HSA employees do not use gov’t insurance

Other public authorities also insure privately

A number of Cayman Islands public authorities, including the Health Services Authority, do not maintain employee health insurance with the government-run Cayman Islands National Insurance Company.

CINICO insures roughly 3,600 employees, and their dependents, in the Cayman Islands government civil service and hundreds of others who work for statutory authorities and government-owned companies that operate outside of central government. However, a significant number of people are signed up to private insurance contracts as well.

Staff of the Health Services Authority are not required to have CINICO insurance.
Staff of the Health Services Authority are not required to have CINICO insurance.

“There are about 3,000 people, including spouses and children [of employees], in the authorities who don’t use CINICO insurance,” CINICO Chief Executive Lonny Tibbetts confirmed Friday.

According to data provided by Mr. Tibbetts, only 11 of the 26 government statutory authorities and companies are covered under the CINICO insurance plan, totaling fewer than 250 workers and dependent family members.

There are various reasons why the public sector healthcare insurer is not used by certain authorities. In the case of the HSA, it’s a “moral hazard,” according to Mr. Tibbetts.
“They could potentially treat their staff to profitability,” Mr. Tibbetts said. “It’s always a [healthcare] industry dilemma.”

In the case of other public agencies, particularly those with larger numbers of employees, private sector insurers are used by the public authorities because they offer a wider selection of healthcare providers.

“The majority of them … felt they wanted choice,” Mr. Tibbetts said. CINICO-insured patients, who may get waivers to receive treatment at other hospitals or medical facilities, must use the Health Services Authority as their first “point of contact” for healthcare.

Finance Minister Marco Archer began a government-wide effort in mid-2014 to get as many of Cayman’s nearly 6,000 public sector employees and their dependents onto CINICO insurance. Mr. Archer said several recommendations were presented to Cabinet and accepted, but he noted that issues related to current healthcare and employment contracts have slowed the process somewhat.

Mr. Archer said Friday that he viewed the matter largely as one of finance, not a healthcare quality or choice issue.

“It is my belief that CINICO would be well-served, and so would the country, if all the authorities joined one healthcare plan,” he said. “You would have a much larger pool [of insured individuals], greater funding, reduced risk overall and perhaps CINICO could provide lower premiums.”

Mr. Archer also suggested some healthcare “portability” could be provided for in a better funded insurance plan so that patients “wouldn’t have to necessarily go to CINICO providers.”

In any case, the government is now paying for healthcare plans of the statutory authorities and government-owned companies, the finance minister noted. Some of those agencies raise their own revenues to cover operating costs, but many require yearly stipends from central government to keep operating.

“Some of them are paying higher premiums for the same coverage that CINICO provides,” Minister Archer said.

According to information provided to the Compass via a Freedom of Information request, health insurance rates for working civil servants are $416 per month for single adults, $832 per month for married couples, $832 per month for single adults with children, and $1,242 per month for families. Similarly, 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.

Neither retired civil servants nor active government workers are required to make co-payments, so the monthly premiums are funded entirely by the government. Mr. Archer proposed changing this for active government workers in 2014, but Deputy Governor Franz Manderson said that proposal would be the subject of a longer term review and would not be implemented until at least 2018.

Both civil service health 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 necessary for treatment, are covered 100 percent. Mr. Archer said healthcare costs for employees are the second-largest annual item in the budget next to staff salaries.

“Government spends about 20 percent of its annual budget on healthcare,” Mr. Archer said.

Mr. Archer said maintaining current benefits for civil service workers, retirees, seamen and veterans will result in healthcare costs eventually overwhelming the government’s annual budget. A 2014 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.