Health Insurance Miscellaneous Amendment Act

June 6, 2015

The changes being introduced in the Health Insurance [Miscellaneous] Amendment Act 2015 are to “support the strategic reforms planned for the health system,” Minister of Health, Seniors and Environment Jeanne Atherden in the House of Assembly on Friday [June 5].

“The Bill before this Honourable House is the Health Insurance [Miscellaneous] Amendment Act 2015. Honourable Members and the public could be forgiven for thinking that the issue of coverage for mammograms is the singular focus of this Bill,” said Minister Atherden.

“It is not and in providing the overview of this Bill as part of the debate in this Honourable House, it is important that we focus on more than the issue that has garnered the most media coverage.

“I must stress that the changes being introduced at this time are very much to support the strategic reforms planned for the health system.

“The Standard Hospital Benefit [or SHB] as defined by the ‘Standard Hospital Benefit Regulations 1971’ is the minimum, mandated package of health insurance.

“Employers must provide at least this level of cover for their employees and their non-employed spouses, and insurers have to include this package in their policies at the regulated price or the Standard Premium Rate [SPR].

“The following changes are brought about by the Health Insurance [Miscellaneous] Amendment Act 2015. There are three types of changes that together result in a net increase to the SPR of 12%.

“First, new standard benefits will be introduced to protect under-insured patients and promote cost-efficiency. Overall these will reduce the SPR by $1.07.

“The second set of changes pertain to the allowance for fees and utilization. These have been kept to a minimum, and they add only $2.73 to the SPR.

“The third set of changes pertains to the Mutual Reinsurance Fund [MRF]. These represent the largest increase to the SPR, an increase of $34.56.”

The Minister’s full statement follows below:

Mr. Speaker, the Bill before this Honourable House is the Health Insurance [Miscellaneous] Amendment Act 2015. Honourable Members and the public could be forgiven for thinking that the issue of coverage for mammograms is the singular focus of this Bill. Mr. Speaker, it is not and in providing the overview of this Bill as part of the debate in this Honourable House, it is important that we focus on more than the issue that has garnered the most media coverage.

Mr. Speaker, the context of all of the changes proposed in this Bill is best viewed through the renaming of the former Standard Hospital Benefit to Standard Health Benefit. This change reflects the sharpened focus of the Ministry of Health, Seniors and Environment to promote more efficient use of healthcare resources, including a greater reliance on non-acute care settings. This means, Mr. Speaker, an increased emphasis on secondary prevention and disease management.

Mr. Speaker, I must stress that the changes being introduced at this time are very much to support the strategic reforms planned for the health system.

The Health Insurance Act 1970 contains the foundation of our current national health insurance system, and there are a number of regulations associated with the Act, some of which are updated annually and others periodically. In particular, the Health Insurance [Standard Hospital Benefit] Regulations define the minimum, mandated package of health insurance and require this Honourable House to set its price.

The Standard Hospital Benefit [or SHB] as defined by the ‘Standard Hospital Benefit Regulations 1971’ is the minimum, mandated package of health insurance. Employers must provide at least this level of cover for their employees and their non-employed spouses, and insurers have to include this package in their policies at the regulated price or the Standard Premium Rate.

The Government subsidizes children, the indigent and seniors at prescribed rates, set by the Health Insurance Act 1970.

Currently Mr. Speaker, SHB covers a majority of local inpatient and outpatient hospital services, some diagnostic imaging procedures outside of the hospital, and select home medical services. The premium for this minimum package of benefits, the Standard Premium Rate [SPR], is comprised of a Standard Hospital Benefit [SHB] component and a Mutual Reinsurance Fund [MRF] component.

The SPR is actuarially priced annually, and set in law by this Honourable House. However, because Government pays for the subsidized populations, part of the cost of SHB coverage is borne by the Consolidated Fund.

Mr. Speaker, annually, the Bermuda Health Council presents to the Ministry of Health, Seniors and Environment the actuarial review of the SHB and MRF prepared by consultant actuaries to recommend the SPR for the upcoming fiscal year. The SPR is calculated on the basis of all insurers’ SHB claims experience, projected changes in fees and utilization, and any benefit changes.

Mr. Speaker, in 2014 the Health Council undertook a review of the coverage under SHB and recommended benefit changes to promote more appropriate use of healthcare resources. These were priced by the Council’s actuaries and represent the first efforts to move from a hospital-based SHB to a more cost-efficient minimum benefit.

On consideration of the various scenarios presented, the following changes are brought about by the Health Insurance [Miscellaneous] Amendment Act 2015. There are three types of changes that together result in a net increase to the SPR of 12%. The breakdown of these changes is as follows:

First, new standard benefits will be introduced to protect under-insured patients and promote cost-efficiency. Overall these will reduce the SPR by $1.07.

