HIP Insurance Premiums To Rise April 1st

March 21, 2011

Today [Mar.21] the Minister of Health Zane De Silva announced the new increased rates for the Health Insurance Plan [HIP] and the FutureCare Plan which will become effective on April 1, 2011.

Minister DeSilva said, “The HIP premium will again increase on April 1st, 2011 from $298.93 to $385 per person per month. This is a premium increase of more than $86 or 29 per cent. This premium is the sum of the Standard Hospital Benefits Premium including the Mutual Reinsurance Fund premium, and the HIP Supplemental Benefits premium. There will be no additional benefits added to HIP at this time.”

Minister De Silva and Collin Anderson

Minister DeSilva’s full remarks follow below:

Good Morning Ladies and Gentlemen,

Today I announce the new premium rates for the Health Insurance Plan (HIP) and the FutureCare Plan which become effective April 1st, 2011.

Under the Health Insurance Act of 1970, the Health Insurance Committee manages several of the Government’s insurance plans, including:

1. HIP: a plan consisting of Standard Hospital Benefits and Supplemental Benefits, which is available to anyone above school-leaving age; and
2. FutureCare: a plan designed for persons over the age of 65 which provides comprehensive benefits.

Annually the Health Insurance Committee seeks advice from its Consultant Actuary and reviews the annual actuarial report for HIP and FutureCare. The Committee submits a recommendation to the Minister of Health for the setting of the premium, which in turn is approved by Cabinet.

At this time last year, the monthly premium rate for persons on HIP was set at $298.93 – this is almost a 24 per cent increase over the previous year’s rate of $241.15. At the end of March 2010 there were approximately 2,800 persons insured on HIP.

The HIP premium will again increase on April 1st, 2011 from $298.93 to $385 per person per month. This is a premium increase of more than $86 or 29 per cent. This premium is the sum of the Standard Hospital Benefits Premium including the Mutual Reinsurance Fund premium, and the HIP Supplemental Benefits premium. There will be no additional benefits added to HIP at this time. As of January 31st, 2011, HIP had 3,203 policyholders.

The primary reasons for this significant premium increase are:

  • 1) increases in utilization;
  • 2) increases in medical inflation in Bermuda; and
  • 3) increases in administration costs.

As mentioned in the budget debate, the combination of these increases led HIP’s cash on-hand to decline by approximately $7.7M (or 190 per cent) to a deficit of minus $3.6M at March 31, 2010. This was in stark contrast to a surplus of $4.1M at the end of the prior year.

In previous years, HIP’s surplus was artificially inflated due to slow turn-around times for claims payments. Also, new benefits were added to HIP in 2008 with no subsequent increase in the premium until now.

HIP also paid less in administrative expenses because it lacked an automated system and adequate human resources. Government’s actions over the past few years in clearing the claims back-log, adding new benefits to HIP, along with implementing new systems and processes brought the surplus to where it is today.

This is a dangerous financial position for HIP. All local health insurers are experiencing similar increases in claims costs. The Ministry of Health is working closely with the Health Insurance Committee, the Health Insurance Department and the Ministry of Finance to provide financial support to HIP in fiscal 2011/12.

On April 1, 2010, the FutureCare premium for those on Phase 1 was $300 per month. The premium for those entering the program in Phase 2, from April 2010 was $600 per month.

  • Phase 1: The FutureCare premium as of April 1st, 2011 for Phase 1 policyholders will increase from $300 to $375 per person per month. This is a premium increase of 25 per cent.
  • Phase 2: The FutureCare premium as at April 1st, 2011 for Phase 2 policyholders will increase from $600 to $635 per person per month. This is a premium increase of approximately 6 per cent.
  • Phase 3: April 1st, 2011 will also be the launch of Phase 3 of FutureCare, which will open eligibility to all persons over the age of 65. The Phase 3 premium will be $635 per person per month and is the same as the Phase 2 premium. In doing this, the Government of Bermuda has now fully achieved its promise of offering an affordable and comprehensive health insurance plan to all of Bermuda’s seniors who choose to enroll.

The FutureCare Fund ended its first year in a strong financial position with approximately $8.2 million in capital. We expect FutureCare’s claims to increase significantly in future years and this first year’s positive results are not an indication that we will move forward without careful planning and prudent actuarial analysis.

