Wilson attacks BF&M over health premium hike
A hike in premiums by a health insurance firm was done to boost profits, the health minister said yesterday.
However, the president of BF&M hit back at Kim Wilson and said that the increases were due in part to proposed healthcare changes by the Government.
Ms Wilson said that she had been given a letter sent from insurance company BF&M to a business about the increases.
She added: “It is unconscion-able that BF&M, who recently reported heavy profits, would attempt to blame their premium increases on the efficiencies that the Government is making with respect to healthcare payments of our healthcare dollars.
“The letter wrongly blames the Government for the increase.
“The letter is wholly misleading and contains serious inaccuracies that the public must be made aware of.”
Sections of the letter were released by the Government yesterday.
The letter, dated April 29 and signed by Michelle Jackson, senior vice-president of group lines health and life, advised the recipient that their health insurance premium rates would increase from June 1.
Ms Jackson said that Ms Wilson announced “major changes to the components of the standard premium rate in order to reform Bermuda’s hospital financing system” in March.
Ms Jackson said: “While the SPR [standard premium rate] will remain the same, the distribution of the components of this premium are changing.
“This means that more than 93 per cent of the SPR will now flow to the Government as an indirect tax.”
A graphic showed the “tax” increase was about 225 per cent.
Ms Jackson said that the Bermuda Hospitals Board was to be given a budget of $330 million a year rather than operate under a fee-for-service arrangement.
She added: “By reforming the funding mechanism of BHB as proposed, BF&M will no longer receive claims information from the BHB.”
Ms Jackson said: “Given current health trends and healthcare cost inflation, we project premiums will not be sufficient to pay expected claims for 2019-20 without this increase.”
But Ms Wilson insisted that SPR and the mutual reinsurance fund premium were not a tax.
She added: “They are actuarially derived premiums to pay for healthcare. There is no 225 per cent increase on any tax. This is wholly untrue.”
Ms Wilson said that the premium increases by BF&M were a “business decision based on profit margins and shareholder interests”.
She added: “The extra premium they are charging is not to pay for hospital care, because the Government is protecting that by not increasing the standard health premium rate.
“The extra premiums they are charging is to help to fund profits.”
Ricky Brathwaite, the acting chief executive of the Bermuda Health Council and its director of health economics, said the BHeC licensed health insurance providers in Bermuda. Dr Brathwaite added: “It is our responsibility as part of that process to ensure that they are providing accurate information to the public when making statements.”
He said that “incomplete information” had been provided in the letter sent by BF&M.
Dr Brathwaite added: “The insurers will be receiving data on the care provided for their clients in the hospital.”
John Wight, the president and chief executive of BF&M, said that premiums were hit by several factors “including rising healthcare costs, overall claims experience, as well as the Government’s proposed changes to the distribution of standard premium rate”.
He added: “The proposed government reform is an exercise in reallocating funds and capping hospital funds and fails to address the real drivers of the cost of healthcare in Bermuda — the third most expensive per capita in the world.
“Premiums will continue to increase as a result of our ageing population and the growing number of adults with chronic conditions.”
Mr Wight said that the mutual reinsurance fund was embedded in clients’ standard premium rate and that the firm collected it on behalf of the Government.
He added: “It is a fact that, as part of the changes to the distribution of the standard premium rate, the MRF is increasing by 225 per cent.”
Mr Wight said the firm wanted to work with the Government to develop “thoughtful, comprehensive healthcare reform that achieves our shared goals of stabilising costs, increasing accessibility, and driving better health outcomes”. He added: “We are in the process of presenting the Government viable alternatives and we are hopeful that those discussions will result in thoughtful solutions.”
Ms Wilson outlined a plan to pool private and government sources of funding to spread out the cost of healthcare across the entire population in March.
Insurance sources told The Royal Gazette that an overhaul would shift costs from government-backed insurance schemes to private insurance. The result, they claimed, would be that employers and the 33,000 employees who pay for private-sector insurance would carry more of Bermuda’s healthcare costs.
• To read in full the statements from Kim Wilson and John Wight, and the BF&M letter, click on the PDF links under “Related Media”