The benefits are:

  1. Artificial limbs cover will be increased from the current lifetime maximum of $15,000 to $30,000. This cover has not been adjusted in over a decade and has not kept pace with technological advances and real-cost changes. The new limit will assist patients on the lowest insurance plans.
  2. Hospital-based professional fees will be included under SHB. This refers to the BHB fee schedules 3B [professional fees] and 4B [facility fees]. These are currently excluded from SHB for historical reasons, but have recently caused hardship for persons on the lowest insurance plans who were unexpectedly billed for the services. Comprehensive plans cover the schedules either as supplemental benefits or misreport them as SHB. Adding these fees to SHB will eliminate under-insured patients from being billed for services that are a necessary part of their hospital-based treatment.
  3. Post-acute care in community settings will be covered as SHB for select, eligible, non-acute patients. This seeks to move eligible patients from $30,000 a month beds to $5,000 to $10,000 a month beds [approx.]. The benefit is currently priced based on the projected availability of fifteen community beds and reduces the premium due to the lower costs, and
  4. Emergency ambulance services have been expanded to provide additional, necessary coverage across the Island.

Mr. Speaker, the evolution of our approach to healthcare in this country must be a process that fosters inclusion and engenders the broadest possible support. In the weeks since this Bill was tabled it is clear that the broadest possible support has not been achieved in the case of the proposed changes related to the adoption of alternate clinical guidelines for the coverage of mammograms.

I maintain that it is unfortunate that this proposed change has been mischaracterised. The facts remain that over diagnosis and unnecessary exposure to small amounts of radiation are real issues in women’s healthcare.

The broader, much needed amendments that create the Standard Health Benefit cannot be derailed by an inability to achieve consensus around this issue. Therefore, at the appropriate stage in this debate I will invite Honorable Members to consider an amendment to the Bill which removes the provision related to mammograms. The status quo will remain.

These benefit changes will serve to better protect under-insured populations, without a significant cost to the standard premium.

The second set of changes pertain to the allowance for fees and utilization.

These have been kept to a minimum, and they add only $2.73 to the SPR:

  1. BHB fees will be increased by 1% to offset service delivery cost increases [e.g. medical supplies]; and
  2. the allowance for changes in utilization has been held at zero per cent, based on the most recent claims experience of the subsidy plans, the various benefit revisions and BHB modernization proposals that are anticipated to prevent uncontrolled escalation of utilization.

Mr. Speaker, the third set of changes pertains to the Mutual Reinsurance Fund [MRF]. These represent the largest increase to the SPR, an increase of $34.56.

The MRF has acted as an experimental fund to cover new benefits that are subsequently downloaded to the SHB. It has also acted as a transfer mechanism to help fund the Government’s low-cost insurance products for the benefit of the general public. Last year a $0.67 cent transfer was introduced to assist in funding the Bermuda Health Council.

The MRF is funded by a premium which is included in each health insurance contract, and is transferred by insurance carriers to a collective fund administered by the Health Insurance Department.

Mr. Speaker, this year, the MRF has been structured to fund a pilot health service akin to the former medical clinic, to provide necessary additional funding for BHB’s new acute care wing, and to absorb a greater proportion of the risk associated with low-cost plans for high-risk populations.

They are broken down as follows:

  • a) Non-Communicable Disease Primary Care Pilot: A pilot programme will provide primary care for eligible uninsured, indigent persons and HIP policy holders who are Financial Assistance [FA] clients, when such persons have a pre-defined chronic, non-communicable disease [NCD], namely: diabetes, hypertension, heart disease, asthma and obesity. Eligible persons will receive primary care, case management and prescription drugs to control NCDs in order to avoid costly Emergency Department visits and unnecessary hospitalizations. The projected cost is $6.19 to the SPR. This pilot benefit is in development, and we expect to see it implemented later in 2015.
  • b) BHB Transfer: With the opening of the new acute care wing, and a crisis of funding due to historical challenges, the Island’s hospitals require additional funding to support their proactive sustainability plan. In order to avoid continued increases in fees, which could add more than $8 million to the subsidy costs, a direct transfer to BHB will be introduced to help fund its operations. To raise an estimated $13.7 million, the new transfer will increase the SPR by $23.64. This prevents BHB’s fees from becoming less competitive compared to local and overseas providers, protects the subsidy budget, and provides secure funding for BHB.
  • c) HIP Transfer: The HIP claims experience is severely compromised by the risk it absorbs as the insurer of last resort and the health needs of the HIP-FA clients. Annual capital injections to support the plan help to keep the HIP premium affordable for persons who are experiencing financial challenges, but such capital will be reduced in the upcoming fiscal year. In anticipation of this, the MRF transfer to HIP will be increased from $14.00 to $18.40 per month. This has an impact on the SPR of $4.40.
  • d) Health Council Transfer: Currently the Council receives $0.67 cents monthly per insured person via the MRF. To help fund operations and reduce the burden on the consolidated fund, offset a reduction in their grant, and in anticipation of additional resource needs to regulate healthcare providers, the transfer will be increased to $1.00. This has an impact on the SPR of $0.33 cents.