There will be no new benefits added to FutureCare in the fiscal year starting April 1st, 2011. This marks the third year that the benefits have remained the same and it will provide us with good actuarial data to plan for the future. As at January 31st, 2011, FutureCare had 2,840 policyholders.

The Ministry is prudently managing HIP and FutureCare. Our external actuaries provide advice to ensure the sustainability of the Funds. Appropriate premiums are required to ensure FutureCare and HIP’s can pay claims. This means we must be both fiscally and actuarially responsible. At times that means we must increase premiums. We are aware of the difficult economic times. However, raising the premium is the responsible and correct thing to do.

Warren Buffett, the famed investor and insurance industry professional, has long said the industry has suffered from prolonged periods of underwriting losses for the risks accepted.

In this year’s Berkshire Hathaway Letter to Shareholders, Mr. Buffet writes of the Property and Casualty industry: “In most years, industry premiums have been inadequate to cover claims plus expenses.” This has led to huge swings in premium rates between good years where capital is plentiful, and bad years when capital has been depleted.

We don’t want our local health insurers, including HIP and FutureCare to be subject to the same volatility seen in the ‘P&C’ industry. We need our local health insurers to be viable, stable and strong to ensure they have the financial strength to pay claims when we need them most.

However, in the long term, we want to work towards a more equitable distribution of health insurance premiums among our population because a nation’s health is also a source of its future wealth.

We must work together to ensure the sustainability of the system, not just by pricing premiums correctly, but by managing risks properly, placing limitations on benefits where needed, aggressively managing the most catastrophic cases, controlling reimbursement rates, managing administrative expenses carefully and looking for ways that technology and better partnerships can generate greater efficiencies.

Thank you.

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Comments (30)

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  1. Jus' Askin" says:

    When will the madness end?

    • Cleancut says:

      It won’t we have to keep paying. It’s not “Business as usuall” the Dial has been “Reset” in this “New Bermuda”

  2. Robert Bryce says:

    How on earth are Seniors supposed to pay these premiums? Ministers don’t care of course because their healthcare is paid for by the taxpayer. Control the costs first and cut down on the outrageous fees charged by doctors.
    Today there was much made of “medical tourism” and how people are coming here for treatment. What a joke when it costs, I am told, $60,000 to fly a patient from here to the US – reverse medical tourism? – for something that Bermuda could provide if the facilities were here, and in many cases I’m sure it could be. Heart attack patients can’t be that rare that you have to fly them to Boston? Pay the money and get the equipment here.

    • Hmmmmm says:

      Such ignorance. The average senior covered by a private insurer is paying a minimum of $600 per month and in some cases approaching $900 per month. Those persons are insured by those private insurers because they have been with them for some time. Most insurers are not accepting new senior enrollees for health insurance. Ministers are insured on the same plan as civil servants and so they contribute to it like every other human on the Island by deductions from their monthly salary. Flying to Boston and the like has become fashionable for Bermudians whether necessary or not. All one requires is a referral from a physician and off you go. Insurers want to clamp down on it also but know that consumers like the idea. Further, no other population of 65,000 has the surgical, ER and rehabilitative care Bermuda has. What you need to be asking is what the Bermuda Hospitals Board does with the surpluses they declare every year and why the fees keep going up without regard to their surplus position. The Health Minister hasn’t yet been born tat will take on the insurers and as a result we all continue to pay more and more without regulation. A good system perverted by greed.

      • Robert Bryce says:

        You obviously didn’t read the final part of the Minister’s address. I would also comment that in 2007 the rallying cry was “free healthcare for seniors, free day care, free public transportation”. The foolishness of those election promises are clear today. By the way, Ministers and civil servants are paid by the taxpaying private sector. Ministers and civil servants consume money and don’t generate any. Halve the public sector and there would be around $250 million a year savings.

  3. Mad Person says:

    This is nonsense That The Insurance is going up and they don’t even cover a lot of stuff. I am on HIP insurance i have problems with my health i gotta get medication that cost like $100 just for one single pack. And I was supposed to go away find out whats wrong with me and they don’t even cover you to go away. That is stupidness they should at lease cover people who have problems with there health or got in a bad accident and need the help. This is why people is so broke now a days government wants to much money thats there problem they dont think about other people who cant afford to pay so much money and who are struggling. Because of the hip insurance I cant go away, I cant get my medication like how I used to because it’s to much money and HIP doesn’t cover it.
    A Very Mad Person

  4. PEPPER says:

    Thanks minister of health, we in the know are aware what is going on ,and the truth is not being told… so be honest and tell us the truth.

