EDITORIAL – Healthcare obligations: The straight story (minus the sugarcoating)

If government healthcare obligations continue to grow as expected, they could end up “overwhelming the government’s budget,” Financial Secretary Ken Jefferson told the Public Accounts Committee last week. He added that in future years, these small islands could be expending “hundreds of millions” of dollars each year to ensure government retirees can receive their health benefits.

Then, inexplicably, Mr. Jefferson added, “I don’t want the public to be left with the impression that this is a crisis.”

Pardon our naiveté, but to us it looks very much like a crisis. Consider:

  • The estimated healthcare liability the government will face over the next 20 years for current civil service employees and their families is $1.7 billion at present dollar values
  • That $1.7 billion, when added to government’s other liabilities, significantly exceeds the total value of all of the assets in the public sector – in other words, all of the land, buildings, highways, EVERYTHING the country owns
  • In 2014, government estimated its unfunded healthcare liabilities for current and retired civil servants was $1.18 billion. Two years later, in 2016, that number had increased to $1.4 billion. One year later, in 2017, that number had jumped again to the $1.7 billion mentioned above – a 44 percent increase in just three years.

The reality is that Cayman’s taxpayers cannot afford to fulfill the platinum-plated promises that government has already made to existing civil servants, who, heretofore, have demonstrated a steadfast unwillingness to accept reductions to, or share the costs of, their overly handsome benefits packages.

The financial secretary’s reassurance, that “The government has cared for retired civil servants and their families all along without this becoming a national crisis,” is no assurance at all, considering that government has accomplished that through a “credit card financing” strategy of using future anticipated funds to pay for obligations incurred in the past.

For years, public officials in municipality after municipality, state after state in the United States, and country after country around the world have watched as public healthcare liabilities have sunk, and ultimately destroyed, their economies.

In Cayman, our leaders have known with certainty – buttressed by hard numbers and actuarial projections – that the benefit schemes for civil servants were financially unsustainable. And yet, officials have continued to promise free non-elective medical and dental care for civil servants, their spouses and children; and free medical and dental care for retired civil servants and their spouses – for life.

Elected leaders have cowered from the potential displeasure of 3,600 civil servants plus their dependents – who together constitute Cayman’s largest voting bloc – as the financial realities have grown more (and more obviously) dire.

The public should no longer leave unchallenged such saccharine statements from Mr. Jefferson (and his cohorts) as “The government has cared for retired civil servants and their families all along with this becoming a national crisis.” Or, “It was concluded that the cost-sharing arrangements would not affect existing civil servants. It would only impact civil servants hired at a specified date.”

Not surprisingly, that “specified date” has not been specified.

Every citizen of these fair isles should be asking whether they are comfortable spending “hundreds of millions” of dollars each year of their hard-earned money to pay the healthcare benefits promised to our civil servants by our vote-seeking politicians.

As long as this newspaper has paper, ink and printing presses at our disposal, we will continue to address this budget-busting, country-killing issue.

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  1. Over promise- under deliver, tax and spend, more taxes and fees- then spend more, fiscally mismanage any sizable endeavor, add a sprinkle of corruption, do not recognize all of your liabilities, sweep some under the carpet, run a deficit and borrow obscene amounts to cover the inevitable shortfall, then repeat.

    Over regulate, stifle business, make processes/regulations burdensome, time consuming and expensive, make the people jump through many hoops to cover inefficiencies, then wonder why quality businesses like private banking, fund admin, captive insurance runs away to greener pastures, leaving less good quality tax payers and job creators, burdening the ones left even more so.

    By all means take and cover for yourself firstly and be generous in doing so, leave less for the people who entrust you to do otherwise, make housing more expensive all round, less good quality opportunities for our youth.

    But DO do it in the name of doing what is best for the people.

    And if us the majority sit on our hands and do not speak up, do not hold those in power accountable, to spend the people’s money effectively and wisely, then whose fault is it really? Absolute power/lack of accountability corrupts absolutely.

    $1.7 billion needs to be covered by how many of us? 35,000 Caymanians or 65,000 residents. The math is crystal clear on how this will shake out.

    Greece, Italy, Iceland, Cypress, most recently the State of Illinois all had to sell out to someone with deeper pockets who then up owning their ass.

    Who will own Cayman in the end? Because it won’t be us Caymanians.

    • The People’s Money? How many of ‘the people’ pay taxes? How many actually contribute to the Government coffers to pay for the golden pensions civil servants have? How many pay anything towards the ‘free’ healthcare civil servants have, not only when they are employed but for years after they retire when their health bills are likely higher?

      That’ll be none then.

      Let the 35,000 pay – the others – non Caymanian workers and visitors pay handsomely already via various fees.

  2. Forgive me, but exactly where does Government income come from? Where do the citizens pay their hard earned money?

    This is becoming a crisis, and yes I agree it is a crisis, because:

    A. The Islands do not have a sustainable, regular, income stream,
    B. The cost of health care has gone up faster than Government income, and
    C. Health care providers know the government is good for the money and uses it to subsidise those who fail to pay for their private treatment

    It is possible to have a universal health care system free at the point of delivery but only if there is a national insurance scheme, paid by every individual based on their income, but try introducing this tax to CI.

    Just one final thought – how many retired seafarers do the Islands have, who checks that these are genuine and how much do they get?

  3. Mr Jefferson is completely right that all of the free handouts that Civil Servants are getting is going to be a major crisis for the Islands in the future . But why couldn’t these Government Officials not see this coming ? This is going to be very big problem for this Government and. future Governments to change . And the Government is growing everyday .

    I have to think that a lot more of thesei kind of things are going to backfire in the future .

  4. Well said even if it will fall on deaf ears. We must also remember that any curtailment of these platinum plated benefits will effect the very people who can stop this i.e. all our elected representatives. Mention should also be made of the large number of civil servants on very generous pensions which include adjustment for annual cost of living increases, who have never contributed a cent to their pension pot.
    Can you imagine the perfect job, employment for life, with no accountability for poor performance or breaking the law (eg wrecking a car at the DVDL and theft at the post office), free medical and pensions, and you never have to answer your telephone. Here we have it.

  5. Well said Roger , then I would say that we all need to tell the Premier and the other 18 Members of the LA , fix this situation before they can get the next VOTE from any of us . They seem to be able to fix everything else.