Kempe: Addressing Real Costs Of Healthcare

May 7, 2019 | 55 Comments

“Without fixing the underlying cost drivers no amount of pooling or funding acrobatics will halt the rising tide of healthcare costs,” OBA Shadow Finance Minister Nick Kempe said.

Senator Kempe said, “On June 1, there will be a fundamental change to how services at the hospital will be funded. Whilst we have yet to see any draft legislation with only three weeks before go-live, from what information that has been shared, it is clear that not everything adds up as easily as the Minister says.

“She asserted that 20% of the Standard Hospital Benefit portion of the premium presently managed by insurance companies is consumed by their profit and admin. These new changes will transfer almost all of this premium directly to Government. The insinuation is that this 20% will go away and the system will benefit.

“But what about Mr. and Mrs. Bermuda? Why isn’t the overall Standard Premium Rate going down by that 20% if what the Minister says is true? Based on the Minister’s 20% figure there should be approximately $45/month in savings for working Bermudians.

“Why should Government take these savings from us? We aren’t getting any additional benefits in exchange for these savings. Government is simply taking these alleged profits for themselves.

“Minister Wilson said this new model will also result in $20m in savings at the hospital due to efficiencies, but never said what those efficiencies are.

“It would seem the only real change is that claims will no longer be administered. That means that people at the hospital that billed the insurance companies as well as people at the insurance companies that processed those claims are no longer needed.

“If 20% of the premium managed by insurance companies was for profit and admin and that goes away, clearly those performing that admin will lose their jobs. But on the hospital side are there really $20m worth of savings from making people redundant?

“What other efficiencies are there? Shouldn’t the $20m is savings at the hospital also be passed on to the workers paying this tax/premium?

“The hospital is moving from a fee for service model to a block grant model. Up until now, when insured people go to the hospital, the insurance company paid for the hospital service.

“If you consumed more services one year than what you paid the insurance company in premiums, the insurance company still paid the bill, but had to absorb the loss.

“How will it work in the future if the hospital spends all of its fixed block grant providing services, but there is still more people that need services? Where will the money come from?

“Will people be denied services? Will we have to wait longer for care? Will quality drop?

“These proposed changes actually do nothing to address the real costs of healthcare such as the unnecessary and over usage of diagnostic imaging and of laboratory testing. Without fixing the underlying cost drivers no amount of pooling or funding acrobatics will halt the rising tide of healthcare costs.

“Another major cost driver is a declining working population in relation to retired population. Each working age person contributes approximately $50/month of their Standard Premium to subsidise qualified HIP and FutureCare recipients.

“With the bucket getting smaller and the spout getting bigger, what is Government doing to get more people on island to ensure that the bucket is big enough to assist those that require subsidised HIP and FutureCare?”

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  1. smile says:

    As one of the wealthiest nations on earth. Our people deserve to live with dignity and basic rights to health care.

    While perhaps there are some unfair distributions of wealth on our small island. We certainly do not need sweeping reforms that hurt the small local Bermudian business. Nor policy that would move our larger overseas businesses offshore.

    Our PLP government were voted in with a LANDSLIDE vote in 2017. PLP for the people who were in touch with the common man.
    All we have seen is first class travel, press releases of attending important overseas conferences…… But they’ve simply lost touch with the people and are raising taxes to fund these fanciful trips.

    I had hoped (and voted) for better.

    • LaV says:

      “I had hoped (and voted) for better.”

      Despite the fact that they set out to destroy Bermuda, you thought they’d be different this time.

    • sandgrownan says:

      “I had hoped (and voted) for better.”

      Really? On what basis?

    • inna says:

      What on this green earth made you think that the PLP would be different this time around??

      Unfortunately, YOU get what you voted for!!

  2. Health is not for Profit says:

    Here is the thing with the OBA. The words sound nice, but they offer no alternative because they are in the pocket of the insurers.

    OBA if you were in what would you do differently? Don’t say you will reduce rates, that’s not realistic, especially as some of you sit on the boards of insurance companies. Will you at least reduce the margins for the insurers like the independent studies have suggested, or will you let them continue to fleece the public?

    I’m happy that someone is actually taking on the insurers, Healthcare should not be a profit business, and I just wish that in this RICH country of Bermuda, we would do like other RICH countries do and provide health care for all.

    PLP, you have my support. The insurers have been screwing us for years, and Kempe is just concerned about his stock price.

    • Red rose says:

      One of the main duties of any opposition party is to ask questions of the government, which is exactly what nick is doing here.
      In terms of policy – the oba wanted to introduce precertification but lost its nerve which was a big shame

    • question says:

      But you’re ok with certain health providers being given $1.2m for absolutely nothing just to ensure they make a profit.

