The new NHI scheme part 1: Big questions remain unanswered

  • Media misses the mark in telling the bigger story

  • Cost of doing business could skyrocket

  • Why those intended to benefit from the scheme may lose out

 We have started the discussion on the newly proposed National Health Insurance (NHI) scheme all wrong.

On the one hand, upon the release of the NHI policy paper, the media immediately focused on the easy story: funding the scheme would require a capped two per cent “contribution” taken directly from the wages of employed Bahamians. The policy document was careful not to call this contribution a tax.

Health Minister Dr. Duane Sands.

On the other hand, in response to public exasperation over another “tax” increase, the Minister of Health Dr. Duane Sands, claimed that not backing government’s NHI model will usher in a doomsday for the country’s healthcare system and that it was unlikely that there was a better alternative.

Ideologically, I support the implementation of universal healthcare.

I believe that healthcare is a human right.

I also believe that when people who can’t afford healthcare are given access through public schemes, it benefits us all. For me, public access to healthcare is like public access to education—when we’re all healthy and educated, all our lives are better.

The new NHI scheme solves an important challenge it did not in its earlier form: how to pay for it.

Unfortunately, the media’s narrow focus on the two per cent contribution obscures some major questions the policy document fails to answer—questions that are vital to understanding the new scheme in its entirety.

Similarly, Dr. Sands contention that this is the only way forward forecloses on the possibility of a real discussion amid a consultation period that an agency under his management is leading.

The truth is that while the NHI policy document gives us greater insight into how the National Health Insurance Authority (NHIA) envisions moving forward, it does not provide enough information to make any comprehensive technical assessments of the plan.

For example, the document is missing the kind of information that would typically provide the reader with context. It also fails to provide any information that supports the policy’s rationale.

What is the current state of affairs in the healthcare system and what information has led the NHIA to take this course of action? Further, given that this is the proposed direction the country will go in, what effects will it have on our economy, and in a more general sense, our way of life?

That last question is especially important for employers, who will eventually be mandated to pay a portion of each employee’s contribution to the minimum Standard Health Benefit (SHB). The SHB is the minimum standard of insurance coverage to which all Bahamians will be entitled.

Employee contributions are capped at two per cent or no more than 50 per cent of the total monthly contribution of $83. Employers are not so lucky because they are mandated to pay the difference.

If you employ minimum wage workers at $840 a month, while your employee will pay two per cent of their wages (or about $16.80) into the scheme, you will be required to pay the difference of $66.20 or over seven per cent of that employee’s wages.

This increase in the cost of labor, coupled with this year’s value-added tax (VAT) increase, can’t be an easy pill for businesses to swallow.

In the roll-out of the first phase of the new NHI scheme, a distinction is made between non-exempt employers and exempt employers—businesses that have less than 100 employees, businesses with employees who work less than 15 hours a week, businesses with existing private health insurance plans and those who earn less than $100,000 in revenue a year.

Employers who may wish to avoid a steep increase in labor costs in this first phase could look at reducing staff or cutting staff hours to bring them into the exempt business category.

The policy document says nothing about how the new employer mandate could be expected to affect the labor market.

Just like the two per cent “contribution” is not a tax, employers who are exempt aren’t exempt. These so-called exempt employers are still mandated to pay 25 per cent of the premium for the SHB or about $21 per employee.

It’s unclear, for example, if an employer that already has private health insurance for employees will be required to pay $21 per employee, in addition to the cost of their existing insurance plans. Beyond the additional expense to the employer, who will now have to decide whether to drop any existing health insurance plans, this could be bad for the employee.

If the existing health insurance plan is more comprehensive than the proposed minimum SHB, but an employer decides to drop the existing health insurance plan, the proposed scheme could work to the employee’s disadvantage.

According to the National Development Plan’s “State of the Nation Report”, 85 per cent of businesses in The Bahamas are domestic firms, and a number of these firms are small or medium-sized enterprises (SMEs), owned by everyday Bahamians.

To no doubt blunt and unfavorable responses, the Government’s public relations machinery has been quick to point out to voters that it is their employers who will bear the brunt of the cost for this new scheme. The distinction between voter and employer is not that clear-cut, and for an administration focused on building a cadre of new entrepreneurs, it may find the increased labor costs to be a disincentive.

The policy document also does not mention anything about co-payments, deductibles or lifetime/annual maximums.

Let us use the co-pay as our example in this instance.

A co-pay is a fixed amount paid by a patient for receiving a health care service after the amount covered by insurance has been paid. The co-pay is what health care service providers charge above the compensation they receive from insurers.

It is unclear if there will be any regulation of co-pays beyond what is included in the minimum SHB bundle. The document is clear that: “For all standard health benefit services, health insurers will be regulated and limited as to what they can charge for deductibles or co-payments.” It says nothing about regulating health care service providers and nothing about services outside of the minimum SHB bundle.

The SHB bundle includes treatment for certain common diseases in The Bahamas such as breast cancer, prostate cancer, colon cancer, rectum cancer, cervical cancer, heart attack, need for a pacemaker and end-stage kidney disease. However, the minimum SHB doesn’t cover something like the removal of an appendix, which is not an uncommon procedure.

While speaking to one health insurance professional, she recounted that in 2001, having her appendix removed cost her insurance $16,000, and her co-pay was still $3,000 at a private institution.

Last year the Central Bank of The Bahamas (CBOB) released statistics that showed 90 per cent of Bahamians have less than $5,000 in their bank accounts. Most Bahamians would be unable to afford this co-pay at a private institution, which means that unregulated, high co-pays may ultimately defeat one of the primary purposes of the new NHI scheme.

The policy paper admits, “Long wait-times due to increasing demand for public-sector health services have put significant strain on a system with limited resources. This places a great burden on our healthcare workforce to find capacity where there is none.”

Unregulated, high co-pays will drive Bahamians back to this very same strained, limited and capacity-starved public healthcare system.

Interestingly, despite these ongoing systemic challenges, the policy paper says nothing about what steps will be taken to improve the public healthcare system and to build capacity.

This admission about the state of our system and the void of information on how it will be addressed is set against the backdrop of relentless conflict between the Public Hospitals Authority (PHA) and the staff that is responsible for holding this ailing system together.

Highlighting these gaps in the policy is not about discrediting the policy as a whole but is an attempt to focus the conversation on critical questions the policy leaves unanswered, beyond the click-bait of the two per cent contribution.

While this administration, like administrations before it, has become all too comfortable claiming that their answers to the challenges we face are the only answers, fundamental questions remain.

In the next installment, we will discuss the opposition’s paltry response to the proposal, how the funding structure benefits the wealthy and how alternatives to the new proposed scheme could look.