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Questions about looming healthcare changes

It is official. In a matter of days, the reality is that all local health insurers offering and managing health insurance in Bermuda will commence remitting an additional $233+ per SHB (Standard Health Benefit — MRP) premium to the Bermuda Government.

A $330 million grant — we make the assumption that this is one time annually — will be given to the Bermuda Hospitals Board to manage hospital care for all recipients needing it, billing internally for services provided, paying itself from the government grant for said services, while operating within a crystal-clear annual budget.

The population of Bermuda residents accessing hospital services (and generating claims) is difficult to estimate: the numbers could be 10,000, 15,000 individuals or significantly more, based upon the 2014 BHB financial report statistics for inpatient and outpatient services needing medically necessary help.

On June 1, the immediate influx of additional administrative paperwork (digitally driven assumed) alone for BHB hospital has to be a serious upswing by any conventional measurement.

So, Moneywise has a number of further questions, not including all those asked in last week's article, “Household finances take hit from healthcare”.

1, Who will manage this new initiative at BHB?

2, How will this significant increase in healthcare administration at BHB be handled?

3, Has the BHB administration team been significantly ramped up in anticipation?

Comparatively, consider that right now an entire existing business industry in Bermuda comprised of all of the healthcare insurers will continue to administer BHB claims for payment, but only for a few more days. These are local businesses that employ hundreds of Bermuda resident individuals in teams of highly proficient medical administration professionals, having decades and decades of historical experience.

This unprecedented change in healthcare administration has been marketed by Government as the new way to healthcare cost efficiency and fairness to Bermudians.

4, How will the accountability for claims work, given that the BHB is billing itself for client care?

5, Does BHB have such an administration team operational given the sheer volume of transactions and such short notice?

6, Or, will an offshore internet-remote firm specialising in medical claims and related administrations take on the role?

7, If so, is an offshore contract for these services already in place? Is BHB liable for the foreign services tax?

Moneywise researched the data question and answer sheet regarding the Standard Health Benefit and BHB funding as released to the press by Kim Wilson, the Minister of Health. Very difficult to decipher, and will need further dissection. Moneywise also reviewed the 2014 BHB financial report, although five years old, to see if it might have some relevant data.

No explanations to the questions above were listed, currently. Perhaps, the questions are just too premature.

By the way, the late tabling of the BHB 2014 financial reports cannot be faulted/attributed to the prior or current Auditor-General. If financial information is insufficient and not timely provided to the AG, there is no way financial statements can be audited.

Now some questions on the government grant to BHB, a sum so large at $330 million, it represents almost 30 per cent of the entire Government's annual budget for the fiscal year.

8, If the BHB is to receive the entire grant in one lump sum as Government has stated it will, who is going to manage this money? That assumption is made because surely this lump sum is not going to sit in a chequing, savings, or term-deposit account.

9, Will it be an internal portfolio manager? An external firm? Who will that be?

10, How will the monies be invested?

11, Where will such a large sum be custodied?

12, Who will earn fees from this activity?

13, And if being invested, is there an investment policy statement for this extremely financially significant grant?

The Government backstop responsibility (and ours as well as taxpayers)! It has been stated that Government has set aside an additional $65 million reserve for BHB.

14, What happens if BHB breaches the reserve? How will these extra sums of money be financed? Government is still running its own budget deficit according to the most recent Consolidated Financial Statements.

15, Are these sums just representational estimates on paper, optimistic budget projections, or real money?

The Bermuda families' commentary regarding the torpedo impact on their family budgets has been rich, pardon the pun. Nothing rich about it all; emotions of frustration, anger and discouragement were evident.

All discussion points mentioned last week received commentary feedback verification.

• The overwhelming concern is that health insurance is necessary, but at what cost?

• The sheer financial impact to families has been stated as anywhere from a 8 per cent to 15 per cent increase in premiums, monthly.

• Those self-employed, particularly, are hard hit since essentially they are their own employer in matching the benefits. Fees for that group are running as high as $3,000 a month, $36,000 a year for a two-person working family.

• The healthcare increase is another frustrating financial hurdle for families with two working adults and children — adding to plethora of new tax increases impacting their cost-of-living as well as on family goals to own a home, educate children, etc.

• Retired persons on fixed incomes are feeling extremely pinched from even a small premium increase. Their pensions are fixed, while costs continue to rise. No matter how careful a budget, they feel they are falling behind.

• Individuals are working longer, well past retirement age just to pay health premiums.

• Most are well aware that public employees pay less than half of the size of their personal private premiums, such knowledge is noted as quite upsetting.

• There are indications that some are feeling that it is time to leave. Cost-of-living is just unsustainable.

• Commentators have publicly said that their employers have reduced premiums to the legal minimum, leaving the employee to finance any additional benefits.

• Estimates vary as to how many families have no health insurance at all.

What's next? Readers, there are still far more unanswered questions at this stage. We will follow up. Stay tuned.

Martha Harris Myron CPA CFP JSM: Masters of Law — 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. Finance columnist to The Royal Gazette, Bermuda. All proceeds earned from this column go to The Reading Clinic. Contact: martha.myron@gmail.com

Looking for answers: in a shake-up of healthcare finances, local health insurers remit additional premiums to the Government. Martha Harris Myron poses some questions about the new regime (File photograph)

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Published May 25, 2019 at 9:00 am (Updated May 25, 2019 at 12:26 am)

Questions about looming healthcare changes

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