SHTA warns National Health Insurance posing risks for SXM

PHILIPSBURG – In a newsletter to their members sent on Wednesday November 23rd, 2016, the St. Maarten Hospitality and Trade Association (SHTA) has sounded the alarm bell on the National Health Insurance (NHI) proposal for St. Maarten.

SHTA says that they are fully in agreement that access to affordable healthcare for every resident on St. Maarten should be the primary objective, but warns against the hasty implementation of the NHI in its current, according to the SHTA, flawed form.

SHTA further states that the NHI could result in past deficits to be carried by the average tax payer because social security cost for employers will increase with at least 30% resulting in inflation (higher consumer prices). SHTA proposes guiding principles and optimizing an open market mechanism.

Below the full content of their newsletter of Nov 23rd, 2016:


What a National Health Insurance (NHI) system means for our market mechanisms ~

“Some time ago, after months of rumblings, it was brought to the attention of the Sint Maarten Hospitality and Trade Association (SHTA) that government seeks to implement a National Health Insurance (NHI). The proposed regulation seeks to have one insurance provider (SZV), and will be or become mandatory for all residents, legal and illegal alike.

Implementation of the NHI will concentrate all responsibilities with respect to the funding, quality, quantity, control and appeal (in first instance) as well as audit of employers and care providers in the hands of SZV.

This means that SZV will decide which care an insured individual will receive, which care it will purchase and control payments to the actual care providers (hospitals, house-doctors, specialists, pharmacies, dentists etc.), that it will audit these (local) care providers and determine how much they are allowed to charge for their services and that it will audit employers and other premium payers, assess them and collect premiums as well as be Judge in first instance when there is a dispute between an employer and SZV. SHTA questions whether the concentration of so many responsibilities and power into one organization is wise (the potential for conflicts of interest is significant) and it also questions whether SZV is and will be capable of managing all these responsibilities.

The proposal made only discusses a system fully managed by SZV. It does not deal with other options and it appears that those other options have not been fully considered. There is ample experience with NHI systems, Aruba and Curacao for instance have both implemented something similar and have experienced serious difficulties (both in the management of available care as well as having serious financial deficits). The Netherlands has a compulsory medical insurance system managed by professional insurance companies.

While the premium payable has increased over the years, those increases have been relatively digestible. St. Maarten needs to learn from these experiences, the mistakes and the successes, so that we do not repeat the mistakes and that we build on their successes.

The proposed NHI results in the complete removal of market mechanisms. In a functioning market; supply and demand dictate the development of the market. Left on its own, with some supervision, it will find the best possible solutions for everybody. It’s like buying cars. Not everybody can afford, nor does everybody want the same one. Why is healthcare different?

With one supplier, service is more likely to go down rather than up. Even if prices don’t go up, and that’s not very likely, the one supplier will not be faced with competing for customers on things like value and service. The one supplier will have no incentive to improve. When people hear about Telem and UTS merging, they worry about what will happen to the service. Why would healthcare be different?

Why all this sudden interest in getting NHI implemented? The Kingdom Government Instruction issued to the St. Maarten Government includes instructions with respect to the retirement system (AOV) and the health care system. The present system (ZV/OV) has shown sizeable deficits since 2009. According to the law, Government is responsible for this deficit and is required to cover these deficits. Because Government did not include these obligations in its budgets for most years -or when they did include it didn’t actually pay it) Government built up a significant debt to SZV.

The proposed NHI is meant to solve these deficits by canceling its obligation to cover past deficits and transfer the burden to the average tax payer. The proposed premium rates included reflect that; the social security cost of employers will increase with at least 30%.


This additional cost for the private sector will be felt by everyone and might cause inflation. It will result in higher wage costs without increased productivity, prices will increase. Our competitive position will erode, business will decrease leading to increased unemployment and less tax revenue. In trying to get more, government will end up with less and everybody gets a piece of the downturn.

First and foremost, SHTA is of the opinion that an arrangement needs to be developed in which every resident has access to affordable healthcare. SHTA would like to see healthcare on Sint Maarten improve. That would benefit everybody. SHTA is very aware of the fact that this costs money.

In order for Sint Maarten to get the best possible, sustainable healthcare we need, a few guiding principles should be considered.

1.       There is a limit to what we can afford. We can argue about who pays more and who less, but there is a limit.

2.       Money for healthcare should go to providing healthcare, not overhead and bureaucracy.

3.       You always need to find the best value, even if it’s not the most desired option.

It is the SHTA’s opinion that this cannot be achieved through legislation. The only system, flawed as it is, for optimizing is an open market. There have to be some policies for those that can’t help themselves, there has to be a safety net, but one that cannot be abused.

An open market where different providers of healthcare and insurance providers compete for clients that are free to choose is the only way to optimize the 3 guidelines above.

The SHTA strongly believes that under current circumstances we should be looking at decreasing government bureaucracy and government spending and thus taxation, as opposed to increasing any and all of the three.

Why the current proposal is both an economic and a political risk for country Sint Maarten

Next to the market disturbance and undesired reliance on government, the SHTA warns that the proposal poses high risks for country Sint Maarten. While commending the government for taking up this highly important subject, SHTA requires the department of Health to be more transparent in providing information in order to avoid high risk financial and political pitfalls in the long term.

