Health Ministry Responds To OBA’s Concerns

One Bermuda Alliance members Sen. Michael Dunkley and OBA Candidate Andrew Simons held a press conference in which they made various claims regarding health care costs in Bermuda following the recent release of the National Health Accounts Report 2012. The Minister of Health, the Hon. Zane De Silva JP MP, would like to respond to each of these claims below.

OBA Claim #1- That rising health insurance deductions cut deep into individuals’ pay checks

Minister De Silva’s Response: Government controls the standard hospital benefit portion of health insurance premiums. This year (2012), the standard premium rate went up 7.7 per cent as recommended by actuaries. This includes hospitalization costs both locally and overseas. In comparison, health insurance premiums as a whole went up from 15 to 26 per cent. The increase over the standard premium increase is attributable to major medical claims, which are not controlled by Government.

OBA Claim #2 – That HIP premiums are high

Minister De Silva’s Response: HIP premiums are the lowest in the industry. As a social health insurance product, premiums are kept as low as possible to ensure that everyone has access to health insurance, without restrictions for pre-existing conditions.

OBA Claim #3 – That high fees are currently being charged for hospital services

Minister De Silva’s Response: The hospital fees went up by two per cent this year and one and a half per cent last year. Each year, one per cent of this was reserved to pay for the new hospital. Hospital fees must be approved by the House of Assembly and the Senate each year. This is the responsibility of the entire Legislature, not just the Minister of Health.

OBA Claim #4 – Total health expenditure by BHB is too high

Minister De Silva’s Response: The hospital has accounted for a slightly greater share of expenditure overall because services, including anesthesia, obstetrics, and cardiology, have been transferred from the private sector – these benefit the whole population and ensure the cost is community-rated.

OBA Claim #5 – That the hospital proposes a fee schedule to the Bermuda Health Council

Minister De Silva’s Response: For clarity it should be noted that the hospital does not propose a fee schedule to the Bermuda Health Council. That proposal is made directly to the Minister of Health. Also for clarity, the hospital fees must be approved by both the House of Assembly and the Senate. This is the responsibility of the entire Legislature, not just the Minister of Health. This year (2012) the fees went up two per cent and the hospital has agreed to revenue caps with all payors.

OBA Claim #6 – Insurance premiums increase due to hospital fees

Minister De Silva’s Response: Insurers do not set their premiums based just on hospital claims. The standard premium rate is based on hospital claims and is set by Government and approved by the Legislature. The major medical portion of the insurance premium is controlled by the insurer. To reiterate, the standard premium rate increased by 7.7% in 2012 while insurance premiums increased by 15 to 26%.

OBA Claim #7 – That GEHI is a public health insurance plan

Minister De Silva’s Response: GEHI is an approved health insurance scheme and does not receive any Government or taxpayer funding.

OBA Claim #8 – That the recently released financial results for HIP and FutureCare show mounting losses

Minister De Silva’s Response: HIP and FutureCare are social health insurance programs which are designed to receive financial support from Government. This is not a loss. Rather, it is part of the design of the plans. If their premiums were set based only on claims, the premiums would be much higher and unaffordable.

OBA Claim #9 – That subsidy costs were $150.2 million

Minister De Silva’s Response: In 2011, hospital fees increased one and a half per cent. The statement suggests that subsidy costs were $150.2 million. In fact, the subsidy paid hospital claims of $110.6 million. The balance of $39.6 million was an operational grant to the Mid Atlantic Wellness Institute.

Patient subsidies are designed to ensure that vulnerable populations have ready access to acute care.

OBA Claim #10 – That the Minister of Health and the National Health Plan (NHP) attribute rising costs to the private sector and overseas care whereas the Government itself is the largest driver of our skyrocketing costs.

Minister De Silva’s Response: The NHP does not attribute rising healthcare costs to the private sector. The Health Accounts have consistently shown that overseas care costs have more than doubled since 2005. We were pleased to see that in 2011 this rise was curbed due to the efforts of public and private insurers and the BHB’s efforts to repatriate services.

OBA Claim #11 – That Government is the largest driver of costs

Minister De Silva’s Response: The health accounts show that Ministry of Health expenditure went down by 4 per cent in 2011, administration costs went down by 18 per cent and prevention and curative care went up by 5 per cent. BHB expenditure went up by 8 per cent. This shows clearly that the public sector is not the largest driver of health cost increases.

OBA Claim #12 – Public sector spending outstrips private sector spending

Minister De Silva’s Response: Since 2005, the Average Annual Growth Rate in public sector spending has been 14 per cent compared to 10 per cent in the private sector. Public sector increases have included the introduction of a low cost insurance plan for seniors (FutureCare), an overhaul of the Health Insurance Department’s claims processing and payment systems as well as the transfer of services from the private sector to BHB including cardiology, anesthesia and obstetrics.

OBA Claim #13 – Government is deliberately withholding BHB financial statements

Minister De Silva’s Response: The Ministry is aware of the status of BHB’s audited financial statements for the 2011 fiscal year. It should be noted that the office of the Auditor General was only able to sign off on the accounts at the end of March 2012. The BHB will have their 2011 Annual Report which includes the audited financial statements ready for publication in August, 2012.

OBA Claim #14 – That KEMH is operating as a for-profit hospital

Minister De Silva’s Response: The Bermuda Hospitals Board Act requires the Board to generate sufficient revenue to meet its annual liabilities and to maintain a reserve for capital programs, including maintenance, building development and equipment replacement. To that end, the Board endeavors to maintain a six per cent surplus in revenue over expenses to provide for capital improvements and programs.

OBA Claim #15 – NHP does not address hospital costs

Minister De Silva’s Response: The Ministry of Health, the BHB, the Bermuda Health Council and health insurers have been collaborating for the past two years to control hospital costs through memoranda of understanding and other measures. The NHP is designed to address future reforms rather than current, ongoing changes and improvements.

OBA Claim #16 – Government to take over healthcare

Minister De Silva’s Response: Nowhere does the NHP call for Government to take over the island’s health care. The NHP explicitly states that health care will continue to be delivered by both private and public providers. Nowhere does the NHP propose that the basic health care plan will be administered by government. The Health Insurance Act already requires every health insurance plan to include a basic package of health care covering hospitalization. The NHP does propose to expand this basic package to include non-hospital benefits.

The Ministry of Health appreciates that it is difficult for lay persons to fully understand how the health system functions and how the financing and expenditures are organized. We trust that through publications such as the National Health Accounts greater understanding will be achieved.

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