Financial impact of rising healthcare costs
The lament is familiar, the same every year.
“Healthcare is unaffordable.”
“Healthcare is at an unsustainable level.”
The Bermuda Health Council’s 2017 report states “the Bermuda health system is at a breaking point!”
Further, healthcare premiums are going up again — by a whopping 18.5 per cent for the coming year, according to news reports of the last week.
Just in revisiting statistics and urgent commentary from the last eight years, I could simply write the same article each year, too, adding nothing more than the ongoing percentage cost escalation in healthcare.
The most concerning aspect is that based upon publicly available data derived from the BHeC from 2006 that even then by the end of 2012, healthcare costs had already risen 60 per cent.
Can we conjecture that onward to 2018, healthcare costs are more than 100 per cent higher?
The rule of 72 imposed on an estimated 18.5 per cent increase in 2019 means that healthcare costs will double again in less than four years — the year 2022.
Unsustainable is putting it mildly.
Family expense effect: how many families have a household budget that can accommodate these non-progressive, but significant increases in health insurance, while base wages have nowhere kept the same pace?
The chart on page 7 in the 2013 BHeC presentation, Ageing in Bermuda: Impact on Health Costs and FutureCare as a Strategy, for the Caribbean Conference on Health Financing Initiatives, demonstrates the significant percentage damage to the lower wage earner versus those in higher wage brackets.
The less than $60,000 annually bear the highest health insurance expense — more than 20 per cent of their budget.
Employer healthcare expense effect: how can employers cope with these increases? Think about it.
Health insurance is mandatory for anyone working more than 15 hours a week. The cost is further heightened where Bermuda health legislation states that in certain situations, an employer must also cover a non-working spouse.
Total employee benefits alone:
• Percentage dollar match on Social Insurance with an anticipated increase on a progressive basis.
• 5 per cent pension match on employee.
• Health insurance dollar match for employee based upon health insurance plan.
Wonder why cost of living is so high? The total cost of these benefits plus a basic employee salary is significant for employers with said costs must be recuperated along with paying salaries while hopefully generating a profitable business.
Government — always the social insurance of last resort. How deep is the liability for Future Care matches and aid to seniors subsidy?
In 2010, Future Care participants paid $440 premium per month while the real average cost per participant was $1,200.
It appeared that the Bermuda Government at that time was covering an estimated two-thirds (65 per cent) of Future Care costs for all enrollees, keeping in mind those subsidies indirectly are obtained from all of us.
Seniors are also subsidised coverage by government payments.
At press time, I’ve been unable to find current data on the number of Future Care participants and subsidised seniors.
Someone kindly enlighten me, please.
How does tiny Bermuda compare to other countries? Measuring the cost per working papers from the BHeC against OECD statistics of healthcare, Bermuda is the second highest of all countries listed — the first is the United States.
Bermuda! With a working population of less than 40,000 people.
The healthcare cost lament is unchanged, nor has any truly viable long-term solution emerged.
Contingency planning is that you buy health (or any) insurance when you don’t need it. No one that I know can summon any real enthusiasm for insurance. When the subject comes up, the discussion centres around the cost. “Why do we need it” and “those insurance companies are just raking it in”, and so on.
The first truth is, we do need it. The true cost in times of disaster is minuscule compared to the emotional, physical, mental and financial toll that natural disasters, illnesses, and injuries inflict on ourselves and our families.
The second truth is that insurance companies save us from ourselves, but should they?
Witness how most of us (me included) take health insurance for granted with our less than stellar eating habits, our lack of discipline in exercising, our indulgence in substances that really aren’t good for us, but sure make us feel great for about five minutes, our indifference to future physical and mental damage.
Tedious statistics are a total turn-off, no matter the serious nature of the concerns. But, statistics are important because their very nature demonstrates future trends, and in Bermuda healthcare, the trend is not pretty.
What is to be done? Can healthcare costs be contained — ever?
Will there be:
1. Employers revolt — where a contribution is capped.
2. Change in the legislation to allow opt-out to non-mandatory benefit participation.
3. More part-time, no-benefit jobs?
4. Catastrophic insurance plans for all?
5. Higher fees for determinedly unhealthy participants?
6. Financial incentives to meet healthy guideline tests?
Relative to the 5 and 6 — who determines who is healthy and who is not? Who plays judge and jury in these analyses?
Are we living up to our side of the healthcare cost, that of staying well?
Have we become too complacent about these benefits, thinking that they will always be there?
We, as individuals and families, are all in this community health pool together and ultimately, we all bear the cost for each other, in one form or another — directly or indirectly.
I have no answers.
And for those, unable or unwilling to leave our beloved island: are your healthcare premiums affordable or not?
Have you, or will you decide to go “bare”, meaning take a gamble by opting out, thus uninsured?
Recent anecdotal commentary. “I’m working three part-time jobs to make ends meet — we are leaving the island.”
Write to me. Tell me the challenges in your healthcare life? Replies always remain confidential.
• Martha Harris Myron CPA, JSM: Masters of Law in International Tax and Financial Services; dual citizen, Bermudian/US; Pondstraddler Life™, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. The Bermuda Realistic Retirement Reviewer™, personal financial columnist for The Royal Gazette. Contact firstname.lastname@example.org
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