The future amount the Cayman Islands government estimates it will have to pay to provide retired workers and other citizens with healthcare coverage has grown by an estimated $500 million in the last two years, according to government’s own estimates.

A valuation completed in September 2016, but which was not made public until last week, estimated Cayman’s total post-retirement healthcare obligation at $1.7 billion as of June 30, 2016. That is the present-value figure that Cayman’s government expects to pay out for healthcare coverage over the next 20 years.

Similar valuations done in mid-2014 put the 20-year healthcare liability at $1.18 billion.

The figures, contained in government’s pre-election economic and financial update, also note the following: “For all intents and purposes, the government is on a ‘pay-as-you-go’ plan in respect of post-retirement healthcare liabilities. Currently, no long term assets have been established to start offsetting the government’s post-retirement healthcare liability.”

Finance Minister Marco Archer has pushed for the public revelation of these healthcare liability figures which – before 2014 – had not been released in more than 10 years by the government.

Mr. Archer has often cautioned that the estimates of $1.18 billion or even higher do not represent money owed immediately and that larger amounts would only come due if Cayman “does nothing” about its current healthcare costs.

However, the pre-election finance report also seeks to place a current value on the post-retirement healthcare costs for the last government budget year.

“The post-retirement medical expense total[ed] $141 million for the year ended June 30, 2016,” the report stated.

Certain changes to lessen the blow of healthcare costs over the next 20 years have already been made by the government, including increasing the retirement age for civil servants to 65.

Another major change, expected to be put in place this year and to take effect in early 2018, is a requirement that civil servants contribute a portion of their salaries to monthly healthcare premiums. Mr. Archer said in late 2016 that the move was “unavoidable” – regardless of which political group might win the May 24 general election.

However, the Cayman Islands Civil Service Association has noted that its membership has not agreed to any such co-payment without choice in healthcare providers being offered to plan participants.

Neither retired civil servants nor active government workers are required to make co-payments; their monthly premiums are paid 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 for treatment are covered 100 percent.

The Cayman Islands government is obligated to provide civil service retirees, veterans and seamen a certain level of healthcare benefits during their later years when they are no longer working. The liability figure represents what government is expected to pay over a specified period for these healthcare services, which include, to some extent, payments to current civil servants whose retirement is expected during the period.

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7 COMMENTS

  1. Yet another example of the Caymanian ‘free ride’. Can anyone please point me to another country that gives it’s citizens so much?
    This is a free ride that will come to an end, maybe not this year or the next, but soon and that end will not be pleasant for those who rely on the continued success of the financial and tourism sectors.

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  2. Wow it is getting even worse, faster, than any outside projected post. In 2014 C4C released similar type information projecting a program cost of $1.2b. Senior Govt officials public response was that the group was trying to scare monger and create issues where there were none. 9 months later the Govt’s own projections turned out to be worse than ours.

    Over the years we have been told “not all due at once”, “payable over many years”, “not a problem that was created overnight and will not be fixed overnight”.

    This number should scare EVERYONE. The entire program was projected to cost $654m back in 2004 and yet today it is growing by $500m just in the last year??? Remind me again what our total gross revenue last year was?

    At what point does it not dawn on folks that this is the most significant threat to the viability of our island, and someone needs to do something right NOW. Not tomorrow but today.

    All take note because by doing nothing/burying our heads in the sand as we have been doing, we are ensuring that a) we are going to force the UK Govt to take more active control of our finances, b) property and income taxes are a given, c) by pushing this burden onto the next generation we have ensured they will be much less well off.

    At the end of the day if the Govt has committed to covering its workforce then they need to make good on that. You cannot promise something to someone all the while having no plan in place to make good on that commitment.

    Politicians- no doubt something no one wants to address, but this issue should be the front and center of all issues.

    Nothing else will have the largest impact on the future of our island than this.

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  3. Mr Peene , I don’t know you but I have to agree 200% with your comment. This is the same thing that X President Obama did for the US , just kept making more debt and didn’t create more revenue and just kept giving out those free hand out for votes , and the people seen that the only cure was to elect a President that seen and understands the problems /debt of the Country . Look what’s happening in the USA today . I think that President Trump has made a 15 degree turn around in his first 100 days for the Country . I have to think that the Cayman Islands needs NEW leadership that is responsible and cares about the future of the Islands.

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  4. The math just does not work. There are 6,000 current employees of the Government. Lets be generous and say it is 10,000. This means, that their healthcare benefit is increasing at the rate of $25,000 per year. Now this is for when they retire, so the use of the funds in not for a few years out. (If you use 6,000 employees the numbers are even worse).

    Someone is ripping off the country! Period. This is what happens when there is no transparency in the system. The system is completely broken! If you don’t work for Government, you will get “taken” by Government.

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  5. How does it compare to other countries of similar size?
    What is the percentage of workers in government service in the Cayman Islands and Bermuda (or any other country of similar population size), and the relative costs to their economies?

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