By Fred Skovberg,

On Sept. 23, 2011, Mr. Hugh McGravel Groves, our new Chief Financial Officer (CFO), publically stated that the health care system in the TCI is just too expensive. He suggests talking to Interhealth Canada to see what can be done to lower costs.

He goes on to state that the present 5% contribution is not enough to cover the costs and the TCIG needs to consider raising contributions from subscribers and/or reducing benefits. This comes after the TCIG published what was supposed to be a comprehensive budget and the first quarter results.

It is interesting to note that neither the budget nor the quarterly reporting of results contained any hint whatsoever that the cost of health care was so seriously underfunded that it was now a serious problem.

While we appreciate that the new CFO has investigated this long outstanding matter, it is not new information. There have been numerous articles on the subject of the affordability of healthcare with the new hospitals including one I wrote to the TCI Journal, Oct. 18, 2009. That submission seriously questioned the ability of 30,000 people to support two hospitals. 

Why was this subject not thoroughly investigated BEFORE the Wetherell government agreed to sign off on the contracts?  I do not know of any country with the population of a small village anywhere else that has two hospitals! It appears the surprise concerning the cost of healthcare is but another example that, after three years of effort we still do not have adequate financial management, budgeting and tracking of results.

The overall detailed budget for fiscal year 2011/2012 does NOT address all the budget items associated with healthcare. For example, the budget has an allocation of $12.0 million for overseas medical treatment but does NOT recognize the Interhealth or NHIP administration related costs we must bear each year, specifically the following:

The TCIG is directly responsible to pay $36 million of this amount and to collect another $24 million via NHIP contributions. As I understand it, if the NHIP collections do NOT equal $24 million or the overseas treatment costs exceed $12 million each year, the TCIG is responsible for any shortfall.  What is the picture regarding these collections and payments for fiscal year 2011/2012? What are the actual figures for the first quarter of 2011/2012? We simply do not know!

In addition to the Interhealth annual medical costs, the TCIG department of Health and Human Services has expenses related to annual health care costs and there is the expense of running the NHIP. It is not clear what these amounts are. There are also the following health related expense amounts shown on page 3-7 of the fiscal budget summary:

[Table Corrected: 11:45hrs - Sept. 26]

Certainly we need to keep the AIDS program fully funded. Similarly, the Public Health Laboratory is probably required in any case. The dental department is somewhat of a mystery. To begin with, it is budgeted to generate only $30,000.00 in revenue during fiscal year 2011/2012. It costs $550,331.00 in expenses for 2011/2012! There are a number of qualified dentists in the TCI and I doubt they are losing money at the rate the TCI dental unit is.

If we add all of the above together and assume that NHIP collections are actually covering the “Clinical Services” portion of the Interhealth Canada contract ($24,000,000.00), we appear to have a total expense of at least $ 37,242,616.00 for health care related costs for the budget year 2011/2012.

If we optimistically assume the TCI has a population of 30,000 people and each family as 4 people, the cost of health care works out to $4,965.66 per year for every family.  For a person supporting a family and paid $10.00/hour for 40 hour weeks, NHIP would cost 23.9% of his gross yearly salary! The $37.2 million figure does NOT include the cost of the NHIP department nor does it include the hospital construction loan payments the TCIG must make each year for 25 years to repay $125 million at 12% interest!

This is an astronomical cost for health for a very small population to bear. Clearly the cost has to be reduced or we must find a way of increasing our population so more people are supporting the high cost of health care. The only way to increasing the population is by attracting inward immigration. Unfortunately, this is NOT a viable option to the voting public; they have made that clear in the struggles to create the new constitution and in legislation. We still see many complaints about foreign workers being in the TCI. Other than tourist facility construction, foreign businesses are subject to regulations that make the TCI an unattractive investment. As well, local residents are already enduring massive increases in taxes due to the poor financial management of the past local government. I believe Mr.  Hugh McGravel Groves (CFO) needs to consider how to seriously reduce the cost of health care. He needs to think outside the box, look for innovative, quick, decisive solutions; not the classic civil service, no brainer solution to every problem; simply raise taxes. A cursory look at what is stated above and the current budget should convince the CFO that “quick hit”action is required to correct the mistakes of the past. As a starter, I would suggest the following possible ways to begin to reduce the cost of health care in the TCI:

1.   The TCIG Health care unit includes a dental department. There are also a number of capable private dental facilities in the TCI plus the Provo hospital has a dental facility (perhaps also Grand Turk). The TCIG dental department estimated revenue is about $30,000.00 in the fiscal year 2011.2012 (see page 3-4). The same TCIG dental department estimated expenses are $ 550,331.00 (see page 3-7).  Why do we need to have TCIG provided dental care? We can save at least $550,301.00 in the 2011/2012 fiscal year alone by dropping this department. This would also help reduce the size and cost of the civil service.

2.   Why does the TCIG pay both the employer and employee NIB and NHIP contributions for civil service employees? It does not seem right to discriminate against the private sector employees by making them pay their own NIB and NHIP employee contributions plus NHIP and NIB contributions for the public sector employees as well. Civil Service employees should pay their own NHIP contributions.

3.   Given the small size of the population of the TCI, and the fact that about 90% of the total population resides in Providenciales, why do we need two hospitals? We should close the Grand Turk hospital services and provide limited clinic services in Grand Turk. Perhaps this could be accomplished through a private clinic on a contract basis.

4.   The TCI has a long history of people not paying their taxes and government mandated fees. The TCIG has a long history of poor collections performance. We need to improve collections. How many employers are NOT paying their NIB and/or NHIP contributions? How many are deducting NIB and/or NHIP employee contributions from their employees pay but NOT sending it to NIB and/or NHIP? I personally know of two employees who say that is happening. One of them has taken his case to the labor tribunal because; unknown to him, his employer did not pay his NHIP. This person got sick and went to the Provo hospital only to be told they could not treat him because his NHIP contributions were over two months late.  When he brought this to the attention of his employer, he was immediately fired for doing so! There are continuing stories about such things and, frankly, it seems that collection of arrears from employers is not very effective. The common theme is that the employer does not pay and is eventually taken to court. He arranges a payment schedule, makes some payments and stops. Later he is summoned to court again and the cycle begins anew. It is time that NHIP and NIB hold employers responsible and accountable for collecting and paying NIB and NHIP contributions. If this is not done then increased taxes and fees will be levied on the rest of us to support delinquent payments. That is not reasonable or fair to those of us that do make our payments.

The above four simple improvements would reduce the cost of health care in the TCI by millions of dollars per year.  These are only immediate improvements; they will not bring the system into an affordable state. We need to reduce the range of services by renegotiating the Interhealth contract. However, given the core running costs of the hospitals plus the high interest rate and size of the construction loan, it is highly doubtful that an affordable level of cost versus benefits can be achieved. The absolute last thing that should be done is to increase taxes and fees on an already overtaxed people! The reason we have the problem of healthcare being too expensive is we do NOT have the population or level of economic activity to support such costs.

We did not have sufficient population or economic activity to support this level of healthcare when the past local government foolishly decided to approve this level of health care and the hospitals. The voters of the TCI abrogated their responsibility by fully supporting the hospital deal. The interim government faced even worse economic conditions and a smaller population and made the second bad decision concerning health care by implementing the hospital deal.  It is time to correct the serious mistakes made by successive governments and the voters or the TCI will NEVER RECOVER ECONOMICALLY!