Mr. Speaker, These changes will help us direct healthcare to more appropriate, cost-effective settings, and protect the subsidy budgets.

Mr. Speaker, in addition, to these benefit changes that impact the SPR, there are three further amendments proposed to the Standard Hospital Benefit regulations to reduce healthcare costs with no impact on the SPR.

Mr. Speaker, Honourable Members will recall that the relatively new Home Medical Services [HMS] benefit under SHB is covered by all insurers. Evaluation of the pilot phase of the programme found it to have saved an estimated $100,000 for the health system by delivering select services outside the acute-care setting. The benefit is not currently covered by subsidy. Given its proven cost-effectiveness, the indigent subsidy will now cover HMS to help reduce cost to the subsidy budget.

Mr. Speaker, this Government is committed to working hard to ensure that wider health system improvements take place so funds are dedicated to protecting the most vulnerable. We aim to achieve this task with the assistance of many partners in the private and public sectors, and the changes introduced this year will help to ensure we use healthcare resources more efficiently and improve healthcare coverage and access.

Thank you, Mr. Speaker.

Clause 1 is self-explanatory and is the standard citation clause.

Clause 2 amends section 2 of the Health Insurance Act 1970. Currently, section 2 limits subsidy coverage to services provided by the Bermuda Hospitals Board. The amendments allow subsidy payments also to be made in certain circumstances to health care providers approved by the Health Insurance Committee. This would allow flexibility for subsidy funds to be used to pay for services in clinically appropriate, lower cost settings than the general hospital such as in residential care or nursing homes or in a patient’s home.

Clause 3 amends section 3A of the Health Insurance Act 1970 by inserting a new subsection [2C]. This new subsection allows the Committee to establish and supervise a primary care programme for the treatment of chronic, noncommunicable diseases, and provides that claims shall be paid out of the Mutual Re-insurance Fund.

Clause 4 amends section 26 of the Health Insurance Act 1970 to provide that whilst existing approved schemes may continue to be approved on an annual basis, no new schemes will be approved.

Clause 5 is to be deleted by amendment.

Clause 6 amends the Health Insurance [Mutual Re-Insurance Fund] [Prescribed Sum] Order 2014 to increase payments made out of the Mutual Reinsurance Fund as set out.

Clause 7 amends Health Insurance [Artificial Limbs and Appliances] Regulations 1971 to increase the maximum liability for an artificial limb or appliance from $15,000 to $30,000.

Clause 8 amends the Health Insurance [Approved Scheme] Regulations 1971 in consequence of the amendment of section 26 of the Health Insurance Act 1971 in clause 4.

Clause 9 amends the specified Acts to change all references to “standard hospital benefit” to the new terminology “standard health benefit”.

Clause 10 amends the specified statutory instruments to change all references to “standard hospital benefit” to the new terminology “standard health benefit”.

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Comments (7)

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  1. Frank says:

    “The third set of changes pertains to the Mutual Reinsurance Fund [MRF]. These represent the largest increase to the SPR, an increase of $34.56.”
    This is per month per person in addition!

  2. Jus' Askin' says:

    This is another place where NATIONALIZATION makes sense ;-)

    If government offered different levels of coverage and was receiving all the monies being paid to the insurance companies, it would be a “Better Bermuda for All Bermudians”

    This is truly a viable source of revenue for the government without adding any new taxes or raising old ones.

    Government can go into the Insurance Business ;-)

  3. Kim Smith says:

    Does anyone know to whom we can direct questions regarding the above… where we can expect a response?

  4. Hmm says:

    Blah blah blah. When is HIP going to cover something sensible? It’s a waste and cheap a$$ employers use it to simply meet the law requirement of providing insurance to their Employees! Address that in layman’s terms.

  5. Raymond Ray says:

    How much more explicit can one be? I personally want to thank you Minister of Health, Seniors and Environment Jeanne Atherden for putting everything in layman terms. The simplicity of your presentation e.g. The changes being introduced in the Health Insurance [Miscellaneous] Amendment Act 2015 are to “support the strategic reforms planned for the health system,”

  6. Build a Better Bermuda says:

    So the reason for the the largest portion of the I ncrease to the Standard Health Benefit is to pay for the new hospital… and the opposition is protesting such a huge increase… so perhaps they would like to enlighten us to how they actually intended to pay for the hospital when they proceeded with the project. Surely they had a plan…

    If only the PLP put more effort into figuring out how to sustainably cover the social programs, than the effort they to put into getting elected with PR and misinformation campaigns, we might not be in as deep a financial mess as we are in now.

    • Build a Better Bermuda says:

      Should actually be Standard Premium Rate, not Standard Health Benefit.