What looked to be a difficult political decision for the Progressives-led administration has been put off until after the May 2017 general election, government leaders announced Friday.
Finance Minister Marco Archer said the head of the Cayman Islands civil service, Deputy Governor Franz Manderson, will begin reviewing whether government workers should begin funding a portion of their own healthcare costs through a co-payment system. Mr. Archer said government hopes a “modernized” healthcare payment system for civil servants can be put in place by 2018.
“[The current system] is simply unaffordable and something must be done in the long-term interests of the Cayman Islands,” Mr. Archer said.
According to details provided to the Cayman Compass as part of a 2014 Freedom of Information request, retired pensioner rates under the Cayman Islands National Insurance Company plans are $870 per month for non-married individuals, $1,306 per month for non-married people with children, $1,741 per month for married couples, and $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 and the same for single adults with children, and $1,242 per month for families.
Neither retired civil servants nor active government workers are required to make co-payments; their monthly premiums are funded entirely by government.
In addition, both civil service plans under CINICO have a $5 million maximum “lifetime limit” for healthcare coverage. There are no limits on prescription drug purchases, or inpatient or outpatient care. Overseas accommodations and airfare, if the covered government worker or retiree must fly off island to obtain treatment, are covered 100 percent.
Mr. Archer said late last year that keeping current benefits for civil service workers, retirees, seamen and veterans will result in healthcare costs that eventually will overwhelm 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 value – if the current healthcare coverage policies are maintained.
Other changes can be made in the nearer term to help stave off some of the healthcare costs, 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; and considering a “graduated scale” of health benefits for retirees based on their years of service in government.
The retirement age increase is expected to be approved later this year, Mr. Archer said. Reducing the “lifetime” cap could also be done simply through a legislative change.
Creating a graduated system of healthcare benefits based on time spent working in the civil service is likely to be more complicated, but Mr. Archer said he believes such a scheme could be developed without impacting current retirees.
Making the case
Cabinet requested that Deputy Governor Manderson present a business case for the co-payment proposal and report back to elected members. Mr. Manderson released an administrative circular to all civil servants Friday about the changes.
With regard to the “graduated scale” healthcare benefits plan, the deputy governor said the idea would be to award “pro-rated benefits to persons who only spend a portion of their careers with the civil service.”
The memo also discussed the possibility of civil servants paying a portion of their own healthcare costs. Mr. Manderson said any changes made would be fully discussed with the civil service, since the changes likely would require amendments to current contracts.
One potential 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. Now, individuals insured by CINICO are only covered if they use government-run healthcare facilities.
Mr. Archer has 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.
The issue of civil servants paying for their own healthcare coverage has long been debated in parliament.
Former Health Minister Anthony Eden said in 2009 that current benefits were “unsustainable” for government in the long term.
However, Mr. Eden’s government colleagues – including current Premier Alden McLaughlin and Minister Kurt Tibbetts – seemed reluctant at the time to reduce civil service benefits, at least for current government workers.
Mr. McLaughlin said at the time that he would not “personally support” any move to strip benefits from existing government employees, but he said consideration must be given to offering lesser benefits to new civil servants.
“They have been hired on the basis that healthcare is part of the overall package,” Mr. McLaughlin said during the 2009 Legislative Assembly debate. “Obviously, they would object to those benefits being changed.”
Mr. Tibbetts, who was leader of government at the time, promised not to make any hasty decisions on the subject.
“I want to ensure civil servants, their families and all our citizens that their voices on this matter will be heard clearly and completely prior to any decision being reached by Cabinet,” he said. No action to change civil servant benefits has been made since that 2009 debate.