All Cayman Islands civil servants would have to pay a portion of their healthcare coverage premiums as part of budget cutbacks proposed Wednesday by Premier McKeeva Bush.
Mr. Bush said the proposed public sector employee healthcare premium payments – now funded 100 per cent by government – are part of a wider plan to reduce costs while at the same time implementing more “sustainable” revenue measures, including a payroll tax for businesses that employ work permit holders.
“Some of these [cost-cutting proposals] represent a ‘sea-change’ to the sharing of expenses between the government and members of the public service,” Premier Bush said.
Mr. Bush’s proposal had not been approved by the United Kingdom’s Foreign and Commonwealth Office by press time Thursday.
According to administration sources that spoke on condition of anonymity, existing civil servants would be required to contribute in the region of 25 per cent of the current monthly health care premiums. That means government would continue to contribute 75 per cent of the monthly premium costs.
Spouses of civil servants that are on the Cayman Islands National Insurance Company coverage plan would have to pay 100 per cent of those monthly premium costs, according to administration sources.
Mr. Bush said any newly recruited civil servant would be required to contribute to both healthcare premiums and to their pension contributions. It was not immediately stated what was meant by “newly recruited” civil servants. According to Deputy Governor Franz Manderson, there is a moratorium on filling vacant positions within government. Mr. Bush said one notable exception to this would be for the hiring of new public school teachers.
Total health care premiums currently paid on behalf of public sector workers by government are; individual coverage $416 a month; individual plus spouse coverage $832 per month; individual plus children $832 a month; family coverage $1,242 a month; plus an additional plan for $464 a month to cover dependent offspring aged 18-30.
Previously, the Cayman Islands Civil Service Association has not directly opposed the idea of having government employees pay for their own healthcare coverage.
“Civil servants have expressed … that they would support exploration of co-pay options if, and only if, those options include the ability to choose health care providers and if the cost is comparable to those experienced in the private sector,” the association’s report stated. Civil servants indicated that some discussion would be required to ensure that health insurance premiums for government workers were not being artificially inflated to subsidise care for indigents or those patients deemed “uncoverable” by private sector providers.
No such specific plans for healthcare choice options were released by government on Thursday.
Lonny Tibbetts, CEO of CINICO, said the insurance company had not been responsible for civil servants having to contribute to their premiums. Instead, CINICO would continue to collect the premiums, as usual, from government departments each month and how the government chooses to collect the money for those premiums was a matter for the government and not for CINICO, he said.
With regard to spouses of civil servants paying 100 per cent of their premiums, that amount would be taken from the civil servant’s salary, Mr. Tibbetts said, if he or she had signed up for a plan that covers an employee and spouse. That plan currently costs $832 a month, meaning the civil servant would pay $416 to cover the spouse (100 per cent of the coverage) plus $104 of his or her own premium (25 per cent of coverage).
A government-funded report from early 2010, dubbed the Miller-Shaw Commission, noted that a 2004 valuation of post-retirement healthcare benefits for retired and current civil servants indicated the accrued liability for those payments had reached US$798 million.
That liability figure is now expected to have exceeded US$1 billion, although no similar evaluations have been done by the government since 2004.
The independent report did not vouch for the accuracy of any recent estimates on healthcare liabilities.
“An up-to-date legal opinion and actuarial report should be published immediately,” the report stated. “Benefits under the programme should be reduced to affordable levels, with some (co-payment) contributions required for treatments.”
A number of other cost reduction proposals were put forth by Premier Bush on Wednesday. They included:
A $1.5 million reduction in marketing and public relations expenditures. “Better synergies may be possible, among our own entities and with the private sector,” Mr. Bush said.
The sale of the Royal Cayman Islands Police helicopter was proposed, saving an estimated $1.7 million per year in operating costs. Administration officials confirmed Thursday that no buyer for the aircraft had yet been found. Mr. Bush said the police helicopter was “simply unaffordable to this country”.
Another $1.5 million would be trimmed from the housing allowances budget, cutting it back to levels that existed prior to 2004’s Hurricane Ivan. Mr. Bush said “rationalisation” of salaries within statutory authorities was expected to save $1.5 million in the 2012/13 budget.
Consumables and security services costs were reduced by $1.3 million
If and when the United Kingdom approves Mr. Bush’s budget proposal, the 2012/13 budget must still come before the Legislative Assembly for approval. That could happen as early as next week. Cayman is currently operating under a two-month temporary or interim budget, which gives the country spending approval through 31 August.