Issues in designing a health insurance program for Bermuda's seniors: Evidence from the FutureCare program

Objective: To develop an enhanced publicly subsidized health insurance program for Bermudian seniors, ages 65 and older, that improves their access to primary care, outpatient services, and prescription drugs that is also affordable from the perspective of both the government and seniors.

Methods: Policy analysis of alternative design features for a publicly subsidized health insurance program, called FutureCare, based on international experience, including U.S. experience under the Medicare program, and pre/post comparison of health care expenditures among seniors under alternative policy scenarios.

Population Studied: Bermuda citizens and long-term residents ages 65 and older.

Principal Findings: A substantial portion of Bermuda's seniors -about 40% - currently have inadequate insurance; 35% are enrolled in the government subsidized HIP plan, which primarily provides coverage for inpatient hospitalization, with limited coverage for prescription drugs and dental care; another 5% are completely uninsured. The remaining 60% of Bermuda's seniors have fairly comprehensive insurance, but pay substantial premiums out-of-pocket for that coverage, ranging from $700-1200 per month. Based on our analyses of 3 optional benefit designs, we estimated that government spending for health care would increase from $33.8 to $43.5 million in FY 2011 (or by 54-70%) if the government subsidized a new standard benefits package for all Bermudian seniors, with 75% of the additional costs paid by the government and 25% by seniors, except those below poverty, who would be fully subsidized. We estimate that these additional government revenues could be raised through a total payroll tax of 1.2-1.8%, with a 50/50 contribution from employers and employees. Furthermore, we estimate that seniors above poverty would experience sufficient savings in out-of-pocket expenses to be able to afford increased premiums under each of these options. The increase in government expenditures for health care under these scenarios would represent about a 3-4% increase in Bermuda's total government expenditures.

Conclusions: FutureCare would provide stability and equity for Bermudian seniors, and would extend the principal of shared employer/employee responsibility that currently exists through a mandate on employers to the entire retired, aged population. These improvements in access and affordability can be achieved at a relatively modest increase (i.e., 3-4%) in the government's total annual budget and can be financed through a modest payroll tax (i.e., 1.2-1.8%).

Policy Implications: Providing additional government subsidies within an existing mixed public/private system of financing for seniors is an effective strategy for improve access, equity, and affordability.