(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.
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.