Compass Point - Healthcare: Gov't spends $93 million per year on local health care
Cayman Compass, November 3, 2011
The Cayman Islands government spends more than $93 million per year to provide health care services.
This expenditure figure includes local coverage as well as paying for health care for specific segments of the population, including civil servants, pensioners, seamen and veterans, indigents, the elderly, people with impaired health status, and people with low income.
The government performs those functions through a statutory authority and a government-owned company. Additionally, a government agency is charged with monitoring and regulating the health insurance and health care industry.
Early this year, Health Minister Mark Scotland said the government had spent a total of $93.4 million on health care in the last financial year, representing 17.5 per cent of the national budget. Of the $93.4 million, 22 per cent (about $20.5 million) was spent on overseas referrals for 2,500 persons from the seafarer and indigent population. In 2010, Mr. Scotland said government was spending more than $12 million per year on overseas referrals for the indigent population alone.
Health Services Authority
The current budget for the Health Services Authority entails $84 million in expenses, with $55 million of its revenue coming from Cabinet, ministries and other government entities, according to its ownership agreement with the government. The authority employs 767 full-time-equivalent staff, who are paid a total of nearly $50 million. Personnel include physicians, nurses, senior management and administrative staff.
The authority operates the 124-bed Cayman Islands Hospital on Grand Cayman, the 18-bed Faith Hospital on Cayman Brac and the Little Cayman Clinic, as well as five district health centres on Grand Cayman.
Each year, the authority renders a significant amount of goods and services for which it is not paid. As of June 30, 2011, the authority had accumulated about $55.9 million in so-called 'doubtful debts' (i.e., debts that are unlikely to be repaid). The authority expects that total to rise to $63.5 million by June 30, 2012 – an increase of $7.6 million for the year. The accumulated amount of doubtful debts is nearly half of the total contributed capital to the authority.
In July 2010, the authority celebrated making its first-ever profit, with revenue exceeding expenses by $2.3 million, even after accounting for some $12 million in doubtful debt that year. At the time, authority board chairman Canover Watson said half of the outstanding debt was from work-permit holders, many of whom had presumably left the Islands. Cruise ship tourists and stay-over visitors had also incurred debts as well. This past fiscal year, which ended June 30, 2011, the authority was forecast to turn another profit, of nearly $1.1 million.
For the current fiscal year, however, the authority expects to run a deficit of $1.1 million.
CINICO
The Cayman Islands National Insurance Company was incorporated by the government in December 2003. Its principal function is to provide health insurance for 13,000 customers, including civil servants, pensioners, other government entities, seamen and veterans and their dependents, CINICO employees, as well as Cayman residents with low-income, impaired health status or who are elderly.
CINICO also provides administrative services for the indigent population (those with no means of paying for health care) and advance patients (people who are granted loans from the Treasury Department to support overseas medical care because they have no insurance or inadequate insurance).
The current budget for CINICO is $59 million, with $53 million of its revenue coming from Cabinet, ministries and other government entities, according to its ownership agreement with the government. CINICO employees 10 full-time equivalent staff. CINICO has hired contractor CBCA Administrators Inc. to provide claims administration services for local claims, and Care Management Network Inc. for services related to overseas medical treatment. CINICO has reinsurance coverage through Presidio Excess Insurance Services.
At the end of 2009 and 2010, CINICO reported two straight profitable years, netting earning of $5.8 million and $3.5 million respectively. However, in 2011 and 2012, CINICO forecasts running deficits of $2.4 million and $3.4 million respectively.
Department of Health Regulatory Services
The Department of Health Regulatory Services is part of the Ministry of Health, Environment, Youth, Sports and Culture, overseen by Minister Scotland. The Department was formed in 2008 through the merger of the Health Insurance Commission and Health Practice Commission. As the names imply, the former is concerned with health insurance, and the latter is concerned with medicine, dentistry, nursing, midwifery, pharmacy and other professions allied with medicine.
The Department's expenses listed in the 2011-2012 budget total a little more than $1 million, out of the Ministry's total revenue of a little less than $10 million.
Health Insurance Superintendent Mervyn Conolly said the Health Insurance Commission's functions include pursuing prosecutions under the Health Insurance Law, administering the Segregated Insurance Fund (which draws $5 from payments for individual health insurance plans and $10 from family plans to help offset government expenses for medical indigents), to review and monitor health insurance premium rates and reimbursement terms, and to advise the Health Minister regarding health insurance legislation.
Mr. Conolly said his commission prosecutes about 12 cases per year in court under the Health Insurance Law. About three-quarters of those cases involve employers which allowed health coverage for the employees to lapse. Penalties for violating the law can range up to $10,000. Oftentimes, the commission is able to have cases settled before they go to court, he said.
"Under the Health Insurance Law, the health insurance companies are required to inform the Health Insurance Commission as soon as there's a lapse in coverage," he said.
Additionally, health care providers will often voluntarily contact the commission if a patient's health coverage is found to be not current even though he/she is employed. Mr. Conolly said the commission will follow up with the employer, and instruct them to take steps in order to rectify the situation.
"Your employer would be responsible for any uninsured medical expenses that you may have incurred during the period that you were employed," he said, in addition to any penalties handed down by the court.
Other legal matters for which the commission becomes involved include challenges to approved insurers regarding not covering a certain benefit or claim, or not reimbursing a health care provider, he said. Additionally, sometimes a health care provider will refuse to accept an insurance card without providing sufficient reason or taking the time to verify whether it should accept the card.
"We typically get good cooperation from health care providers and approved insurers when it is necessary for us to get involved,"
Mr. Conolly said.
This is part of Compass Point - Healthcare. Please click here for more stories on this topic.
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