As the monetary union of Sint Maarten and Curacao contracted over the last quarter of this year and only this year Sint Maarten government had a “shotgun budget” imposed, SHTA underlines the importance of spending money wisely and with a sensible eye on the long term. A National Health Insurance system is a complex system with high impact on our insurance and healthcare system and with that our economy and citizens. Taking it all together, the new system will influence Sint Maartener’s daily lives in various ways over a long time to come.

Hastily jumping towards an imperfect health insurance system now, can be a financial burden for decades to come. Several months ago, SHTA submitted a list of questions to the Ministry of Health, these have hitherto remained unanswered. Even though SHTA has been invited onto a stakeholder committee, SHTA has concerns about the effectiveness of that committee.

Secondly, the NHI proposal only will work with a strong and consistent political will. A large amount of LBHAM proposals needs to be put in place before the system can start to work in 2018. Over the past six years, five Sint Maarten governments in place have lacked the support, as well as output to put a comparable effort in place. Even though SHTA has high hopes for a more stable Sint Maarten, history does not support this expectation to be realistic and build a system with high societal impact on.

To add to this political risk, the proposed ways to put the LBHAM’s in place is one not having to consult parliament. The NHI proposal for that matter takes away the control of the average Sint Maartener of one of the country’s largest financial endeavours.

A third political reason founding this proposal on quicksand is that the SHTA as well as her SER/SEC partners see the information shared by the ministry as inadequate. For a partner representing the larger part of Sint Maarten hospitality and trade organizations and very much willing to cooperate, SHTA lacks supply of reliable financial information to assess the economic soundness of the system. For a solid political decision of this magnitude, the SHTA seeks more clarity on its foundations.


The SHTA believes that adoption of NHI will have more negative consequences than positive ones. The direct result of establishing a government supported monopoly is that there will be no going back if we are not happy with the result. Mandating everyone to fall under NHI is one thing, there is no way to get them back with private insurers once those are gone. If NHI fails governments only way to attempt to rectify this is through more funding. This will be a vicious circle.

The Sint Maarten Hospitality and Trade Association stands for optimistic and entrepreneurial vision on the future of Sint Maarten. As such, count on us to keep issuing suggestions for improvement for this law in order to provide the best healthcare for the citizens of Sint Maarten, accompanied with a sound financial foundation in the long run.

Proposal for resolution

Considering the above and the fact that the Sint Maarten Hospitality and Trade Association believes NHI is not a good proposal in its present form. We would like to propose the following:

1.       The instruction given by the Kingdom Government mentions the financial threats to Government resulting from the present system (i.e. too low ZV/OV tariffs for large care providers, structural annual deficits in the ZV/OV funds, Government’s legal obligation to cover those deficits) and instructs the Government of St. Maarten to create a sustainable system before 31 December 2016. The Government has therefore not been instructed to implement NHI;

2.       The development of a financially sustainable healthcare system that ensures access to healthcare for all is an absolute necessity and should be done carefully and enjoy the support of all the stakeholders (Chamber of Unions, Healthcare providers, Senior Citizen Representatives and the private sector);

3.       The NHI proposal in its present form is not acceptable; it seriously underestimates real costs of health care, it lacks regulations to prevent double insurance charges for large groups of individuals, leaves many details unresolved, concentrates too much responsibility and power in the hands of one organization (USZV) and will most likely not create the desired financially sustainable healthcare system;

4.       Government must meet the obligations resulting from the instruction received from the Kingdom Government in order to prevent more serious sanctions;

5.       The NHI proposal in its present form seriously decreases St. Maarten’s attractiveness for (much needed) foreign investors.

The Associations in support of this Joint Statement recognize that only criticizing the NHI-proposal is not sufficient and offer the following option:

1.       Increase the ZV/OV premium from 12.5% to 14.5% (both employer and employee share to increase with 1%);

2.       Increase the maximum premium income from its present level to the level of the AOV/AWW maximum premium income;

3.       Decrease the employee part of the AVBZ premium from 1.5% to 0.5%.

These actions will significantly reduce the ZV/OV deficits or possibly create a surplus. The proposed measures are budget neutral for employees. These measures most likely meet the conditions included in the Kingdom Government Instruction. Implementing this will create the necessary time to develop a financially sustainable healthcare for all system that should include the following features:

1.       A basic package that but provides necessary health care;

2.       Coverage provided by professional insurance companies;

3.       Compulsory acceptance of individuals by insurance companies;

4.       A fund (managed by USZV) from which health care premiums will be paid for residents of St. Maarten that cannot afford to pay the premiums for the basic healthcare package;

5.       Fund will be financed by a premium to be levied over taxable income;

6.       Government payment as stated in the present NHI proposal;

7.       Decrease of personal income tax/wage tax rates to offset additional cost for employers/employees/other actives;

8.       Strict enforcement and personal/corporate liability for employers of undocumented uninsured people (including dependents).

We have been invited by the Honorable Minister to discuss our misgivings about this whole project. After this meeting has taken place, we will follow up.”


  1. SHTA on point. The more transparency the grester the chances of success.
    Though USZV is essentially non-profit a keen look at the at the projected expense ratio is advisable.