SIBA President Dwayne Elgin.
PHILIPSBURG--A proposal by government to implement an increase in the Social and Health Insurances SZV wage threshold from NAf. 67,816 to NAf. 120,000 as of January 1, 2022, is a major concern for the private insurance industry, which foresees a host of negative impacts including major job losses, increased cost to employers and reduction in the net wages of workers, amongst other things, if the plan goes into effect as is.
Currently persons earning up to NAf. 67,816 per annum qualify for medical insurance from SZV. An increase in the wage threshold would mean that persons earning up to NAf. 120,000, who currently require private insurance, would also qualify. The decision was motivated by the need to reduce the deficit in the health insurance fund (estimated at NAf. 291 million at the end of 2020 for the combined ZV and OV funds) as instructed by the Committee for Financial Supervision CFT.
Private insurers under the St. Maarten Insurance Association and the St. Maarten Insurance Brokers Association (SIBA) outlined their concerns in a letter to Health Minister Omar Ottley dated September 27, 2021.
The private insurers said they had taken note of Ottley’s presentation on September 1, 2021, regarding the proposed wage limit increase to be effective as of January 1, and had taken note that the decision was motivated by the need to reduce the deficit in the health insurance fund. The private insurance industry sees this as “a very serious issue” for St. Maarten which must be addressed in a manner that takes into account the impact on all parties without compromising stakeholders’ best interests.
“As a major contributor to the country’s economy through employment, taxes, insurance benefits and other contributions, we are very disturbed by the manner in which this process is unfolding without sufficient transparency, feasibility and impact considerations to employers/employees and regard for the role of the private insurance industry,” it was stated in the letter to Ottley.
“Based on the presentation, it can be deduced these proposed measures are tantamount to a phased introduction of ‘National Health Insurance’, which the private insurance industry and other stakeholders have engaged your Ministry over the years in dialogue to ensure a very equitable and well-thought-out process is followed in the interest of all stakeholders,” the letter continued.
Considering the proposed January 1, 2022, implementation target date for the wage limit increase for ZV insurance, private insurers are very concerned that the proposed approach may or may not have adequately taken into consideration the increased cost to businesses and employers; reduction in net wages for employees; loss of choice to residents or employees; reduction in turnover tax, wage tax and other social tax contributions; uncertainty of coverage, continuity of care and SZVs’ capacity, capability and strategic plan for servicing the increased pool of insured.
The private insurance industry contends that private insurance premiums, whilst risk-based, are comparatively cheaper than the cost of SZV which at a fixed rate of 8.3 per cent will increase the cost of insurance for employers on the introduction of the increased wage limit.
Regarding the reduction in net wages for employees who usually do not contribute to the cost of private insurance, on the introduction of the increased wage limit these workers will now bear 4.2 per cent of the cost of health insurance.
There will also be loss of choice to residents or employees who will no longer will be able to choose where they can access specialised healthcare when not accessible in St. Maarten; loss of representation for residents and employees who will no longer have an insurance intermediary to negotiate or mediate with SZV; reduction in turnover tax, wage tax and other social tax contributions to government’s coffers as a result of reduced premium income to the private insurance industry; and uncertainty of coverage and continuity of care as employees who currently have private insurance and are undergoing treatment in facilities outside of the SZV network may be left in limbo if their private insurance is discontinued and they are unable to access care at those facilities arranged through private insurance.
Additionally, with more clients becoming eligible for SZV Insurance, it is expected that the workload will increase significantly for the current SZV workforce and private insurers wonder how this will be tackled to ensure efficiency for clients.
There will also be loss of employment in the private insurance industry, which employs more than 300 residents and will be adversely impacted by the loss of revenue from the proposed wage limit increase simply because a segment of the population that currently subscribes to private health insurance will no longer require the same, thus rendering at least 30 per cent of the private insurance industry workforce redundant.
“The private insurance industry is particularly and deeply concerned that in the current contracting and declining economic environment there is a plan by government to introduce a measure that will result in significant job losses that will affect at least 30 per cent of our labour force, their families and those dependent on the trickle-down effect of our employees’ spending. We have not been consulted on alternative solutions or assistance for those that will be affected,” the letter read.
The private insurance industry recommends that government conduct an urgent impact and feasibility study to determine the impact the increase will have on government revenues, businesses/employers and on employees.
They also recommend that government consider a phased implementation whereby eligible employers/employees become enrolled under the SZV plan on expiration of their existing and active private insurance policies, as this will help to prevent duplication of payment of premiums to both private insurers and SZV.
Also recommended was the establishment of service standards for dealing with clients seeking access to benefits under the SZV plan that provide comfort and accountability as is the case in the private insurance industry. There should also be an alternative insurance option whereby employers/employees have a choice between SZV and private insurance.
“This creates an opportunity for fair competition as opposed to your government’s apparent plan to implement a National Health Insurance Scheme that is SZV. This is our conclusion based on your statement to have all employees and residents registered under SZV with effect from January 1, 2023,” the letter reads.
“Whilst the above is not exhaustive, we urge you to take all social and economic factors into consideration prior to this proposed implementation whilst ensuring that stakeholders’ legitimate rights and concerns are adequately addressed.”
The letter was signed by SMIA Interim President Robert de Vries and SIBA President Dwayne Elgin.
