The Cayman Islands has 345 outstanding “loans” to residents who do not maintain healthcare coverage, with unpaid balances of $12.3 million owed to government.
The government’s overall cost of providing healthcare to its currently insured employees, retired civil servants, seamen and veterans has increased from $87 million in 2012 to $107 million this year.
The 20-year estimated liability government carries for future healthcare expenses, measured at today’s value, has ballooned from $654 million in 2004 to $1.18 billion in 2014. “Essential services such as education, national security and healthcare are underfunded because of the healthcare costs and the long-term healthcare liability,” Finance Minister Marco Archer said Friday.
Minister Archer told the Legislative Assembly in a statement that the government “recognized the gravity and significance of the healthcare cost liability facing the country and the struggles it presented in preparing the budget annually.”
The minister, who faces a re-election by May of next year, said those reasons – as well as some others – explain why government has come to the decision that civil servants will have to start paying a portion of their own healthcare premiums by 2018.
The problem is so daunting that charging civil servants for a portion of their monthly healthcare costs won’t, by itself, fix the issue, the minister said.
Other measures being considered are expected to be implemented shortly.
Those include a proposal – expected to come before the Legislative Assembly next month – to raise the civil service retirement age to 65. Increasing the current retirement age from 60 would mean government workers pay into the healthcare system longer, putting additional funds toward future liabilities in healthcare.
“The proposed increase in the retirement age will benefit civil servants in numerous ways, such as allowing willing and able civil servants to earn a higher salary [rather than] a pension, or being able to negotiate lower mortgage payments with more years to repay their mortgages,” Mr. Archer said.
Other options being considered that won’t appear before the assembly in the next meeting include a proposed cap on lifetime health insurance benefits per employee. That cap now stands at $5 million. Mr. Archer said even upper-echelon private sector health plans max out at $2 million lifetime benefits.
The government is also weighing graduated benefits for retirees; in other words, whether someone who has worked in the civil service for 10 years should receive the same level of healthcare coverage in retirement as someone who has had a 30-year career in government.
The cost of healthcare benefits is an issue the U.K. has raised with Cayman in previous budget meetings. Mr. Archer said former Overseas Territories Minister Mark Simmonds addressed the issue in June 2013, right after the Progressives-led government took office.
“The minister stressed his concern about the size of the civil service and the related cost and liabilities and queried what the government intended to do about it,” Mr. Archer said.
Mr. Archer said the government has discussed lowering healthcare costs with civil servants and government managers several times, and added that he stood by statements made last month that indicated it was “pretty much accepted” civil servants would have to pay a portion of their own healthcare costs.
“It is pretty much accepted that the implementation of co-pay should come with choice of healthcare services provider,” he said. “What remains to be agreed are the details of who will contribute and how much the contribution will be.”