~ Govt.’s debt estimated at NAf. 85 million ~
PHILIPSBURG–Companies operating in the private sector appear to owe Social and Health Insurances SZV more than government does.
Health Minister Emil Lee told Members of Parliament (MPs) on Friday that while it is “difficult to get a good estimate” of what the private sector owes SZV, current estimates from SZV seem to indicate that the private sector owes between NAf. 100 and NAf. 150 million guilders in premiums for the ZV/OV and AOV/AWW funds.
Lee said that based on an investigation conducted by Audit Team St. Maarten (ATS) in 2018 of a random sampling of approximately 120 businesses in the construction and HoReCa (hotel, restaurant, café) sectors, it is estimated that from the 120 companies an estimated NAf. 19 million is outstanding. The outstanding is owed to SZV in premiums for the ZV/OV and AOV/AWW funds from 88 of 120 companies.
“These numbers are from a pre-assessment and an actual investigation is required to verify the actual numbers, but it certainly does give an indication to the issues with compliance that are out there,” Lee told MPs during the meeting, which was about SZV’s financial situation.
As for government’s debt to the social insurance service provider, Lee said current estimates indicate that government owes SZV NAf. 85 million.
According to Lee, the previous government had defaulted on its obligation to reduce its debt to SZV. The previous government had made an arrangement to pay off its debt by trading assets with SZV – turning over the Government Building as a form of payment towards the outstanding debt and agreeing to a payment plan to pay off the debt in three years.
“This would have relieved SZV’s cash flow issues. However, this agreement was not adhered to. In fact, the 2016/2017 budgets ignored the legal obligations to pay into the ZV fund,” Lee said.
Structural issues
Lee said some of the funds managed by SZV have structural issues that date back to the formation of SZV in October 2010. These issues have grown and were worsened due to the impact of Hurricanes Irma and Maria.
“The negative trend in the financial position of the healthcare-related funds are largely due to the fact that the benefit payments increase faster that the premium income,” Lee said. “Basically, the money that SZV has to pay out for healthcare expenditures is growing at a faster rate than the revenues that are coming in to SZV and that creates a gap that creates financial pressure.”
Compared to 2011, the premium income for 2016 increased by 24 per cent, while expenses for the same period increased by 77 per cent.
He also stated that SZV is carrying out additional tasks for which it is not compensated, which leads to higher expenses for the insurance provider. For example, the administration of medical expenses for public service staff and their dependents, Court of Justice staff and their dependents, and PP cardholders are all done without compensation.
SZV also provides sick leave control for public servants and PP cardholders, as well as the implementation of care for the elderly as part of the AVBZ fund without compensation.
Also, based on legislation that dates back to the 1960s, there are some groups that enjoy the services of the ZV/OV fund but their contributions are relatively low – formerly employed persons, numbered at between 6,000 and 8,000 persons plus their families is one such group.
Lee explained that government is required to pay a total of 12.5 per cent – 8.3 per cent as government’s contribution and 4.2 per cent as the employee contribution for this group. However, government only pays the employee premium of 4.2 per cent.
He said also that insurance for persons age 60 and over went into effect by ministerial decision in 2009, but this was never formalised. Participants of this group, mostly pensioners, pay 10.4 per cent of their income primarily from their AOV pension and in practice the contributions range from NAf. 10 to NAf. 120 per month.
“This is a group that is an older population and the expenditure levels are relatively high, but the contribution that they make is relatively low. … The contributions made to cover the cost are not enough to cover the cost.”
It is also “questionable” whether referring these patients to the Dominican Republic and Colombia is permissible by law. “When the law was originally written the intention was that St. Maarten Medical Center was a peripheral hospital and SEHOS (in Curaçao) was the main hospital and people who needed extra care would go to SEHOS, but the way the law is written there is a question mark as to whether the law allows for individuals from that fund to be referred abroad [outside of Curaçao – Ed.].”
As for the FZOG fund for retired civil servants, the expenditure in this fund exceeds the income and the size of the group continues to grow. “And this is a trend since 10/10/10 and by law there is supposed to be an adjustment in the premium to match the expenses against the income,” Lee said. “If we look at the various funds, we can see that there are structural issues to several of the funds.”
Possible solutions
Lee told MPs that when he entered government he had a number of possible options – one solution must be chosen in addition to solving the outstanding cash flow issues to government’s debt of approximately NAf. 85 million to SZV.
The options included either implementing austerity measures to reduce expenses and increase revenues such as increasing premium percentages, deny or limit the coverage of persons age 60 and over, increase liens on non-compliant companies, stop offering the service of medical referrals abroad – as, based on outdated laws, there is a question whether SZV should be paying for referrals abroad.
The second option is to continue to work on the phased implementation of National Health Reform.
In the short term this would include improvements in compliance; in the medium term, cost-saving measures such as restructuring of referrals abroad and pharmaceutical savings, improvements in locally available medical service and a new general hospital. For the long term it would mean a change in legislation that, in phases, would update and consolidate all the different funds in the form of General Health Insurance.
Lee a press release on Sunday in which he said, “In reality, only one option is acceptable. The other options are still structurally unfeasible and could leave a vast number of the population unable to access healthcare, and this would be immoral.”
Lee addressed MPs for more than two hours answering a long list of questions that were posed to him. The meeting ended with several MPs asking follow-up questions and presenting comments on the Minister’s responses.
Follow-up questions and concerns ranged from the request for details of salaries of SZV staff to the consequences of including preventive care measures in the National Health Reform plans, such as breast cancer screening. One of the comments made was that screening campaigns always lead to increased breast cancer diagnoses and, in essence, the country cannot afford to find more health problems.
However, Lee said in his release that he believes that “having no measures in place for preventive care, allowing illness and disease in the population to go uncovered is a far bigger threat than financial concerns alone and something we cannot afford to just let happen with no action.”
A follow-up meeting will be scheduled where Lee will be expected to provide answers and clarification to MPs’ concerns.
Source: The Daily Herald https://www.thedailyherald.sx/islands/85498-pre-assessment-shows-private-sector-owes-szv-naf-100-to-150-million
View comments
Hide comments