PM: ‘Happy medium’ was goal on health claims VAT

By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net

THE PRIME Minister says the Government sought to achieve “a happy medium” in ensuring health insurance companies are no longer able to reclaim VAT on claims payment made on the patient’s behalf. Philip Davis KC, in a House of Assembly exchange on Wednesday with Kwasi Thompson, the Opposition’s finance spokesman, argued his administration had attempted to take the “path of least resistance” over what he argued was the industry’s “misinterpretation” of the VAT Act.

He spoke out after Mr Thompson challenged the Government’s move, arguing that the change in VAT treatment from April 1, 2023, onwards will result in consumers assuming the financial burden for paying the 10 percent levy on the insurer’s claim payout.

“The question that I’m concerned about would be this, and it is not something that we are guessing or something that just came into our head, but it’s something that came from the insurance companies,” the east Grand Bahama MP said. “Their scenario, which they put in the form of a letter, was that if you have a procedure, and that procedure cost ‘X’ amount of dollars, you will [presently] only pay for the deductible, or you will only pay VAT on the deductible.

“This is what they say, the insurance companies. Then they go back, and they’re saying that if you have a procedure and that procedure, for example, costs $50,000, you will only pay the deductible, or you will only pay the deductible and VAT on the deductible. What they are saying is now because of this change, you will also pay in advance VAT on that entire service.

“So if that service is $50,000, you will pay the deductible and the insured person would also have to pay the 10 percent of the entire procedure, which would be - if it’s $50,000 - $5,000. That is what is concerning, because that is an expense that the consumer did not have before, and that’s the point that we are raising - that it is an expense that the consumer did not have before.”

Mr Davis responded: “First of all, the insured person is paying a premium to cover a risk. The insurance company ought to take into account, in determining what that payment should be, what the risk factors are. And so part of the costs associated with paying for medical service, the VAT Act says that you have to pay VAT.

“Now we hear the argument, because they’re now saying that that risk factor was not factored into the premium. All costs in business pass on to the consumer, and we appreciate that. So that is part of what is being taken into consideration in our discussion with insurance companies.

“It was discovered that insurers who have group insurance were not paying when doctors provided service to patients. They were not paying VAT for that service. Now, the way the

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