It is health insurance renewal time and meetings are happening across town, with many employers and employees hearing the bad news that their premiums will be rising again — probably by double digits.

The feedback we have started to hear is that the hospital is to blame for driving up costs: it’s because the emergency department is overcrowded, the costs of the “medically fit for discharge” patients won’t leave the hospital, the cost of the new wing, we’re inefficient — or even that we run too many tests just to make money or do too many inpatient tests.

This feedback leaves us at the Bermuda Hospitals Board scratching our heads, as we have been on a fixed funding model since June 2019 that has not significantly increased. In the past six years, only once has the BHB seen an increase in the amount paid to it from your healthcare insurance payment. This was when the monthly payment for standard health benefit services — which includes most hospital services and some community services — went up by a little more than $20 a month, from $276.20 to $297.38

Many residents still do not realise that the hospital has been largely prohibited from billing on a fee-for-service basis since we were transitioned to the fixed funding model in 2019.

So let’s look at what that means.

The hospital has four significant sources of income: the $297.38 portion of your monthly insurance payment that covers standard health benefits goes into the Government’s Mutual Reinsurance Fund. If you are insured by a commercial insurer or the Government, many of your hospital inpatient and outpatient services are covered by this payment. This is the portion of the BHB’s revenue that can affect your healthcare premium.

There are also several grants from the Government that contribute to our revenue, but these do not affect your premium rate. There is a fixed grant that contributes towards the costs delivering standard health benefit services at the hospital to our young, senior and indigent residents, and a fixed government grant for the operation of Mid-Atlantic Wellness Institute. All these grants have been relatively flat as part of the fixed funding model. We also get other smaller grants from the Government that contribute towards capital costs.

So, the $22 million grant you saw allocated for BHB operations this year has no relation to your health insurance premium — it is government money from taxpayers. In many ways, it has reduced the need for your premium to go up.

About 3 per cent of our income being is generated via a small cohort of billed physician services and billing non-residents on a fee-for-service basis, as well as some donations from our amazing support charities — the Hospitals Auxiliary of Bermuda and Bermuda Hospitals Charitable Foundation.

In the old fee-for-service model, having additional emergency department bed boarders and “medically fit for discharge” patients in the hospital would have generated the hospital millions of dollars in additional revenue. But as we work under the fixed revenue model, we do not get more money for more patients. The system benefits from increased value from our fixed income, as more patients are seen for the same expenditure. The team at the BHB must find ways to provide the same quality of care for an increased number for patients under a fixed budget that is ever-stretched.

What about driving up health insurance because of excessive tests at BHB?

Not true. If we run unnecessary tests, this drives up costs for the hospital, but does not drive up premiums because we don’t get paid more money the more tests we do.

High-cost medical equipment does have an impact on health insurance premiums. The net increase in high-cost CT and MRI scans in Bermuda is likely one of many external factors that have placed upward pressure on health insurance premiums, but hospital scans are not billed fee-for-service. Before the introduction of a third MRI and fourth CT in the community, Bermuda had ample scanning capacity for a population of our size. If the BHB had been required to double our scans, your premium would not have gone up because we would have been paid the same amount.

We are all individually responsible for helping to contain the increase in premium rates. While we can have unfortunate accidents or illnesses, 50 per cent of chronic diseases are attributed to our behaviour, and therefore are somewhat controllable. A visit to your GP may feel like an additional cost, especially as there are usually copays, but we strongly encourage all residents to have at least an annual checkup with your GP. Identifying issues early can avoid much costlier care and medications in the future.

Healthcare is expensive all over the world, whether paid for on a fee-for-service basis or funded by government tax schemes. Unfortunately, high-quality healthcare in some jurisdictions is available only to the wealthy. Bermuda, as a collective, is working to make healthcare more accessible and affordable for all.

The health system complex — Government, providers and payers — must do its part, but equally we the citizens must do our part by adopting healthy lifestyles, reducing or eliminating behaviours that contribute to chronic illnesses, reducing or eliminating use of drugs and alcohol, and suppressing dangerous activities such as reckless driving or violence.

Few of us are guilty of all the above, but if we can each lessen the potential harm-causing activities, we will do our personal part to cut reliance on the health system and make it more affordable for all.

• Scott Pearman is the chief executive and president of the Bermuda Hospitals Board