BIA concerned VAT changes for insured will harm healthcare sector

The government is preparing to move the burden of value-added tax (VAT) costs on healthcare services for insured people from both the insured person and the insurance provider to solely the insured person, Bahamas Insurance Association (BIA) representative Marcus Bosland said yesterday, warning that this move by the government could have myriad negative effects on the local healthcare industry.

Bosland, during an appearance on on Morning Blend Business on Guardian Radio 96.9 FM, explained that while the cost of VAT on healthcare for insured people is currently shared based on the percentage split of costs in a particular insurance plan, if the government moves ahead with its plan come July, VAT costs will no longer be split, but paid only by the insured person.

This, he said, is a “fairly big change” for the health insurance industry and certainly will be for insured people seeking healthcare, especially on big-ticket procedures.

“Their position is that the VAT on medical claims, medical expenses is VAT that ought to be paid by the insured person and that is a very dramatic change to how we’ve been operating in the past,” said Bosland.

“When VAT was implemented, the government took a somewhat unusual step of adding VAT to medical services and adding VAT to medical insurance. But naturally people buy medical insurance to pay their medical bills. That’s the purpose of it.

“So it means our biggest input is the thing that we spend the most money on, delivering health insurance. And the proposition that medical services are not deemed an input for a health insurance company is quite an unusual proposition from our perspective.

“So, what that means is that the VAT bill, whereas as currently it is shared between yourself and your health insurance company in the same proportion as the underlying claim is shared, essentially the government’s position now is that that is on you, and that’s quite a radical change.”

Bosland added that the fallout from this position on VAT taken by government includes possible increased insurance premiums, insured individuals cancelling their insurance schemes and more Bahamians seeking big-ticket healthcare services abroad, removing business from local healthcare providers.

Guardian Business contacted Minister of Economic Affairs Michael Halkitis to confirm whether this VAT change would be brought into effect July 1, but no response was received up to publication time yesterday.

Bosland said the insurance industry has been attempting to get the government’s final position on this policy change as well as its rationale for its implementation.

According to Bosland, the government should strongly consider public consultation with insured individuals and healthcare providers on this change, that he says will come as a “significant burden” on those seeking healthcare.

“We’re doing some data collection within the industry and while I don’t have the final figures, I can confirm that on an annual basis we currently pay and then recover over $10 million in VAT on medical claims,” he said.

“That is over $10 million that will now be borne by our clients. So, it is from our perspective, quite an unusual move.

“We’ve been seeking a rationale from the Ministry of Finance for some time. Their position simply is that because we are not party to the medical service, which of course we’re not – no company ends up in the hospital – that that is in their minds a totally separate service that has nothing to do with your insurance. And we don’t understand that from a rational perspective, because it is clear to us – and I think it would be clear to the public – that the reason health insurance exists is to pay people’s health bills.

“So, for us, it is quite naturally and obviously an input, and a position that causes us not to treat it like an input, while having to charge VAT on our premiums to our clients, in our mind doesn’t make sense.”

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Chester Robards

Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian. Education: Florida International University, BS in Journalism

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