Financial challenges ahead as healthcare costs soar

The original article can be found in: Bermuda Sun  By Raymond Hainey

FRIDAY, JULY 27: The cost of healthcare could hit $1.7 billion in less than a decade — but the pot of cash available to pay for it continues to shrink.

New statistics show that the cost of national health could balloon by 150 per cent over the current figure of $679 million a year by 2021 unless action is taken. But Bermuda’s Gross Domestic Product (GDB) — the national paycheque — has fallen since 2009.

Health Minister Zane De Silva, unveiling the latest check-up on the price of national health, said: “We cannot allow our health care costs to rise at eight to ten per cent a year.”

But he added that the National Health Plan was being designed with costs in mind and that the use of cheaper generic drugs and health promotion would also help cut expenditure.

150% spike projected

The National Health Accounts Report 2012 revealed costs are set to rocket by a massive 150 per cent by 2021 unless action is taken. That means Bermuda could be spending $1.7 billion a year — $25,900 a head — a year if costs continue to increase at current rates.

The report, prepared by the Bermuda Health Council (BHeC), warned: “Per capita health expenditure of this magnitude would be high by international standards and may not be sustainable.”

BHeC’s Dr Jennifer Attride-Stirling added: “Ways to rein in expenditure include using services appropriately and pricing those services sustainably.

“For example, appropriate use of hospital services for things like emergency care and long-term care can make a difference.

“Reduced use of expensive technologies can also help and preventing poor health will also help to control costs in the long-run.”

The island at present spends close to 12 per cent of its GDP on healthcare – nearly $679 million or $10,570 per person, according to figures for last year.

That was an eight per cent increase on the previous year.

Dr Attride-Stirling said: “Staying on the trend we are on would present a problem for Bermuda and many countries are in a similar position, though each has its own set of challenges.

“Our challenge is that health costs have risen significantly above inflation. What we can realistically aim for is to get health cost increases in line with overall inflation, and this would enable the health system to be financially sustainable.”

The report added: “The rate of increase for healthcare expenditure exceeded the rate of increase in the nominal GDP.

“This increasing expenditure on healthcare, despite the decline in nominal GDP, indicates the resilience of healthcare expenditure to changes in economic conditions.

“In the financial year ending 2011, healthcare expenditure as a percentage of nominal GDP increased to 11.8 per cent and there are no trends observed to indicate a change in the foreseeable future.”

The report added that the average cost per person for healthcare went up from $9,734 to $10,570 between 2010 and last year.

The authors said: “These levels of average expenditure imply significant challenge to Bermuda’s low-income individuals and families. Against the backdrop of a decline in nominal GDP, a decline in Government revenues and an average change in the Consumer Price Index during 2011 of 2.7 per cent, the pace of growth in healthcare financing and expenditure may present challenges with respect to sustainability and affordability.”

Easing the burden

Mr De Silva said that up front payments for insured portions of healthcare would end at the start of next month — easing the financial burden on users.

He added: “While we have had some challenges with this legislation, I think that the healthcare providers and people of Bermuda will all benefit from it.”

The figures also show an even split between spending on health the private sector and the public sector – with around $339 million being spent by each.

The Bermuda Hospitals Board accounted for 43 per cent of total health spending – around $292 million a year — while overseas care accounted for 14 per cent of the annual budget, around $96 million.

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