  5. Reality says:

    Stop complaining. This is what you all voted for. You should have known free daycare would have to be paid for by some other means.

  6. Observing In BDA says:

    Well Lady Finance Minister thanks for not raising anything in the budget for us and giving us a “sweetheart budget”.

    ONLY to hear that the HEALTH MINISTER is hitting everyones pocket with a 29% increase in fees for health coverage to offset what? The new Hospital? Free Daycare? The acceptance of the increase in Financial Assistance? To pay the $2million dollars to Sovereign Ground Services? Or so that the sitting Ministers can live a health long time off the very taxpayers that elected them in.

    Stop and really look at the impact that this has on the working man out there, because at the end of the day the rich get richer the poor get poorer and the working man(woman) is paying for it all. In doing this he(she) is getting frustrated. So tell the truth on what is really going on and stop sugar coating things becasue a continuance of this might mean you won’t be in that very seat your in now.

  7. Can you handle this says:

    Somebody said to me the other day that “They are trying to kill us” and I couldn’t understand what they meant by that..however, after reading the forementioned article I am getting a much clearer picture. With the price of gas going up surely there will be an increase in electricity. The price of groceries is increasing weekly as what I paid for a tin of cream last week is not what I paid for it this week. Now that GEHI is increasing by $86 (with no additional benefits I might add) my already meagre salary will decrese by an additional $1032.00 per year. I am already stressed and robbing “Peter to pay Paul”. And @ Reality, yes, I am going to “bitch” because this is NOT what I voted for. The people I voted for I thought were FOR the people, not just about themselves. Money is the root of all evil and this is what we are surrounded by along with greed, gluttoney and lies…My biggest fear right now is that someday I am going to be a senior citizen, how am I going to survive if the present Government is making it impossible for anyone to save for a rainy day!!!!!

  8. I’m still trying to digest the statement: “We are aware of the difficult economic times. However, raising the premium is the responsible and correct thing to do.”

    Are you serious? How on earth is it the responsible thing to do? People are struggling to pay their rents, utilites and other necessities. And how is it correct to charge these premiums to the sector of the population whom are mostly retired with no sustainable incomes?

    This is so blatantly wrong and evil because no one in government has to worry about how or where the money will come from to pay their premiums. But I guess as long as they’re ok damn everyone else, right?

    • Cleancut says:

      You are going to see a hell of a lot of Seniors at the Polls at the next Election!

  9. Pnk says:

    Its all about the artificially high profit margins of the private insurance companies and the private doctors practices. Have they been reduced to something that is realistic in these challenging financial times?? NO!

    Some how within the system of capitalism in Bermuda we are led to believe that profit margins of 100%+ are a necessity/the norm, that you don’t settle for anything less.

    It boils down to – GREED GREED GREED – lets be quite frank about it.

  10. Sarah says:

    I hope this will be enough to dissuade people from voting PLP at the next election. Sickening.

    • ok says:

      No it wont because unfortuantely a large number of people are still voting on along racial lines and too many people are still alive from the old era of segregation who still identify UBP as the white party. Therefore they will continue to vote PLP or just wont vote at all. Let’s just hope its the latter so that the people who really want to see democracy at work where by if one party is screwing up we can give another party a chance to see how if they can do any better. BTW not that it matters I am black.

      • Concerned says:

        I always hesitate to get involved in politics, but you are absolutely right. No matter how bad things get some people are just set in their ways and won’t change their way of thinking for anything. Won’t even give change a chance because of their perception of what the UBP is. This government is leading us to rock bottom (fast) and it’s time for at least the chance for another party to make things a little better. If it doesn’t work out then we’re in the same position…I don’t think it can get any worse.

  11. Hmmmmm says:

    The lesson to be learned here is you must pay for what you demand. Bermudians demand all the bells and whistles in everything and forget that no population of comparable size has the infrastructure, access to goods and services or healthcare that we do.For so long that has cost us notionally nothing because the lie of Government subsidies has bailed us out every time. Now the reality is that we have a longstanding platinum healthcare system but we’ve been paying bronze prices. The party’s over. The increase is necessary because more and more people will be relying on “the system” for their healthcare needs and if the premiums do not cover the increased demands then the situation will simply get worse. However, if the Government was serious about addressing healthcare costs they’d stop pretending like what we have is sustainable and realise that this little focus group we call a country would benefit from joining up with a large health care provider for coverage purposes…..Blue Cross/Blue Shield should be invited to bid for covering HIP and FutureCare. Costs would go down both here and overseas, the speed of claims processing would increase and the private insurers would be forced to compete for business and not be the consortium they are presently. Step outside the obvious equation: PLP=bad news or Government+increased fees= persecution, and think about ways to make things better. Its not always about preserving the system.

