NHI's survival & sustainability @ high risk- Morneau Shepell Actuarial Report
In a Actuarial Review of the NHI Plan done for the Virgin Islands Social Security Board by Morneau Shepell Inc., a consulting firm specialising in health care benefits issues, the many risks to the very survival and sustainability of the Government run programme were outlined.
The Report, which was laid on the table of the Ninth Sitting of the First Session of the Third House of Assembly on June 23, 2016, outlined what it labeled as the ‘summary of risks’ to the NHI plan.
Bad economy could kill NHI
The report advised the government that a bad economy could see the programme fail as “government contributions and government funding are inextricably linked to the performance of the economy and the rate of employment.”
In other words, a downturn in the economy and a change on the employment rate could pose a risk to the NHI.
Also Demographic is a challenge for NHI. According to the report “ageing of the population could pose a longer term risk to the NHI, as an ageing population would impose higher per-capita costs and a lower dependency ratio would imply fewer contributions per retiree.”
BVIHSA must have its act together or else!
The role of the BVI Health Services Authority (BVIHSA) is another area that could push the NHI plan to collapse. The report warns that it’s important for the BVIHSA to maintain quality and efficient operations. “The NHI will need to monitor the BVIHSA’s capacity and financial model for the delivery of services.”
The actuarial report said, “There is a risk that if the BVIHSA can’t compete effectively with the private sector or does not hold the confidence of the NHI participants, more care will be sought in the private sector than at the BVIHSA, which in turn may necessitate a reorganisation of the BVIHSA...”
If the Social Security Board who runs the NHI scheme does not have the capacity e.g., technical, financial, administrative skills, and cannot function to deliver a positive experience for all stakeholders, then the confidence in the NHI will not be maintained.
Chronic Non-Communicable Disease another risk
The report also said that the absence of a capitation/managed care model unconstrained servicing could also lead to increases in cost. In addition, there is also the issue of the Disease Burden. The report stated that “the increasing incidence of Chronic Non-Communicable Diseases imposes higher costs and the prevention of down-stream cost related to untreated conditions is important.”
Another issue that could see the NHI become defunct is the relationships that providers have with the NHI and their continued contracting with NHI could be important for the success of the NHI.
The NHI can fail over extreme weather events and tropical viruses can have an unexpected impact on the programme. Furthermore, advancement in technology could lead to high cost, with increased demand for services, according to the actuarial report prepared by Morneau Shepell Inc.
Short term break-even; long term NHI could fail
The report advised the government that in 2016 the NHI is estimated to break-even based on the $43.2 Million of funding from Government. This means that over the short term it can work, however, “it is noted that the NHI is exposed to numerous contingent events and risks which could lead to variable outcomes, for example the claims expenditure may range between $73.0 Million and $81.4 Million.
The report recommended that in order for the NHI’s sustainability, establishing a reserve fund at the inception is necessary. The report also advised that government, to help with the NHI programme, should immediately advance approximately $16.7 Million.
However, with the Dr Smith Administration leaving the country broke, this was not possible therefore the NHI programme could run out of money and collapse.
39 Responses to “NHI's survival & sustainability @ high risk- Morneau Shepell Actuarial Report”
Matter of fact ,any busines ,startup or otherwise would have anticipated risks.
Knowing what the risks are is a tool for damage control, in my opinion.
However, the "chronic non_communicable disease "factor is the one to watch. This one is in the hands of each and every person. The VIP constituents are so pro NDP failure,they make them up..So badminded,they will be eating lard and pounds of sugar at one sitting to ensure they become diabetic with clogged veins from head to toe.
Hmm, , then there would be fewer vipers,but heck,every cloud have a silver lining.
When there was no NHI, the majority of people still chose to visit a private health care provider rather than go to the Hospital. Peebles Hospital cannot compete with the private health care providers who are well financed and therefore are expertly staffed and well equipped. So should the priority not have been to get Peebles up to an acceptable standard so that it can be a viable alternative to the private health providers? With the implementation of the NHI more people who did not have insurance before are now frequenting the private providers leading to ballooning health care costs which would put the NHI's sustainability at risk.
'If the Social Security Board who runs the NHI scheme does not have the capacity e.g., technical, financial, administrative skills, and cannot function to deliver a positive experience for all stakeholders, then the confidence in the NHI will not be maintained'.
They do not have the capacity now and neither do they have the administrative skills to manage effectively the NHI. So why was this not sorted before the implementation?
"In other words, a downturn in the economy and a change on the employment rate could pose a risk to the NHI".
Was any survey done before the implementation of the NHI to determine the employment rate in the BVI? I could tell you just by being a Manager I advertised for a position recently and got at least 60 applicants in 2 weeks. Why did we proceed without having a picture of the employment rate?
"In addition, there is also the issue of the Disease Burden. The report stated that “the increasing incidence of Chronic Non-Communicable Diseases imposes higher costs and the prevention of down-stream cost related to untreated conditions is important.”
That has been a problem for some time now and I see no decrease in the frequency of these conditions in the near future.
Seemed to me that the NHI was rushed and not well thought out.
If you are going to go back to the drawing board in an attempt to reduce costs and allow for a more diversified choice when it comes to health care practitioners then you have to literally go back to the drawing board. Adjust the mandate to allow persons to get their own private insurance for their families and that will at least bring down health care costs for those who remain with the NHI. It is no secret that the private insurers are better negotiators (motivation is profit) and will be able to keep costs down. You can charge a health tax for those who opt to go private. For those who have pre-existing conditions and who want to return to a private insurer then it must be made legally mandatory that private insurers cover those with pre-existing conditions.
I have not seen the entire report and the media has only leaked some excerpts but it would be interesting to know what population size and the employment percentage they used to arrive at their figures. If they used 30,000 and 40,000 signed up and add to that the percentages are 30%-40% employed to pay for 60- 70% unemployed we in trouble. We need to know the true numbers and percentages to have a proper picture of the NHI's standing.