Health insurance providers fear that the entire health care system in Bermuda could collapse if cost increases become unsustainable.

The warning came yesterday on the heels of calls for health insurers to reduce increases in premiums.

But Argus Insurance chief executive officer Gerald Simons warned a Bermuda Industrial Union meeting on Thursday night that Bermuda's health system was becoming unsustainable.

"What we are seeing now is what I have been fearing for some years," said Mr. Simons. "The cost of health care is rising faster than the rate of inflation and is becoming unsustainable. Sooner or later the whole system is going to come crashing down."

John Wight, CEO of BF&M echoed Mr. Simons' grim prediction.

"BF&M has been advocating for health care reform for many years since the formula for health rate increases, in response to increasing health care costs in Bermuda and abroad, is in our view not sustainable," he said.

Naz Farrow, executive cice President of Colonial Medical, said her company is working to cut costs.

"All we can do is work to keep our margins as low as possible," said Ms Farrow. "Even so, we have to be able to satisfy the Bermuda Monetary Authority, our auditors and the Rating Agency that we have a stable business model. We have to demonstrate that we are capable of paying for the rising costs for medical services that we are witnessing.

"Health Care costs have been on everyone's agenda for a long time now because the rate of inflation in that industry has been more than double that reported in the Consumer Price Index," Ms Farrow continued.

"New drugs, better technology and higher public utilisation are all putting pressure on costs, as is the ageing population that requires more care.

"We are living longer, healthier lives and there is a cost associated with that. There is no blame to be attributed to any of the partners engaged in the provision of health care."

Health insurers say part of the reason for increases in premiums is the increase in hospital fees set by the Government as well as increases in fees by private medical practitioners.

In March this year it was announced that hospital fees will increase 2.5 percent to cover salaries and the rising cost of health care. MPs approved the hike under the Bermuda Hospitals Board (Hospital Fees) Regulations Act 2010.

"This proposal seeks approval for a 2.5 percent (less than $5 million) increase in hospital fees with effect from April 1, 2010," Health Minister Walter Roban told the House of Assembly in March. "The proposed increase consists of a 1.5 percent inflationary increase plus one percent for the new hospital.

" It should be noted that the " It should be noted that the (BHB) did not request funding for any new initiatives."

A KEMH spokesperson explained why the hospital has increased their rates. She cited a long planed expansion of the KEMH facilities as the cause for the rate increase.

"With regards to the redevelopment of King Edward VII Memorial Hospital, as we have said from the start, it will have a small effect on premiums. Over the last two years, this amounts to only about a one percent increase in total to health care premiums," said the spokesperson.

"It should be stressed that both Government-insured and private-insured patients are charged from the same fee schedule and the fees passed by the House ensure all payers pay the same amount for the same service."

For 2010 Government has set the cost of the minimum health insurance package for employees will be $118.07 a month. This is a $13.85 increase over the 2009 rate of $104.22. The total cost of the Standard Premium Rate will be $236.14, up from $208.44 in 2009. By law employers and employees share this equally.

Mr. Wight said that no one in particular is to blame for the situation, however it will take the effort of many parties to get back to where the health care system was.

"This is a difficult time for Bermuda as the recession is affecting everyone of us," he said. "This is not a time for blame, this is a time for transparency and dialogue between interested parties.

"Under the leadership of the Bermuda Health Council, in partnership with the various stakeholders previously mentioned, progress is being made so that Bermuda's health care system can be one that we continue to be proud of."