HIC: Insurers need to make profit
Ezzard Miller chairs a PAC meeting, 13 Feb 2017
(CNS): Mervin Connolly, who heads up both the Department of Health Regulatory Services and the Health Insurance Commission (HIC) has told the Public Accounts Committee that health insurance companies need to make a profit. After several days of PAC meetings examining the auditor general’s latest damning report, where members heard the details of the many failings of the healthcare system in Cayman, Connolly defended the private sector profit motive. But he did raise concerns about some of the shortcomings.
As the committee reconvened Monday, PAC Chair Ezzard Miller pointed out that the biggest complaint about the health system is insurance.
Connolly said the funding of healthcare in Cayman was “complex” but he defended the insurers’ right to make a profit and that premiums must not be outstripped by claims. He suggested that the firms employ “initiatives to ensure they remain in the black”.
Connolly said the commission’s main concern is where an insured person “has a plan of benefits that meets an episode of illness but claims are denied with little justification”. That’s when the regulator will pursue the insurer, he explained, but repeated his position that the health insurance companies should be allowed to make money.
Connolly claimed that his department regularly monitored the sector and problems were emerging regarding late payment to physicians, which doctors say makes it very difficult. Most healthcare providers accept that they can manage with the current fee regime but when insurance companies seek to delay or deny claims, the physicians start to lose out.
He said doctors were complaining about pre-clearance or certification, which is seeing some insurance companies fail to pay up and doctors believe they are trying to use this to deny legitimate claims. This is leading to non-medical personnel from the insurance firms quizzing a doctor about whether a course of treatment was needed or not.
Connolly said if the local market cannot sort this out, then the commission may need to introduce regulation.
But the health regulator said he believed the local system would be improved with the introduction of a verification system so that all healthcare providers can verify the cover of patients, but he hinted at the recent issues with that. Although he did not mention it, Connolly was referring to the CarePay scandal and subsequent criminal trial, in which the former chair of the Health Services Authority, Canover Watson, was found guilty of corruption in connection with a verification system that he introduced at the hospital.
After almost twenty years sitting on the backbench of the Legislative Assembly and having served in two governments, Captain Eugene Ebanks, one of the committee members, said the local health insurance companies were acting like a cartel. He queried why private insurance companies were allowed to drop insured clients the second they reached retirement. Ebanks said he did “not know how it got this far for so long without anything being done”, but he said he was now going to make every effort to make a change.
Connolly said that to ensure people could be covered past retirement they would have to create a scheme where people paid even more when they were younger to cover themselves in old age.
But Miller said that should not be allowed to happen because the whole principle of group insurance was that the younger fitter people who are paying in and not using their own cover fund the needs of the elderly. He pointed out that this was the problem with the profit motive, as the only goal of the private health insurers was to increase it. Connolly said that he would back any initiative that could deal with this problem.
But the HIC boss denied that CINICO and the tax payers were picking up the tab for the elderly and uninsurable so the private sector firms could make even more profit.
Even though CINICO has some 15,000 clients, he said it was a perception, not a reality, that they were all the uninsurable. CINICO is not the largest insurer, he noted, as one of the private sector companies covers almost 20,000 people.
However, he gave no figures to indicate that the private sector was covering the elderly or people with existing conditions. He said a law has been passed to prevent insurers from removing from the older or more vulnerable customers.
But there was no comment on how that was being monitored or enforced or how much insurance for vulnerable people costs.
Addendum:
Mervyn Conolly sent CNS clarification of what he said at the Public Accounts Committee hearing: “In order for a health insurance company to maintain their ‘book of business’ it is necessary for that health insurance company to ensure that premiums collected can cover the costs of their claims plus any overhead expenses.”
See proceedings below.
Category: Government oversight, Health, Health Insurance, Politics
Another example of how technology has made certain jobs obsolete, but we keep them because they create jobs…dumb jobs. I can tell you 95% of the tasks in insurance or accounting can and will be automated. It’s not about efficiency, it’s about governments all over the world who do not make it a priority to outlaw outdated jobs or do not encourage the growth of new jobs with new technologies. Why, because government itself could be whittled down to about 5% of what is, and that would not be good business for government.
