Kim Wilson, Minister of Health

Health insurance premiums have spiked to the point where some residents will end up paying an additional $100 a month.

That was the downside of the Ministerial Statement delivered in the House of Assembly on Friday, when Health Minister Kim Wilson told MPs that insurance premiums have gone up by as much as 18.5 percent.

She also stated outright that as a Government: “We are not hear to blame insurance companies or the previous government.”

While noting that dealing with the increase “can’t be easy for most working families”, she also said the biggest part of the blame lies with the increasing segment of Bermuda’s population being “sicker, older and receiving more healthcare”.

The most basic package available to date – the standard health benefit, covers only hospital and “a few non-hospital services”.

The rest was priced in “tiny pools among small and medium-sized employers, or individuals without group coverage — they are the most exposed of all”. 

Overall, she said the way forward has everything to do with “the way healthcare is financed in Bermuda”, the Minister noted that her update was timely “because health insurance premiums have just been adjusted for their annual increases and the public is feeling the impact”. 

“While HIP and FutureCare were shielded from premium increases, we have received reports, that some persons experienced insurance increases of up to 18 and a half percent,” she said.
“For a $540 premium – which would be low in most cases – this means an ordinary working person will have to find $100 dollars every month to pay their health premiums. This cannot be easy for most working families.
“We are not here to blame insurance companies or the previous Government for such premium hikes. And we appreciate fully that an increase of this magnitude was not experienced across the board. But it’s a very real example of why we so urgently need to reform the way we finance healthcare.”
Using more healthcare services has caused the standard premium rate to increase by 6.4 percent from July 1st.
“There were no fee increases and only negligible benefit changes. So the only reason the premium for the minimum package increased is because our people are sicker, older and receiving more healthcare.
“However, what is rarely understood by many is that the standard package is protected from larger increases because it covers a large pool of persons,” said the Minister.
“The minimum package takes the full Bermuda insured population of over 48,000 people as one group, as opposed to supplementary benefits which only pool small groups.
“So although someone may have had a health incident requiring intensive care and a long hospital stay, they didn’t have to foot that bill alone because the minimum package shared that cost across the 48,000 insured people in Bermuda. Had that person been in a group of only 5, 10 or 20 people, sharing the cost among their small group would have been a very heavy burden.
“This way of pooling the risk among a very large group is the best way to protect all of us. It prevents large sways due to one or two catastrophic and expensive events. A large community pool spreads the risk, minimizing the potential impact on a few people And it averages out the premium among more people too, which also helps to reduce the impact on any one individual or small employer group.
“However, the reason our health system currently can’t protect people from 18.5% premium increases is because the proportion of healthcare that is protected by that large risk pool is limited.
She also noted that the minimum package, or standard health benefit, covers only hospitalization and a few non-hospital services.
“Everything else –most of the healthcare most of us use – is left to be priced in tiny pools among small and medium-sized employers or for individuals without group coverage – they are the most exposed of all.”
Examples like this, she said, “highlight the urgent need to change”.
She also noted that the Finance and reimbursement Task Group “produced together with our actuaries, proposals on how we could reform our health financing” in December 2012.
Their “proposals were developed to protect policy holders from these large sways, to stabilize health costs and to move us towards ensuring everyone could have decent health coverage without breaking the bank”.
“The proposals were developed with wide consultation and were priced actuarially,” said Ms Wilson.
Given the bipartisan group’s membership”, she said: “We are looking at those proposals again and are now considering how to advance them.”
Two options are now being considered, “as well as a draft benefit package”, to determine how to select “a package and roll out the reforms”.
“Because I never want to hear again that anyone had to endure an 18-and-a-half percent premium increase,” she added.
The projected cost in 2012, “if Government’s existing funding contribution remained, was around $450 a month per person for a package that included not just local hospitalization, but also some primary care, prescription drugs, dental care, long term care and overseas care.
“That is correct. A solid, decent package that would protect anyone from a serious health event and give them preventive and primary care to help them stay healthy.”
“So the projected cost today will not be the $450 of five years ago. But it will be better than what most people pay for this level of coverage today.
“This is within our reach and it’s achievable if we change the basic package and pool it differently. So that small groups don’t take those hits and 18-and-a-half percent premium hikes. And that is what I would like to see for all of our people: real protection when poor health befalls us, and decent premiums when we’re well.
“While we are clear on the direction of travel, I understand fully that developing a defined roadmap to get us there is necessary at this stage. That is what my technical teams are working on, and I will be pleased to come back to my Honourable colleagues and update you again in the coming months as this work progresses,” she added.
The Minister also noted that smaller reforms achieved over the last three years, like the “dramatic” reduction in fees for long-term hospital care, particularly the pilot programme targeting chronic disease such as diabetes.