, private insurance doesn't cover it.health care cost hold people back so much, and sickess is increasing, cancer, sugar,heart disease, AIDS. our facility is pretty on the outside, but there is never any medication, the x-ray machine we have cant be used becuase there is no technician to man it. I had to go to collins avenue and pay big when there is a machine on the island. the doctor, serves harour island and the 4 settlements in north eleuthera, and is way over burdened, and in the high season has to cope with tourists aswell. private insurance exists for the company to make a profit, the government exists to serve the people...why then is it not obvious who we should trust with our health?

[larry smith]

thanks for your comment.

you seem to be saying that the only thing lacking in the public health system today is money. BTC and BEC are rolling in money, but I don't think many people would agree that their service is worth a damn.

and why should the government be in the position of running hospitals and clinics in the first place? why not just outsource the services and support those who need to be supported with tax subsidies and insurance?

I am sure that private policies do cover air ambulance service - it is a question of what benefits you buy.

the fact that the public health infrastructure on Briland (and other places) is decrepit is surely the best indictment one could come up with against government control of healthcare. You will only get more of the same - the evidence is clear from every state-run enterprise.

I agree that more revenue needs to be found, but do you really think that extra money going to the government will make things any different?

[Stephen B Chuck Knowles]

I wish to congratulate you on your column in this week’s Tribune dealing with the proposed National Health Insurance plan which the government proposes to ram through parliament. You managed to summarize the pros and cons of the plan and raised some interesting points which I had not previously considered; a regular tour de force , in fact!

There is one statement that you made, however, with which I must take issue: this is that private insurers will be put out of business by N.H. I. One only has to look at the situation in U.K. to see what the eventual outcome will be.

First of all, as you know, the demand for health care services will increase exponentially. This will result in the budget being blown out of the water. Suppliers of services will be overburdened and resentful of having their remuneration dictated to them by government, resulting in a decrease in supply or service availability.

Secondly, and partially as a result, waiting lines for urgent treatments will grow to the extent that many of those who can afford to do so will be obliged to contract with private insurers in order to obtain guaranteed service in a reasonable time frame; in fact private insurance companies in the U.K. are now going great guns.

Of course, as far as we are concerned, this will mean that those of us who now pay high healthcare premiums to private insurers will continue to do so whilst also having to absorb the additional cost of the NHI scheme unless we can persuade our employer to pick up either or both costs.

For pensioners like me this won’t help very much. Cuba, here I come!

[larry smith]

Thanks for your comment.

But the point about withdrawal comes directly from the health insurers themselves - at a meeting I had with them recently. The Brokers Association position paper also discusses the same thing.

In fact, the most egregious clause in the NHI Bill prohibits employers from withdrawing their private insurance coverage without permission from the Minister of Health. I wonder why they would do that?

However, the fact that you are pensjoner - and soon I will be - is an important point in favour of NHI. I have mixed feelings.