It would take one person and excel to keep track of all business insurances and transactions on the island. Your premiums would be 1/4 of what they are, and there could be complete transparency of all transactions to a certain degree for all customers to look up on the internet. There would no “skimming” of the funds and no sheister CEO who are “not aware” of any misgivings of funds.
Accounting maybe, but no. Government cannot be “Whittled down to about 5%” there are plenty of jobs in government that have not be filled due to lack of specialization or lack of qualified locals able to fill those gaps. But the new generation is beginning to enter the work force with decent levels of education, change will come but it will take time.
Its people like you who like to throw gasoline on the fire trying to look smart. Parts of this government need to be seriously audited and others need to be praised for the hard work they do behind the scenes to actually get things moving on this island. So stop painting the whole canvas black.
Watch the documentary Sicko and you get a good idea of how private health insurance companies operate.
https://www.youtube.com/watch?v=thkBLpRwdSM
It’s time to get rid of the private health insurance scam and go with a public option.
Horton Insurance is coming to Cayman.
Perhaps they are already here?
https://www.youtube.com/watch?v=zfdSTyAcXfs
Hello. I am sorry, but asking a Govt to make sure an Insurance company makes a profit is wrong and unethical.
Like one insurance company said after Ivan when it would not pay any claims ” we are sorry but even with insurance there is no guarantee that you will be covered, its a game of chance”.
Well I am sorry to say that still rings true for everyone. You may or may not make a profit. Its a game of chance.
To require a Govt to ensure you make a profit does not work.
If thats the case then we can all get together and tell Govt that they have to make them give it to us for free.
Cayman is the only place that private companies is guaranteed a profit. This is so wrong simply because they don’t have to do good business they just sit back and relax under the garanteed profit by our government. I am sorry but Morvin shouldn’t be party to this it is clearly a conflict.
Well, there you have it.
After almost twenty years sitting on the backbench of the Legislative Assembly and having served in two governments, Captain Eugene Ebanks, one of the committee members, FINALLY asked a question.
It must be election time…
Here is a suggestion that even captain (note the little “c”) Whogene could turn into a motion without too much help. Pass a law that states Healthcare Insurance Companies must provide audited accounts showing they paid out 80% of the premiums collected each year either for medical treatment or preventative care.
The problem now is a good year is followed by bonuses for senior management, and a bad year is followed by a cry about how they need to increase rates.
A friend of mine in his late sixties saw his health insurance premiums for a single person go from $1250 per month to $8000 a month, the reason being he had a (successful) cancer procedure carried out some months back. That is how health insurers carry out their responsibilities not to “drop customers” as they age and/or get pre-existing conditions. Instead they make it so cost prohibitive that only the tiny minority of wealthy people can afford to pay the premiums. The rest either pay up and become indigent then become government’s responsibility or they cease the private health insurance and apply to CINICO and become government’s responsibility through that means. The health insurers have got it made. Government as always picks up the slack.
It is a no-brainer on Mr Connolly’s part to defend the health insurer’s right to make a profit. That does not mean he is in full approval of the health care system. If they made a loss, they would go out of business and there would be no cover at all. They are not in business for humanitarian reasons, after all. And therein lies the problem. It is the US style private sector health insurance profit driven system (which does not work well even in the US for all its citizens) that is at fault and should never have been adopted in Cayman. There are many other publicly funded systems that should have been examined but in this country the Chamber of Commerce and insurance industry lobby was too strong. Government should have bitten the bullet and ring fenced some duty/ revenue measures/taxation (call it what you like) collected from ALL residents and used it to contain costs and provide heath care to all residents. That, after all, is what it does now to civil servants, pensioners, veterans and seamen, indigents and prisoners but without collecting any revenue for it except for the totally inadequate amount collected from premiums for indigent care.
Far too many serving the wrong masters.
