Health insurance shortfalls a bitter pill
Government health insurance funds ran a deficit of nearly $13 million in the first operational year of FutureCare, according to financial statements tabled in the House of Assembly yesterday.
The statements of the FutureCare Fund (FCF), the Health Insurance Fund (HIF) and the Mutual Re-insurance Fund (MRF) for the fiscal year ended March 31, 2010, paint a picture of a dramatic deterioration in the finances of government-run health insurance schemes.
The accounts relate to programmes including the Health Insurance Plan (HIP) and FutureCare.
The combined expenses of the three funds totaled $12.82 million more than the combined revenues in 2009-10 fiscal year.
It is not clear from the statements whether any one-off costs connected to the implementation of FutureCare, a health insurance plan for seniors, impacted the numbers.
The shortfall in the FCF was $2.03 million in the plans first year of operation, while the deficiency in the HIP fund, the HIF, was $7.67 million and in the MRF, $3.12 million.
Before the implementation of FutureCare, government health insurance plans finances were reflected by the HIF and MRF. Accounts for these two funds for the six years ending in March 2010 were tabled by Health Minister Zane DeSilva.
It should be noted that the reliability of the figures is questionable, given the Auditor Generals decision to deny an audit opinion on the statements, after having identified serious deficiencies in accounting records.
The figures showed revenues exceeding expenses for the three years between 2006 and 2008.
But the finances turned downhill in 2009 when the HIF and the MRF chalked up a combined deficit of more than $5 million, a prelude to 2010s larger shortfall.
Despite its first-year shortfall, the FutureCare Fund had net assets of $8.17 million at March 31, 2010, thanks to $10.2 million of initial funding by Government.
The HIFs situation looks more serious however. Its net assets were $9.39 million in 2008, but plunged to a deficit of $3.7 million just two years later after a spike in claims.
Mr DeSilva reported to the House of Assembly in March this year that the HIP finances worsened further in 2010/11, when the plan took $9.5 million in premiums and dealt with $13.8 million in claims.
At the time, Mr DeSilva said: In simple terms, this means that for every dollar in premiums HIP collected, HIP paid out $1.46 in claims.
As long as this imbalance exists, HIP will continue to run deficits and will require capital injections from Government.
The MRF remained in positive territory at March 31, 2010, with net assets of $0.49 million, after a sharp fall from $3.61 million a year earlier.
The MRF was established to spread the cost of certain costly claims among licensed insurers.
Funded by fees paid by insurers and employers operating approved schemes, it covers risks including haemodialysis treatment, long-stay hospital care, home healthcare, kidney transplants plus the required anti-rejection drugs.
In the year ended March 2010, the MRF saw a 26 percent rise in claims to $15.75 million, up from $11.58 million the year before.
The HIF recorded a massive spike in claims between 2008 and 2009. Claims had risen steadily to $12.56 million by 2008, but then skyrocketed 61 percent to $20.28 million in the year ended March 2009.
Policyholder premium payments to FutureCare totaled $8.41 million in the year to March 2010.
Claims totaled $9.48 million, while administrative expenses were $2.59 million.
Mr DeSilva said in March this year that the claims in the second year of FutureCare had remained virtually unchanged at $9.5 million, while income from premiums went down.
He added at the time: We expect FutureCares claims to increase significantly in future years and the positive results of the first two years of operation are not an indication that the fund will continue to be successful in the absence of careful planning and prudent actuarial analysis.
Windrush-style warning for Bermuda
Confronting the issue
Choice of Hargun as Chief Justice defended
Duffy calls for triathlon ‘wall of noise’
Wells vows to make improvements
Family reasons behind Baron decision to quit
Racing driver ordered to repay $70,000
Burt hits out over new Chief Justice
Belco aims to reduce cost of electricity
Caines to address gang contract cancellation
Separate but equal
Take Our Poll