The recommendation was made in response to requests by the country’s private sector employers, particularly those who already offer health care insurance for their employees.
Maris Stella School, Palau Community College, Morita Corp., Koror State Government, Palau Royal Resort, Palasia, Palau Pacific Resort, Western Caroline Trading Corp. and Palau Shipping, through their representatives, sent a letter dated August 5 to Vice President Kerai Mariur and Minister of Health Stevenson Kuartei, Chairman and Vice-Chairman of HCF Governing Committee, respectively, requesting exemption from the HCF and to delay its implementation to allow them for proper consultation on the regulations, benefit schedule and negotiation with insurance companies to cover the shortfall from the national health plan to the employer’s respective health care plan.
“We are not opposed to the intention of the new health care law; however, we are extremely concerned about the implementation of it which will lead to employers who provide medical insurance to their staff having to pay both private and national insurance as of October 1. However, they will not be able to avail themselves of the coverage until April 1, 2011,” the letter said.It added that this approach is an unacceptable burden to employers in Palau who have decided to provide medical insurance to their staff in the first place.
Mariur, in his reply, dated August 26, said, “To address concerns from private insurers, the Healthcare Fund Act (HFA) included several provisions. As one example, individuals can use the funds in medical savings account (MSA) to cover premiums. In addition, private health insurance coverage will now be supplemental to the catastrophic in-patient and off-island services for coverage.”
He added that employers sponsored plans may look to their private insurer to offer secondary coverage options, with the insurance companies’ reduced exposure reflected in the premiums. “Representatives from Palau have had positive meetings with several insurers already and are arranging meetings with remaining insurers. A promising possibility from at least one insurer is that employers and individuals will be offered several options for supplemental coverage at different prices points,” he said.
The concerned employers added that none of them received any of the information or a copy of the bill until it passed in 2010. “So subsequently the increase in taxes was not budgeted for in their businesses,” they said.
Mariur responded that there’s a specific communication from the Chamber of Commerce to all members back in July 2009, and it addresses the legislation and states.
Other concerns of the employers include double pay, sliding scale, security of fund, administration, equipment and facilities and return of funds to employers.
Several concerns have also been raised about the security, investment, and transparency of the funds collected. They also asked what new medical facilities and services will be offered and improved under this new tax collection arrangement. And if they, employers, are paying health care tax for expats and the current law allows for the latter to withdraw their health funds when leaving Palau, “why can it not be returned to the employer at the end of their employment?”
“A few of your concerns relate exclusively to matters within the authority of the Minister of Health and this Governing Committee is deferring to Minister Stevenson Kuartei on those matters,” Mariur said.
Mariur said, prior to the introduction of HFA, many options, including several that exempted individuals with existing coverage were considered and rejected, based on the advice of the healthcare economists and actuarial analysis.
“One particular benefit to employers is that these programs help employers meet their responsibility to cover the costs of medical care for injured workers,” he said.
On the issue of administration, Mariur said, administrative design for HFA is to minimize administrative costs and avoid creating an additional bureaucracy to manage the programs. “For example, the existing process for collecting Social Security contribution is utilized; even the familiar form will be used to report and transmit payments by employers. And, Ministry of Health’s existing processes will be utilized so that individuals can decide at the time of service whether they want payment made from an MSA.”
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