The recently completed Ernst & Young review of the entire public sector focuses quite a bit on the government Health Services Authority, the Cayman Islands National Insurance Company and the current healthcare coverage provided for government and private sector workers. Ultimately, the EY review recommends outsourcing the full scope of clinical and non-clinical medical services now provided by government.
The outsourced operations might include the Cayman Islands Hospital in George Town, Faith Hospital in Cayman Brac, district health clinics and dental clinics, which would be placed under the direction of a “name brand” third-party private operator.
“The key difference between an outsourcing and a sale option would relate to the retention by the Health Services Authority of the ownership of the existing infrastructure and assets,” the EY report states. “Government would assume a more regulatory/oversight function.”
In conjunction with the outsourcing plan for the hospital system, the report recommends that the government’s insurer, CINICO, enters a joint venture with the private sector, with the goal of making the insurance company financially viable.
“[A joint venture would] allow CINICO access to the skill sets and infrastructure to move into more complex lines and provide additional [insurance coverage] plans,” the report states, including the consideration that CINICO become involved in other types of insurance business, including life or vehicle insurance.
“The objective would be to generate revenue which could be used to subsidize other part of [CINICO’s] business,” the EY report states.
One measure to increase the financial viability of the insurance company would be to require government workers, who now receive 100 percent free healthcare, to pay additional premiums in return for having greater choice in medical providers.
“Under this option, government employees will need to co-pay for their medical insurance,” the report recommends.
In addition, the government could consider increasing the amount private insurance plan members pay into a segregated insurance fund, which helps cover insurance bills for the indigent in the Cayman Islands.
“Currently, the contributions to the … fund do not come close to covering the costs of providing medical care for indigents,” the report notes. “Steps need to be made to increase the contribution of private providers to this fund.”
CINICO now covers all residents in the Cayman Islands not offered insurance by private sector companies. The EY review states that it received feedback from CINICO staff that private medical insurers are allowed to “cherry pick” low-risk healthcare clients while the public sector system has to take on the higher risk clients.
Pushback
The recommendations related to healthcare are seen as some of the more controversial issues of the review, and EY identified a number of problems that might arise, if its recommendations in this area are accepted.
First, reviewers noted, there is the possibility that hundreds of government employees at the Health Services Authority and CINICO could be made redundant if outsourcing or joint venture options were pursued.
Second, they said private sector insurance companies might generate some “pushback” if they believe a government agency would be in greater competition for their services. If CINICO decides to get into the life insurance or vehicle insurance businesses, it could do just that.
Third, EY opined that private sector plan participants and government employees insured by CINICO are not likely to appreciate premium increases, particularly in economically difficult times and if the proposal is “portrayed as government-driven.”
“Attempts have been made [to make civil servants pay for healthcare] in the past, but there has been resistance,” the EY report states. “It would potentially need to come alongside a pay increase that has been held back [from government workers] for a number of years.”
Despite all the inherent difficulties in making such changes, EY reviewers said they believed these could all be handled in the short to medium term, if government had the will to implement them.
“Attempts have been made [to make civil servants pay for healthcare] in the past, but there has been resistance.”
EY report
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