    • JohnnyB says:

      Spoken like a true PLP puppet

    • 2 Bermudas says:

      They sure as hell wouldn’t have given $1.2m to Ewart Brown! OBA was finding ways to reduce the actual cost of healthcare, the main driver of high insurance premiums!!

    • sandgrownan says:

      The answer is simple…it’s in the last line.

      ““With the bucket getting smaller and the spout getting bigger….”

      Increase the size of the bucket.

      • Don’t worry says:

        Don’t worry about a thing! Old people are dying every day and young people not having kids so nature will balance all of this out in the end – peace by the journey!

        • sandgrownan says:

          Ah, so you’re saying the spout will get smaller too…nice theory you got there sparky.

    • truthertz says:

      So then don’t complain when your premiums spike.

      The Government’s move will increase healthcare costs for all.

      That is not ‘for the people’ no matter how much you say it is.

    • Double S says:

      PLP won’t address the regulation of Doctors and what they can charge (the real issue) because they are in the pockets of the Doctors.

      They even gave one $1.2mn ..

      For the people my a&&.

    • Cha says:

      Bermuda is not RICH. Bermuda is in debt. Bermuda was a RICH country but 1998 – 2012 corrected that statistic.

      The reason the government are taxing everything they can and increasing healthcare rates is because we are poor and in debt.

      Don’t get it twisted.

    • CHRIS says:

      Do you think the PLP built that new acute wing for the profit of the foreign investor? Do you think Island Construction should have donated thier fee?
      Bermuda is not rich. We are in debt up to our eyeballs, thanks again to the PLP. Healthcare in Bda is partially social in that we all pay a part of our insurance premiums to the hospital so that no one will go without care. And lastly, if you are really concerned about insurance company’s and how they work, buy stock and attend a shareholders’ meeting. THey can explain how it all works to you.

    • inna says:

      Nothing is stopping you from buying BF&M stock.

      And the PLP is the government, it is their job to get costs down. Furthermore, based on all the positives that are going on in our economy today (the few that there are), the PLP would take the OBAs suggestions and implement them as their own!

    • Nick Kempe says:

      @Health is not for profit

      Good morning,

      You asked a couple interesting questions which I wanted to answer more fully in the press statement but had to work within serious word count restraints. This topic is complicated and can be difficult to synthesise (especially with the similar acronyms SPR, SHB and MFR which I will try to avoid).

      My main concerns here are jobs and health care costs as these are cause of much struggle in Bermuda right now.

      Firstly, what would I do differently? I do not have access to national anonimised health data nor the draft legislation as neither has been made public, so I will have to take the Minister’s claim that 20% of the portion of the Standard Premium Rate being lost to admin and profit as true for the following proposed alternatives. Government is taking over control of the hospital portion of the standard hospital benefit premium ($230/month) and is leaving the insurers with the remaining $23.34 to manage claims from approved non-Hospital health care providers. 20% of $230 is $46. Government is finding efficiencies by eliminating the claims process for SHB services performed at the hospital. “Efficiencies” in this case means the cost of wages to pay people on both end of this admin process. Are the job losses worth it? That’s a question for Government. If these savings are not passed on to all of us that pay into the system then it will make the job losses doubly unfortunate. Are you comfortable with some Bermudians losing jobs if it means $46/month savings for the rest of those working? What if those savings from eliminated “profits and admin job costs” are kept by Government as appears to be the case?

      This move also raises question about the Minister’s “middle man” argument. Seeing as they are forcing insurers to hand over 90% of the SHB premium and 100% of the MRF, why don’t they just collect it all (including the non-BHB portion) straight from employers and leave the insurers out of the equation. The standard premium rate is already effectively a tax, why no collect it like one? I think that Government prefers to push the administrative burden onto the insurers so that they can collect a handful of insurance company cheques a month instead of hundreds or thousands of separate business accounts.

      Secondly, you asked about reducing rates. What would I do? One of the main drivers of inflationary health costs are the inputs. The OBA tackled disproportionate costs on the market, but these controls were reversed by the PLP as their first order of business. I would like to see far more transparency in health care pricing. A gross price list that shows the actual price of services (out of pocket co-pay as well as insurance covered amount) so that consumers can gauge value for money and play a bigger part in controlling unnecessary spending. Self-Referrals between doctors and their own laboratory services should be regulated. National, anonimised, itemised usage and cost data should be made publicly available for greater transparent and public engagement to find solutions. Even if the PLP completely cut out insurance companies and nationalised the insurance pool those costs would remain. The total spend on health care in Bermuda rose 80% between 2004 and 2012 which was clearly not due to exponential insurance company profits. [http://bernews.com/2018/11/nick-kempe-column-economy-new-taxes-debt/] What else would you do to control input costs?

