Cayman Islands political leaders have said for years that the territory can no longer afford current healthcare benefits provided at no cost to civil service workers and retirees, but successive governments have never amended existing laws and policies regarding public sector workers’ health plans.
In the first half of next year, that’s likely to change, Finance Minister Marco Archer said this week.
During an interview with the Cayman Compass Tuesday, Mr. Archer said that keeping current benefits for civil service workers, retirees, seamen and veterans will result in healthcare costs eventually overwhelming the Cayman Islands government’s annual budget. A consultant’s report that looked at pending healthcare costs over a 20-year period estimated Cayman will face $1.18 billion in liabilities – at today’s dollar values – if the current healthcare coverage policies are maintained.
The consultant’s report on estimated future healthcare costs, which has not been released by the government, made a number of recommendations, some of which can be implemented immediately and others that will have to be negotiated with the civil service, Mr. Archer said.
Among the changes proposed are increasing the government’s mandatory retirement age from 60 to 65, reducing the current “lifetime” healthcare benefits cap for civil servants from the current $5 million, requiring that all current civil servants pay a portion of their monthly healthcare premiums and even considering a “graduated scale” of health benefits for retirees based on their years of service in government.
Mr. Archer, serving his first term in political office, said he is not unaware of the political capital he’ll be required to spend to push such changes through, but he believes civil service leaders recognize the dire financial situation ahead if nothing is done.
“I’ve found them quite reasonable in recognizing that times have changed,” Mr. Archer said. “Of course, they would have some requests they would make at the same time.”
One such option often discussed among the civil service rank-and-file is the ability to use other healthcare providers through the Cayman Islands National Insurance Company plans. Right now, individuals insured by CINICO are only covered if they use government-run healthcare facilities.
Mr. Archer said multiple coverage options could be considered, but that the public healthcare system will still have to be properly funded and maintained. “We’ll have to look at the impact of [healthcare choice] on the cost of our funding the Health Services Authority,” he said.
According to rates provided to the newspaper as part of a recent Freedom of Information request, retired pensioner rates under the Cayman Islands National Insurance Company plans go from $870 per month for non-married individuals, to $1,306 per month for non-married people with children, to $1,741 per month for married couples, and finally to $2,176 per month for the CINICO family plan. Similar rates for working civil servants are $416 per month for single adults, $832 per month for married couples, $832 per month also for single adults with children, and $1,242 per month for families.
Both civil service plans under CINICO have a $5 million maximum “lifetime limit” for healthcare coverage. There are no limits on prescription drug purchases, in-patient or outpatient care. Overseas accommodations and airfare, if the covered government worker or retiree must fly elsewhere to obtain treatment, are covered 100 percent. Also, neither retired civil servants or active government workers are required to make co-payments, so the monthly premiums are funded entirely by the government.
Mr. Archer said the increase in the retirement age should occur before the end of government’s current budget year in June. Also, he said lowering the $5 million “lifetime” cap on healthcare benefit pay outs can be done “immediately” without impacting anyone who is currently insured with CINICO.
He said the current $5 million lifetime cap is well above what is normally considered the gold standard in private sector healthcare coverage.
“Some of your top law firm senior partners, accounting firm partners, their [lifetime healthcare] cap is $2 million to $2.5 million,” he said.
Other changes, such as the civil service contributions to monthly premiums are more difficult and will take time to negotiate, the minister admitted. Still, he said Tuesday that he believes a plan of action can be drawn up within the next year and promised that civil servants will be fully consulted in any such proposals.
The graduated benefits plan – essentially, better healthcare coverage based on longer civil service tenures – would take some significant discussion as well.
“All of those [changes] couldn’t take place in one budget year,” Mr. Archer said.
Financial Secretary Kenneth Jefferson said, that while Cayman’s $1.18 billion projected healthcare liability sounds like a big number to most people, it is manageable. Mr. Jefferson said it’s also not a unique issue to the Cayman Islands.
“This situation that the government is facing on healthcare is no different than every other country,” Mr. Jefferson said.
The good news, from Mr. Archer’s perspective, is that Cayman has time to correct the problem.
“[The $1.18 billion liability] is not like a bullet bond that’s [due] tomorrow,” Mr. Archer said.