No simple solutions to Cayman’s health funding crisis

Brown: National insurance will not bring down costs

Annikki Brown says health insurers are as alarmed as anyone else by rising healthcare costs. – PHOTO: WIL BIGNAL

The Cayman Islands is facing a healthcare funding crisis with no simple solution in sight, according to the new head of a major health insurance industry advocacy group.

Annikki Brown refuted suggestions that the profits of health insurance companies were to blame for spiralling healthcare costs.

She said a national insurance system would not fix the core problem, describing such reforms as “moving the furniture in a house that is flooding”.

Brown, the country manager for Generali, has taken over as chair of the Health Insurance Standing Committee. She said the group wants to work with government and others to help bring down healthcare costs in the Cayman Islands.

But she believes it is the cost of healthcare itself, not insurance premiums, that is the source of the problem.

“One of the important things to remember is that the rising costs of healthcare don’t start with insurance. We are just as alarmed as everyone else at the constantly rising tide of healthcare costs,” she said.

The Cayman Islands Monetary Association monitors profits from the nine private sector insurance companies operating in Cayman. Figures published last year show a significant rise in earnings for the sector going from about $4 million in 2011, to $10.8 million in 2012, to about $14 million in 2014 and a sudden jump to $51.5 million by December 2015.

“We have a lot of questions around those numbers,” Brown said.

“The profits in those CIMA reports were a surprise to all of us. The individual performances of our companies simply don’t reflect that increase.”

She said she could not speak about the numbers for other companies but Generali does not make a profit every year, its margins rising and falling depending on the annual needs of those in its insurance group.

She said the government Health Insurance Commission was working with CIMA to clarify the numbers in its reports.

Bodden Town legislator Chris Saunders has been among those to call for a national health insurance system. More recently, Premier Alden McLaughlin suggested government’s insurance company CINICO could be opened up to everybody.

Those discussions came out of concerns over the amount government is paying out to fund healthcare costs for indigents. Around $30 million was spent in 2018 on covering emergency healthcare costs at tertiary institutions, either overseas or at CTMH Doctors Hospital and Health City, for people without full insurance coverage.

Brown said the insurance industry was very much at the table in discussions over healthcare reform, but she questioned whether national insurance was a real solution.

“I believe the basis of this conversation is based on the belief that there is significant profit in the health insurance industry, and we have serious questions about whether that is true,” she added.

She said there were no guarantees that a national insurance system would bring down costs. She said there were challenges around expertise, integrity and the politicisation of healthcare, as well as continuity of funding in a national insurance system.

“When we talk about national insurance,” she said, “we are avoiding the true issue, which is the rising cost of healthcare. The tide will continue to rise – this is just looking at another place to get money from.”

Seeta Paltoo, of Cayman First, has stepped down as chair of the Health Insurance Standing Committee.

Though there have been no significant changes to the Standard Health Insurance fee schedule – a menu of fees that hospitals, doctors and other providers are allowed to bill insurance companies for procedures – she said this had little bearing on what healthcare providers were actually charging. She said there is currently no good data on what was actually being charged for services at a growing number of healthcare institutions across Cayman.

“They have a lot of freedom in the market to charge whatever they want to charge,” she added.

Brown said her committee is more than a lobby group for the industry and has, over the past decade, been integral to improving healthcare coverage. She cited improvements to the Standard Health Insurance Contract, the expansion of individual health insurance offerings and the inclusion of dependents up to the age of 30 on parents healthcare plans as significant advances.

The group is currently in talks with government over its SHIC 65-plus plan in an effort to find a public-private solution to problems around healthcare costs for the elderly.

She acknowledged it was becoming increasingly difficult for a growing number of elderly people in Cayman to afford health insurance.

“The older you get, the less likely you are to be hale and hearty and the more likely you are to be spending money on healthcare at a time when your earning potential is at its lowest,” Brown said. “It is not a crisis that is confined to the aged. There is the unemployed, the underemployed and their dependents. It is going to roll up into a big crisis very soon.”

She said the cause of rising healthcare costs in Cayman was linked to the large annual inflation rate of healthcare in the US, where many patients still go to access tertiary care. On-island costs have also gone up, while services have improved amid increased expectations from a growing cosmopolitan population.

The continuous development of technology and growing costs of training doctors is also believed to be a factor.

She believes politicians, healthcare providers and the insurance industry can work together to find solutions.

“It is time to put our heads together and rather than be antagonistic, try to identify and plug those gaps,” she said.

Brown has taken over from Seeta Paltoo, who served for around 10 years as chair of the Health Insurance Standing Committee, which is one of two standing committees of the Cayman Islands Insurance Association.

2 COMMENTS

  1. 1. It’s a shame that this article hasn’t made the front page.
    2. This is a very complicated issue with many vested interests not wanting to lower health care costs, for example US HMO’s are only allowed to make a certain margin over the cost of providing health care, therefore they do not have an incentive to lower costs, as the higher the cost the higher the absolute dollars they make.
    3. In the US drug prices are raised by 6%+ every year, this is the only industry which can apparently get away with raising prices when most normal competitive industries are lowering pricing every year. Think TV prices.
    4. Read this solution to fix US health care, some of these ideas could be enacted into law in Cayman to alleviate some of the cost issues https://market-ticker.org/akcs-www?post=231949 A MUST READ…
    5. Personally I think points 1 & 4 in the above article are key to begin lowering health care costs to insurers. and onto Cayman residents.
    6. Heath City’s Business plan is to offer lower procedure pricing than the US, so why aren’t Cayman insurance companies obtaining great pricing from them?
    7. Once you legislate for transparent pricing for procedures, Cayman insurance companies can source globally for the best/ lowest cost medical solutions. (For example I have read that you can get an MRI in Tokyo, Japan including flights & accommodation at a significant discount to US pricing)
    8. Personally I once spoke to a Cayman Eye specialist consultant on Cayman who told me that he had sent a patient off island for a procedure in the US which was charged back at $125,000. He told me that the equipment to carry out the procedure cost$250,000 and he would have carried out the procedure included in is current salary.(Payback = 2 Procedures and after that effectively free..)
    9. So Cayman Health needs to develop a joined up policy of obtaining the most cost effective healthcare solution on a global basis & where it is more cost effective to invest in Cayman Heath care infrastructure where appropriate.

    Happy to consult further with the relevant authorities…

  2. I have Blue Cross, Blue Shield health insurance in the USA.

    They are able to negotiate incredible discounts for health care procedures.
    For example comprehensive blood tests at Quest are billed at $350 USD. They are paid just $30 USD in full settlement.
    A complex ultrasound in Tampa is billed at $3,500 USD. After their discount they get just $600 USD.

    The difference between the price that a self-paying member of the public pays and the price at which these providers can apparently afford to provide their services is staggering.

    If Cayman Islands residents are sent to the USA for treatment what does the government, and our insurance companies, pay? Full rate or a heavily discounted rate?
    Perhaps we need a tie-in with a large USA insurer so we can benefit from these much lower rates.