Saturday, January 14, 2012

...monthly National Insurance Board (NIB) contribution rates increase proposed: ...from 9.8 per cent to 10.8 per cent... ...It is unclear whether this will be split 50/50 between employer and employee


Tribune Business Editor
Tribune Business Reporter

A RECOMMENDATION to increase the National Insurance Board (NIB) contribution rate by one percentage point to 10.8 per cent has been lodged with the Government, its director yesterday saying it was "lobbying" private health insurers for reduced premiums.

Algernon Cargill brought a stunned silence, and some gasps of disapproval, to the Bahamas Business Outlook conference yesterday when he confirmed the recommended contribution increase, arguing that it was necessary to fund an expanded National Prescription Drug Plan.

In truth the contribution increase had been flagged some time ago, so it should not come as a total shock to Bahamian employers and employees. The former, though, will again be looking at their financial position with concern, and wondering just how much of a chunk it will take out of cash flow and profits.

Meanwhile, Mr Cargill's assertion that NIB was pushing private health insurance underwriters, such as Colina, Atlantic Medical, Generali and BahamaHealth (Family Guardian), to reduce premiums and provide extra benefits, could stoke concerns in some quarters over a revival/continued move to a National Health Insurance Plan.

This is especially so given that Mr Cargill suggested NIB wanted to be the "first payer of private carriers".

Under the initial envisaged expansion of NIB's drug plan, Mr Cargill said it would cover illnesses/diseases such as epilepsy, sickle cell anemia, thyroid, BPH (Benign Prostatic Hyperplasia) and strokes.

"We envision the plan to cover all employees and self-employed persons, and voluntary insured persons," Mr Cargill told the Business Outlook. "We have recommended that the extra programmes by funded by an additional 1 per cent."

That will increase monthly NIB contribution rates from 9.8 per cent to 10.8 per cent. It is unclear whether this will be split 50/50 between employer and employee.
Confirming that NIB had been talking to private health insurers over its plans, Mr Cargill said plan participants would incur only a small co-payment.

He added: "We are lobbying for reduced premiums or additional benefits from your private insurance companies." Claims reimbursements were also said to be on the table.
"We aim for the day when no Bahamian has to choose between paying rent, paying for food or paying for medicine," Mr Cargill said.

Meanwhile, the National Insurance Board (NIB) saw contribution income increase to about $190 million last year.

Mr Cargill said NIB had recorded "remarkable" contribution income despite the economic recession. "In 2008, NIB's contribution income was $155.2 million. In 2009, toughest year so far of the recession, we saw growth of almost $5 million for a total contribution income of $160 million," he added.

"In 2010, we increased contribution income by a further $7.9 million, and in 2011 NIB's contribution income will increase to approximately $190 million. These advances can certainly be accounted as remarkable given the recessionary times we are in today.

Mr Cargill credited the increases to well planned strategies taken by NIB to encourage and facilitate contributions, as well as enhance the collection process.

According to Mr Cargill, administrative expenses for 2011 amounted to $40.5 million, and that as a percentage of contribution income, these have averaged around 21 per cent. He pledged that NIB would reduce this percentage "significantly" in the future, having "done a good job" in containing them in recent years.

On the benefit expenditure side, NIB is forecast to have paid out $182 million in 2011, a slight increase from $176 million in 2010. That represents a $30 million increase from the $152 million payments in 2008, with much of the rise coming from the unemployment benefit.

Regarding the unemployment benefit made available through NIB, Mr Cargill said: "As of January 3, 2012, 24,635 have received unemployment awards. We have also paid out approximately $35 million in unemployment benefits.

"From the time the benefit was instituted there have been steady and significant decreases in the number of claims. In 2009, awards totalled 14,071 out of almost 16,00 claims totalling $20.8 million. In 2011, we paid out only 4,500 claims awards out of almost 5,700 claims, totalling $6 million."

NIB generated $75 million in investment income in 2011, and Mr Cargill said its reserve fund had ended the year at $1.6 billion, up from $1.57 billion in 2010 and $1.5 billion in 2008.

Mr Cargill added that the National Prescription Drug plan launched in 2010 now has a membership of more than 70,000 persons, and provides prescription drugs to almost 14,500 active beneficiaries.

According to Mr Cargill, to date the drug plan has paid out more than 170,000 claims and over $3.3 million to participating private pharmacies.

January 13, 2012