      I would much prefer to have a conversation than write a wall of text AT you in the comments, so feel free to reach out nkempe@oba.bm if you want to engage further.

      NOTE: I do not have shares in any insurance company. You are welcome to view my Register of Interests form on http://www.parliament.bm

      • hmmm says:

        Go afternoon,

        When are you guys going to create a 3rd party?

        • Double S says:

          Another intellectual response by the green team. Well done.

          I challenge you….no I dare you to formulate a half intelligent response to the posy above.

          $1000 says you can’t do it.

          • hmmm says:

            $1000 your small mind is thinking small lets think bigger that’s not a challenge LOLOLOL!!

            15 million says the oba/UBP will not win the next election and a 3rd party will be created. Don’t shoot the messenger the word is already spreading and people are talking.

            • Toodle-oo says:

              Of course they’re not going to win the next election. The masses have been brainwashed into believing that licks are pleasurable . Along with skyrocketing costs ,taxes and total loss of confidence in Bda by outsiders with the money we need.

            • Question says:

              So you’re not really interested in the points Nick Kempe raises. You just shoot the messenger and change the subject. As always, when you know you’ve lost the argument on its merits.

              • Double S says:

                No he/she is not. Hence his silly and ignorant reply.

                Blind partisanship allowed the PLP to screw up the island the first time round. Good luck.

              • LaV says:

                Racists, like hmmm cannot be reasoned with. Racism is a mental disease enjoyed by the majority of bermudians.

        • inna says:

          Wouldnt that just further guarantee the PLP reelection?

          • hmmm says:

            The victory is already guaranteed as always the UBP clowns are to thick headed to see it. The former BDA party was the only party that the PEOPLE started to swing to……that’s where Lea Scott, Sylvan Richards, Crockwell and many more “PEOPLE” originally came from before joining up with the oba/UBPeee.

            I have a close friend and to this day he and few other wealthy members regret that the BDA merged with the UBP.

            People are talking trust me, and you need the PEOPLES vote to win!!!

            Hey but don’t listen to me you’ll see next election how many jump ship to create a third party.

            • Toodle-oo says:

              *I have a close friend and to this day he and few other wealthy members regret that the BDA merged with the UBP.*

              And how regretful are they about the PLP getting re-elected ? They must be really smarting , eh ?

  3. Ringmaster says:

    Nick will be trashed by the usual Government spin doctors who will attack him and be unable to reply to any of the points he raised.

  4. BermieBorn says:

    Some thoughtful questions for a careless and uncaring PLP governemnt.

  5. Richard A says:

    The answer is nothing. They have NO plan and hopefully next election there is a government that does and is willing to take over this sinking ship

  6. kevin says:

    Well shortly the real facts will begin to surface , either the plp are playing the smoke and mirrors game bxllshxtting the public or the insurance companies and the oba just don’t get it. One thing is real and that is the cost of healthcare and I am sure that many more diagnostic procedures are being ordered today than before. I have personally witnessed a friend that must have had 5 CT scans in a year surely that’s not right. Do our doctors order these procedures because that’s all they know …I liken it to a mechanic .. a real mechanic finds the problem and fixes it ..today many mechanics switch out parts until its fixed.

    • Red rose says:

      The latter part of your comment hits the nail bang on

    • sandgrownan says:

      “I have personally witnessed a friend that must have had 5 CT scans in a year surely that’s not right”

      Where did he have those? DREB’s clinic?

    • Portia says:

      “Do our doctors order these procedures because that’s all they know …”

      Well, I can give you an example from my own personal experience. My husband had been suffering from arm weakness and other symptoms for a long time. He saw different doctors that couldn’t give him an answer. He was referred to a neurosurgeon and this doctor said that my husband needed to travel to Boston for a myelogram on his spine to see what the problem is. So we got the scan done in Boston (covered by our insurer, which cost over $3,000 for tickets since I traveled with him, and the cost of a hotel and transport in Boston, not to mention the Boston hospital costs).

      The myelogram didn’t show anything so the neurosurgeon said my husband should get a spinal fusion done in his overseas clinic to fix his symptoms. My husband was hesitant and we ended up moving overseas the next year. My husband saw a neurosurgeon after we moved who could not believe that the doctor ordered a myelogram.
      “Isn’t that the right scan to use?” we asked. “Yeah…if it was the 1970s!” he said. He then ordered a simple MRI which immediately showed a large tumor in my husband’s spinal cord which was dealt with. Yet it is upsetting to think that we had to go through the trouble of flying overseas for a painful and unnecessary procedure when we could have simply gone into King Edward hospital for an MRI to find out what was wrong, and none of the Bermuda doctors even thought of ordering it.

