Sunday 20th January, 2008

 

Health premiums are for the young

 
 
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In some European countries, comprehensive healthcare costs are covered by “social insurance” eg France, Germany. In the UK, Canada, Spain, like in Trinidad and Tobago, there is universal healthcare. In the US there is no universal healthcare.

Universal healthcare is the term that expresses government’s involvement in health that seeks to ensure almost all citizens have some access to free healthcare. This free healthcare is subsidised by tax dollars or compulsory health insurance. In Canada, government covers about 70 per cent of all healthcare costs.

In T&T, according to PAHO, the Government carries about 50 per cent of all expenditure on healthcare.

Bankruptcy linked to medical bills

The system in the US is based on private insurance, and, ironically, US citizens spend the most money per capita than any other country in the world. In fact they spend about US$6,000 per person, per year. That is more than double the amount spent in Canada per person.

One study even put forward the idea that a large percentage of personal bankruptcies in the US are related to medical bills.

Here at home, we have “free” hospitals and health offices, paid for by tax dollars, and we have the National Insurance Scheme. We also have private healthcare, some of which is employer sponsored.

Private health insurance and employer-sponsored heath insurance are paid for by the individual and the employer together, and the premiums are calculated based on risk, and not on income levels

More earned, more paid

National Insurance includes certain health benefits, and is paid for via a compulsory deduction from wages and salary, based on income levels—the more you earn the more you pay. These deductions from your pay have been dramatically increased effective January 2008. It will continue to increase until 2012.

For certain private health plans sponsored by employers the premiums have almost doubled in the last three years. Rising premiums is the result of raising claims experiences. Claims experience is total cost of all claims submitted by the group of privately insured people.

While we may not have local up-to-date statistics on the cost of healthcare to the individual, these increases in premium are an indicator that the cost of healthcare has rapidly increased.

NIS contributions for people earning more than $5,459.99 per month will now be $46.55 per week from their earnings. They used to pay just about $34 per week before 2008.

People who earn more than $8,300 will now pay $67.03 per week. They used to pay just about $34 before. They will pay between $268 and $335 per month to NIS now.

The health-related benefits under NIS have increased by about 25 per cent overall.

Individual insurance

Insurance that covers major medical conditions like heart attack and stroke can also be bought by individuals to supplement the cost of private healthcare. One major advantage for this kind of protection is that your individual premium doesn’t increase with a higher claims experience.

But the longer you wait to buy this type of protection, the higher the premiums will be.

Ironically, my experience is that only when people want to retire do they seek this type of coverage. But by that age, the cost is almost prohibitive. This is because the premiums are based on risk assessment, and not income.

So, the premiums are really cheap, when you are young. Plus, the benefit will be paid wherever you are in the world.