I spend $1,400 dollars a month on insurance for my family, that’s $16,800 per year, yet when my wife was admitted to hospital whilst pregnant our insurer denied our claim to cover the overnight stay which was $1,200.
THEY ARE F**KING THIEVES!
I so agree with you, I’m paying almost $1300.00 per month for a family of 4. The last claim made was in 2015. Before then maybe 2 claims per annum, which was dental related. Thieves!!! That’s a mortgage payment right there.
Yes, every business is entitled to make a profit but when something becomes so expensive that a large percentage of the population can’t afford it and when you start having issues with your coverage when you get sick and/or old and actually need it the most, then something is clearly wrong!
Tell me why are doctors and dentists still allow to demand upfront payment from the patient after they have verified the patient’s coverage? I get it that insurance companies are a pain to deal with and that it means doctors have a delayed cash flow and additional overhead cost, but sorry, that’s part of their business.
It completely discourages people seeking from medical attention or preventative care and things are then not get dealt with until it has become an emergency and the cost ends up being tenfold.
I keep being told that it’s against the law to make the patient pay upfront, but both medical and dental continue to do it. And one of those to which I’m referring is a Government facility. Can anyone enlighten me please? I don’t think what I’m being told can be right.
Mr Connolly will never object to the hefty premiums the private sector has to pay for medical insurance, why should he?. He, along with thousands of fellow civil servants and thousands more of their dependants don’t pay a single cent for their gold plated medical coverage, neither do they contribute a single cent to indigent coverage, unlike the private sector.He lives in a separate world divorced from the harsh realities outside the mollycuddled civil service.
I’d hardly call services at HSA “gold plated”
You know things are “really bad” when you get a response from Captain Whogene in Finance Committee !!
I am writing a song:
“Who woke the Captain up…”
It uses the music from that other song: ‘WHO LET THE DOGS OUT…”
Yes, well done. Carry on.
So the man in charge of regulating the health insurance business actually believes that it is OK to make a profit out of someone’s misfortune!
Mr. Connolly, health insurance premiums have risen by 400% over the last 10-years and the reimbursements made to doctors has rise by zero; that’s right: nada, none, not one cent. Where is all this money going to? So, don’t worry, Mr. Connolly, health insurance companies are making out like bandits. Want evidence? Look at the new building on Shedden Road being built by Cayman First!
The whole US style healthcare system is rotten to the core, and there is no reason why it should be so expensive in Cayman. This is drug companies ripping excessive profits, doctors and clinic overcharging, and you cannot even claim huge amount of damages here if something goes wrong (closed shop-monopoly) as you can in the US. Insurers are also involved in this, and to me it is a cartel, plain and simple, all looking after each others interests. Shetty has shown it can be done cheaper, and I sometimes get treated in European hospitals (if I need it) but have to pay for it. Most minor procedures in Europe cost less than my deductible here! So it can be done, there is just no will by the self interested parties.
WOW. Whogene had a comment. I was not sure he ever spoke in these forms of public meetings.
He had to because Election is right around the corner.
One man wearing so many hats , good right there’s failure.
The Mr Connolly should not be wearing the hats that he is wearing .But now I starting to understand all the problems within the Government .
Who is going to clean up these kind of things ?
Hey, you want to pay for two people to do the job of one person, the Civil Service will appoint the new staff. Just don’t blame us when we do. “Services requested by the public” doncha know?
Is there a conflict of interest here?
Who is Connolly working for? The government or the insurance companies?
Who can pay the biggest side salary.
The Country. Which is both.
So Captain Eugene Ebanks said “he was now going to make every effort to make a change” (to the retirement age cap on health insurance contracts) did he. OK, would he care to elaborate on exactly what he proposes to do? I’d love to hear it.
First things first, he has to fix his boat.
He will probably sit in the LA building for the next 4yrs to figure that out I imagine.
Insurance companies make small fortunes! The last thing that’s needed is for we, the public, or Government, to worry about “protecting” their profits! Get real!!