There is a solution for the three main areas of concern we face regarding healthcare in the territory: Quality, Cost and Availability.
I’ve spent a portion of my career engaged in projects involving the industry of health insurance and, as a resident of the Virgin Islands, I’ve observed the challenges we are faced with. Our community deserves facilities and staff that are on par with stateside equivalents. Our hospitals struggle under the financial burden of uncompensated care, inefficient processes (lost revenue opportunities), and reduced Government funding, which resulted in a drop in service to the point where one facility was at risk of losing CMS accreditation. Those with insurance seek alternatives to local treatment for elective matters, either stateside or in neighboring Puerto Rico, further reducing revenue sources.
Insurance premiums in the territory have skyrocketed, with reduced coverage and increased deductibles. Insurers incentivize patients to travel to Puerto Rico for treatment by lowering co-pays and in some cases reimbursing flights. This is likely due to higher reimbursement schedules therefore even the local providers must take some responsibility for the discrepancy in coverage.
And, even if an individual could afford the premiums, there are simply no health insurers doing business in the territory that offer individual coverage – if you are not employed by a sizable business, you are out of luck. This is a major disincentive for budding entrepreneurs and small businesses.
There is an approach, consisting of four parts, that may help solve these issues.
But first, let’s start with a little analysis. When trying to impact any marketplace you must consider the largest customer. In our case, it is no surprise this is the government. They have the largest number of employees in the territory and therefore the largest number covered under any insurance plan, especially when you add in retirees covered. This results in huge premiums paid to the government’s health plan provider of choice. Insurance providers are in the business to make a profit based upon the risk of a given population. Even though this profit is now limited under the affordable care act, an acceptable margin is just good business.
The first part of the solutions is for the government to establish its own independent health plan. Premiums would still be paid by the government departments to this new insurer, however premiums should be slightly lower due to the elimination of the insurers profit margin. The bulk of processing membership, claims, and other services associated with a health plan can be outsourced to third party administrators. We don’t need to build everything from scratch to make this happen.
The second part of this solution is going to be politically tough for the government. In recognizing the positive strides made by our hospitals toward improved quality, the new health insurance plan would be heavily skewed toward the utilization of local health care providers and government facilities. Any off-island treatments would be subject to punitive co-pays. This immediately results in two things. Firstly, an increase in the utilization of our local health care facilities, meaning more spending retained locally. Secondly this results in a new level of demand for the highest level of care, that our facilities must be willing to meet. This is where we start addressing the first of the three areas of concern – Quality.
The third part of this solution is in how the new health plan negotiates reimbursement rates with providers and facilities. Now that it represents the bulk of their patients, and has guaranteed an increase in utilization, some reduction in fee schedules must be made. This again is not necessarily the most popular option but something must be done to reduce our overall health care costs. This partially addresses our second area of concern – Cost.
The fourth part of this solution involves opening the new health plan options to all residents of the Virgin Islands. Yes, any individual, or group, should be able to purchase the same health care coverage as any government employee. This addresses the third area of concern – availability.
None of this is intended to replace the insurance companies that are doing business in the territory today. They would still be welcome to offer commercial coverage to any businesses as they do today. However, in order to remain competitive they may need to make their products more attractive and reduce premium accordingly.
Even our past president has been vilified over health care, so I’m not expecting any major changes to happen here. But as an academic exercise the above steps, while highly simplified, are yet eminently doable. The solutions would require strong leadership, solid planning and an unending supply of political support. The greatest risk associated with this approach would be in ensuring the government departments pay the premium deductions and contributions promptly. As we have seen with the retirement system contributions, this is an area of concern.
There are other benefits to having a government health plan and infrastructure – including the ability to quantify uncompensated care, by registering every user of our facilities as non-contributing members of the insurance plan; however, these and other benefits are added value to the core objectives mentioned above.
The ability to positively impact the quality, cost and availability of healthcare in the US Virgin Islands is an option, given strong leadership and dedication of a responsible VI Government.
Scott Johnston, St. Thomas