  12. Rockfish#2 says:

    We have been conned again! Our elite politicians have hit us, especially the seniors, with a velvet glove, despite the promises they made. After sharply criticising /berating Mrs. Louise Jackson MP, they are treating people exactly as she predicted. Of course they are not affected by any of this.
    My 90 year old mother constantly reminds us that” they are locking up the wrong people”

  13. Disgusted says:

    And yet, in the next election, despite all the facts and their worsening economic and social positions, the green shirts will continue to support this government because they are afraid of any other alternative. They forget that 15 years ago, we were all better off than we are today. Brain washed sheep. And this boys and girls is why they will never improve education. They need uneducated people to support them in their greed and believe what they are told without question. To that end, the government has done a fine job indeed.

    • Hmmmmm says:

      You all are like the Republicans in the US. So consumed by hate, spouting vitriol at every turn and questioning the legitimacy of the Government with every breath. As vulnerable as Obama is, the Republicans cannot unite to deal with what should be the main effort. If ever a credible alternative could succeed in this country its right now. There isn’t one and so the Government prevails. That’s an indictment of the Opposition(s) not the Government or the people.

      • Disgusted says:

        BTW, I didnt vote for this govt at the last election. did you?

        • Hmmmmm says:

          I sure did and will do so again. I lived under the UBP and I ain’t never goin back no more.

          • Interesting.... says:

            I see by your poor grasp of the English language that you were educated under the PLP’s reign.

            Keep voting them in – they are doing a great job – we are in great financial shape – we are a loving, harmonious community with no violence – our children are getting fantastic educations – our seniors are enjoying their twilight years with full bellies and no fear of starvation or deprivation of health care – we are in great shape!! Keep on keeping on! Vote PLP!

          • Hudson says:

            Why? What was so bad really? Unemployment was at zero percent. We had a budget surplus. Education was in a much better place than it is now (ie Barclay, Warwick Academy, Whitney etc all were public and gave EXCELLENT educations to senior school students). We HAD tourism. We gave good service. The black and white community were more unified 15 years ago than it was today. So tell me, what was so bad really? Sure, there were areas to be improved, and it wasn’t roses for all i know, but those that suffered in teh UBP regime are suffering MORE today. READ THIS ARTICLE!! Who suffers? The old age pensioner who is on a fixed income, and the unemployed who do not have group health plans and can not afford private health care. What a joke. You go ahead and vote for the greens again. The rich will get richer and the poor will get poorer. Go to Jamaica mate and get a taste of where we are headed. Only difference is that the Jamaican people have figured out that there is a difference between SERVICE and SERVITUDE. Bermuda needs to get to a worse place (and they will) before Bermudians will wish for the days of old…

            • LOL (original) says:

              Peep a PR person for the PLP. Its easy they always have more of the story than the rest of the public.


    • Spot On! says:

      100% agree with you Disgusted! You are spot on. Sadly, these sheeple will vote PLP again. They don’t know any better and simply do what they are told. They are merely puppets. But one wonders why going hungry and living in perpetual fear of poverty hasn’t opened their puppet eyes to the reality around them? Will they ever learn or will they continue to be led around like sheep?

      And don’t even get me going on politics in the US – he WILL be a one-term president.

      • Hmmmmm says:

        Can’t resist……why will President Obama be a one-term President? While you’re thinking on that, between you and Disgusted could you point me in the direction of the local alternative to the PLP that you keep referring to. I must be missing it…..

  14. My two cents says:

    Wow, first we hear about free health care for poor from Zane and NOW we hear HIP going up 29%? Does this even make sense? This guy makes my skin crawl.
    They smile in yo face… all the while they wanna take your place, backstabbers, backstabbers. They smile in YO face.

  15. My two cents says:

    I also encourage all to check rates for individual HIP plans with other companies, you may be surprised at the comparisons now that we have a 29% rise.