      Very often patients are blamed for increasing the cost of healthcare, but no one ever seems to look at the role these health care providers play in jacking up the costs through unnecessary or inappropriate procedures. I also blame the insurance companies, because they never seem to question it and just take the doctors at face value and pass on all the costs to the client through higher premiums. Yet they surely must have (or should have) staff members with a medical background who are capable of assessing these claims to determine if something is amiss. Otherwise, the public is just being taken for a ride.

      • truthertz says:

        “Very often patients are blamed for increasing the cost of healthcare, but no one ever seems to look at the role these health care providers play in jacking up the costs through unnecessary or inappropriate procedures”

        Agreed. However, the PLP reversed the actions taken by the OBA to address over-utilization of certain services and instead are now planning on bringing down the insurance companies (which will result in job losses).

        If they were serious about bringing down costs they will seek to regulate the pricing of services by doctors as well as eliminating the conflicts of interests (ie doctors referring patients to their other services etc.) that are rife within the system. Unfortunately, due to the PLP’s own inherent conflicts of interests they apparently have no appetite for going after the real drivers of our astronomical healthcare costs. Once again Bermudians are paying for political paybacks.

  7. Swing Voter says:

    Nick you have Jet Gate Craig as the leader of the oba aka UBP and you expect people to listen.

    Let’s keep some form of integrity the PEOPLE that swing vote don’t trust him with his past track record.

    • Double S says:

      But yet you lot trust Zane and D. Burgess?!!

      hahahaha

      • 2 Bermudas says:

        You win this one!!

      • Anbu says:

        Of course they do, they are a “swing voter”, aka a staunch plp voter. LMAO

      • hmmm says:

        Yes they do trust Zane and D. Burgess did the PLP 25 to obaUBP 11 seat win not help you understand that. Now go run along and create a 3rd party hahahah.

      • Yes says:

        Yes we do and they are respected in business and the Church! Your bye is not!

        • Double S says:

          Hahaha.

          You guys would trusty anyone that wears the green no matter what they do to you or this island.

          Didn’t realise the church respects people who allegedly conduct themselves in such ways.

          Hahahaha.

          • LaV says:

            “Didn’t realise the church respects people who allegedly conduct themselves in such ways.”

            Just look how the church conducts itself….catholics and their penchant for little boys….the guy leading ‘preserve marriage’…lol, and all the others who willingly discriminate against a small section of society.
            The church has no credibility, who cares if they endorse these bigots.

        • CHRIS says:

          Church? What century are you living in?

        • truthertz says:

          Sounds like the Church has forgotten the 10 commandments and general morals if that is the case.

    • road rash says:

      LOL – if in doubt revert to tired old deflection tactics …. typical PLP MO

  8. Sam says:

    I think the government is on the right path with the block grant! Why do we have to follow the USA way of doing business. We are a small island of 60,000 people and healthcare cost is ridiculous because we try to fit our little island in the big USA world. It is time for healthcare reform and I am open to all ideas, maybe that is the Ireland side of me. Bermuda stop the closed mindedness and give things a try!

  9. Ringmaster says:

    The way to control healthcare costs is simple and it is to have all procedures provided by doctors etc under a price control. The insurance will pay for that cost and only that cost, subject to a small co pay. You have to stop the gross overcharging of a procedure where the insurance only pays say 40% and the patient pays the rest. You have no knowledge of what it will cost as the charges are often way over the prescribed schedule. At least a restaurant gives you a menu with prices. Have you ever seen that in a healthcare provider’s office?

    • alicia says:

      Medical Doctors are required under section 5 of the standards of practice (which is linked to the Bermuda Medical Practitioners Act) to post in public view in their office their most commonly charged items and the portion that is not covered by insurance. They are also required to let you know up front about any charges for non-insurance billable items (such as fees for copying records, doing referrals, performing items that are excluded under the policy, etc)… If your doctor isn’t doing this, then it is a breach of the standards of practice and you can file a complaint against their medical license with the medical council.

      • Don’t worry says:

        They are definitely not doing this! Can we sue them?

      • Question says:

        Where did the extra charge of $1.2m get posted?

  10. Question says:

    Every time the OBA attempted to control healthcare costs rent-a-crowd appeared and whined about it.
    Well, you got what you wanted. Expensive healthcare that you find it hard to afford. Well done.

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