THE HAGUE - The healthcare systems of Curaçao, Aruba, and Sint Maarten are unsustainable if the governments continue to postpone necessary decisions. This can be inferred from an analysis by the College of Financial Supervision (CFT), which was presented to the Second Chamber of the Dutch Parliament today.
The healthcare systems of the three countries are already excessively costly and will become unaffordable in the long run, partly due to the aging populations. Residents easily visit general practitioners, and there is a tendency to refer patients too readily to specialists, resulting in an "overconsumption" of medical care.
Healthcare spending in Curaçao, accounting for 13.4% of GDP, ranks among the highest in the world.
Analysis of Healthcare Funds in Curaçao, Aruba, and Sint Maarten
The origins of the healthcare systems in Curaçao, Aruba, and Sint Maarten can be traced back to the period of the Netherlands Antilles. Due to financial unsustainability, Curaçao and Aruba reformed their systems, with Aruba doing so in 2001 and Curaçao in 2013. Both countries now have a form of general health insurance. Sint Maarten has not yet implemented reforms in the former Netherlands Antilles system but has expressed the intention to do so.
Cost control was one of the considerations for Curaçao and Aruba when reforming the Netherlands Antilles system into a general health insurance scheme. To achieve this, the fund administrators could take a more active role by entering into healthcare contracts with service providers. This was intended to improve efficiency, with primary care physicians, in particular, playing a gatekeeping role in referrals to expensive secondary care.
The former Netherlands Antilles system consisted of different groups of insured individuals with varying coverage and premium contributions. By consolidating the insured groups and standardizing insurance packages and premium contributions, economies of scale were expected to be achieved in the administrative management of the funds. Previously uninsured individuals, including those with high health risks, were admitted to the insured pool.
One difference between Curaçao and Aruba is that in Curaçao, after the reform, it is still possible to have private insurance. The healthcare funds of Sint Maarten have been showing annual deficits since 2010, amounting to nearly ANG 350 million in 2022. The considerations to reform the system into a general health insurance, merging the separate funds and insured groups, align with the considerations made by Curaçao and Aruba.
In the years leading up to the reform of the healthcare system, the healthcare funds of Curaçao and Aruba faced significant financial deficits. In Curaçao, these deficits reached 1.4 percent of GDP in 2011 and 2012, while in Aruba, it was almost 5 percent of GDP in 1995 and 1996. After the reforms, there was improvement in the financial situation of the healthcare funds in both Curaçao and Aruba.
This was largely achieved by increasing revenues. On one hand, through an increase in premium levies on employees' wages, and on the other hand, through increased financial coverage from general resources. For example, Curaçao increased the income-dependent premium rate by 4.9 percentage points to 13.4 percent in 2013. The premium wage ceiling was raised from almost ANG 60,000 in 2012 to ANG 150,000 in 2015.
The coverage from general resources, the government contribution to the budget, increased in Curaçao from 4.5 percent of GDP in 2014 to 5.8 percent of GDP in 2019. Aruba increased the income-dependent healthcare premium by approximately 5 percentage points to 10.5 percent in 2019 compared to before the reform. The coverage from general resources increased by nearly AWG 80 million, 1.2 percent of GDP (2019), since the introduction of a specific-purpose levy in 2014.
The share of total healthcare costs as a percentage of GDP was 13.4 percent for Curaçao in 2014. For Aruba, it was 9.0 percent of GDP in 2015. Both countries exceed the average of the Caribbean region, which is 6.8 percent, as well as the average of high-income countries, which is 7.8 percent.
Healthcare spending per capita in both countries is at a comparable level. With a percentage of 13.4 percent of GDP, Curaçao's healthcare spending is among the highest in the world. No healthcare accounts are available for Sint Maarten, but it is estimated that Sint Maarten spends between 8 and 8.5 percent of GDP on healthcare.
The explanation for the persistently high healthcare spending is largely the same for Curaçao and Aruba. The role of out-of-pocket payments in healthcare financing is minor, resulting in limited cost awareness among healthcare consumers. Combined with insufficiently restrictive regulation of healthcare capacity, this leads to overconsumption of medical care, pharmaceuticals, and laboratory services. The gatekeeping role of general practitioners has not been effectively established in both countries.
Aruba and Curaçao belong to the group of countries with a high prevalence of diabetes combined with overweight. The countries lack policies focused on prevention and health awareness. Healthcare expenditures have also increased due to the aging populations of both countries over the past two decades. Overweight (70 percent) and diabetes (30 percent) are also prevalent among the population of Sint Maarten. Sint Maarten has a relatively young population, but it will also age in the coming decades. Additionally, the limited size of the population plays a role in healthcare, including hospital care, and disadvantages.
Healthcare expenditures are high and will continue to rise structurally as a result of aging if the policy is not changed. The healthcare funds of Aruba and Curaçao have not followed the sustainable path envisioned by the reformers. Overproduction and overconsumption have not been sufficiently curbed. Ad hoc cost control measures are implemented with varying degrees of success, and budgeted financial outcomes are not achieved, partly being temporary in nature.
Taking ad hoc cost control measures to prevent acute financial deficits puts significant pressure on the organization of healthcare. This lowers the likelihood of success. Current financial challenges are being shifted to future years. Curaçao's delay in providing an appropriate response to the issues at the CMC, with increasing financial deficits since the hospital's opening in 2019, and the substitution of patented drugs with generic drugs in both countries are indicative of the lack of decisiveness.
Due to the countries' skewed income distributions, the financing of the healthcare system heavily relies on the solidarity of a relatively small group of high-income earners, concentrated in a few sectors in the private sector. As a result, the economic foundation of premium collection for healthcare financing is fragile. Aruba has prevented further increases in the premium burden on labor income by expanding financing from indirect tax revenues.
Future financial sustainability of healthcare
The countries are facing, on average, a low real economic growth of around 1 percent per year in the long term. The annual average medical costs are rising faster than the consumer price index. This means that over a longer period, an increasingly larger share of GDP is being spent on healthcare.
According to the most recent available projections, Curaçao and Aruba will continue to age in the coming years. The peak of aging is expected between 2035 and 2040. For Sint Maarten, that moment comes later in time. Population aging puts further pressure on healthcare expenditures.
This future perspective and fragile starting point indicate that Curaçao and Aruba are on the eve of another phase of healthcare reform. The countries are faced with the choice of a more efficient alignment of healthcare production and consumption, reducing the package of services, and, although no major impact is expected in the short term, increasing the population's health awareness.
Given the high healthcare expenditures, the fragile starting point, and the future increasing pressure of healthcare expenditures on disposable income, the objective of a sustainable healthcare system benefits from fundamental reform. This can prevent the constant pressure on the organization of the system from relatively small successive changes that detract from the focus on care. Lessons from the reform histories of Curaçao and Aruba should be taken into account in this regard. The reform of the healthcare systems is part of the Country Packages. The reforms being prepared in that context will demonstrate the path toward sustainable healthcare systems envisioned by the reformers.
