The Cayman Islands government’s $1.18 billion figure for estimated healthcare liabilities due over the next two decades may be a bit low.
According to testimony Wednesday in the Legislative Assembly’s Public Accounts Committee, the future liability figure was calculated in mid-2014 without including in the total more than 2,000 public sector workers – many of whom will retire in Cayman at some point.
Those workers, a total of 2,275 in mid-2014, are employed in the 26 statutory authorities and government-owned companies.
George Town MLA Roy McTaggart questioned whether those employees had been included in the estimated $1.18 billion liability figure. Financial Secretary Ken Jefferson said they had not.
Mr. Jefferson later clarified that current retirees on the government pension plans, seamen and veterans, active civil service employees [of which there were 3,571 in mid-2014] and the employees’ dependents were all included in the healthcare liability estimates.
“It would be correct to say that the post-retirement healthcare liability of the statutory authorities and government companies have not been included in the figure of $1.18 billion,” Mr. Jefferson said.
The $1.18 billion, which is more than the entire Cayman Islands public sector earns from taxation and fees in a year, is not all due presently. Rather, Mr. Jefferson said, it is government’s best estimate of what Cayman will have to pay to cover healthcare costs for retirees, current employees who will be retired, seamen and veterans over the next 20 years.
Right now, all current and retired civil servants are covered via a Cayman Islands National Insurance Company healthcare plan. However, that is not necessarily the case for employees in the statutory authorities and government companies.
For instance, Health Services Authority employees are not covered by CINICO insurance. Public Accounts Committee members were told Wednesday that the HSA pays “out of pocket” for employee healthcare and third-party insurance is used only when individual cases require more than $300,000 in expenses – typically only those involving treatment overseas.
When employees retire from the HSA, they are given three months of continuing healthcare coverage. After that, they are required to provide healthcare on their own, similar to what a private sector employee must do, health authority Chief Executive Lizzette Yearwood told the committee.
However, that does not mean government would not end up paying for those individuals eventually. If someone becomes indigent, they would then fall back on social services to pay for healthcare.
Finance Minister Marco Archer has said a number of times that Cayman can address the burgeoning healthcare liability if it plans now and government does not “bury its head in the sand,” ignoring the problem.
“It was not a problem that was created overnight and its solution will not be found overnight,” Mr. Archer said.
The government has already approved changes to the retirement age, pushing it from 60 to 65, a move that is expected to reduce the future liability. A government plan to require civil servants to pay for a portion of their healthcare premiums is due to occur in 2018. Other options, such as privatizing certain health services now being provided by government, are being considered.
Neither retired civil servants nor active government workers are required to make co-payments; their monthly premiums are paid for by government.
Both civil service plans under the Cayman Islands National Insurance Company 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 for covered government workers or retirees who must fly off island to obtain treatment are covered 100 percent.