EDITORIAL – Health insurance: A product divorced from market reality

The Health Services Authority, which runs the Cayman Islands Hospital, is owed $94.5 million in unpaid medical bills. - PHOTO: TANEOS RAMSAY

Already burdensome health insurance costs are spiraling out of control – as many readers know from personal experience. Last week’s Public Accounts Committee review of recent Cayman Islands Monetary Authority reports quantifies just how out of control it is.

In the 2015/16 fiscal year alone, while health insurance premiums paid by private sector employees and employers soared, earnings for private sector health insurers nearly quadrupled – rising from $14 million in 2014 to $51.5 million by December 2015.

As Bodden Town West MLA Chris Saunders noted during last Wednesday’s PAC meeting, CIMA’s annual reports document significant increases in earnings for the health insurance sector going back to at least 2011 – when the sector’s earnings totaled around $4 million – although none of those were nearly as significant as the change during 2014-15. Troublingly, more recent data about premiums and earnings were not presented to the committee.

Why not? In all matters economic, 2015 is ancient history. Statistics that old are more appropriately relegated to the shredder when analysts do their spring cleaning. Certainly they are not reliable to understand current circumstances.

And so we must ask: Do up-to-date figures exist? If they do, where are they? If they do not, why not?

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Health Insurance Superintendent Mervyn Conolly told the PAC the Health Insurance Commission finds premium increases “disconcerting.”

“Disconcerting?” What does that mean? – “Unacceptable … troubling … bamboozling … surprising?”

Mr. Conolly needs to be far more forthcoming about what is taking place in our health insurance markets under the regulatory eye of the commission he heads.

After all, the government forces employers and their employees to purchase health insurance coverage. That mandate, of course, creates a huge captive body of consumers for a relatively few – nine – insurance providers.

Therefore, it is incumbent that the regulator, well, regulates. It must ensure that the favored providers are acting reasonably, relative to both premiums and profits. Government must also ensure that enforcement is applied equitably and consistently and without any hint of favoritism. We are still dismayed that cases of “non-contributions” by some businesses to their employees’ healthcare plans have been in the courts for years – one is approaching a decade!

All of this, of course, is in the context of the private sector. Government employees receive so-called “free” healthcare, meaning they make no contributions to offset the cost of their premiums. (This is doubly vexing to those in the private sector since they are paying not only their own ever-increasing premiums but also those of the “free riders” in the civil service.)

The cost of healthcare, including insurance costs, has driven many families, companies and, yes, countries over the edge into penury. The problem becomes infinitely more complex when governments start “mandating” coverage with little consideration of how their “mandates” will impact the budgets of families and the companies that employ them.

Cayman, may we suggest, needs to do a comprehensive holistic examination of its healthcare delivery model.

If we were in charge of such an exercise, our first call would be to perhaps the world’s leading champion (and practitioner) of delivering high-quality healthcare at drastically lower and realistic costs: Dr. Devi Shetty.

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  1. How can the insurance companies, having increased their premiums at such a rate have the nerve to cap claims to the Government list of authorised fees which I believe has not been updated since 2011. Mr Connolly is clearly not doing his job in allowing this to happen, but then again why should he when it has absolutely no affect on his pocket and the thousands of his fellow free riders in the Civil Service.

  2. The editorial and Dr. Shetty are spot on with the analysis of the Health Care System . I wish that everyone could see into this Health Care dilemma, and realize that there’s a lot that needs fixing .
    When we look at health care as a right for all off the Cayman Islands , small Islands with small population . What do we need for this program to work effectively for all ?
    It seems that the Government is half hearted in the program , they see that we need it , but they don’t know how to manage it . Or it has gotten so big and corrupt that it’s not manageable .

  3. It would be interesting to compare the costs of similar procedures at the Government Hospital, Shetty Hospital, Doctors Hospital (Chrissie Tomlinson ) and USA hospitals.

    Say a blood test, colonoscopy and an angiogram.

    Frequently USA insurance companies have negotiated substantial discounts on the private patient prices. So they might only pay $400 for a $2,000 ultrasound.

  4. Add on to the above comment , who is responsible for the money paid into the health care system ? How does that money gets dispersed ? Couldn’t these questions be the answer to the Watson care pay case .