WILLEMSTAD - A study conducted by the Central Bank of Curaçao and Sint Maarten (CBCS) reveals that healthcare costs in most countries are rising faster than general inflation and the increase in government revenues. Curaçao is no exception to this trend.
Djuwensi Passial from the Economic Analysis and Research Department of the CBCS emphasizes that Curaçao's healthcare expenditures in 2019 align more closely with those of high-income countries rather than with Caribbean small states, middle-income countries, and low-income countries.
The reason the Central Bank focuses on healthcare is because it is partially financed by the government and managed by a public entity.
Therefore, it is relevant for the CBCS to assess potential risks to the economy and, particularly, to the government when the current healthcare system becomes unsustainable.
Concerning
According to the Central Bank, this assumption is realistic. From a demographic perspective, the population of Curaçao is declining while the aging population is increasing. These trends are worrisome as healthcare expenditures rise due to aging, while the number of people paying premiums decreases.
Sustainability issues were also identified from an economic perspective, as the growth rate of healthcare expenditures exceeded that of the Gross Domestic Product, which represents the earnings of businesses and individuals in a year. There may be disproportionate growth in healthcare expenditures, which could come at the expense of other areas of the economy.
From a fiscal perspective, government contributions to healthcare generally grow at the same rate as healthcare expenditures, but the growth rate of healthcare expenditures is higher.
A major concern lies in the growth rate of government revenues compared to healthcare expenditures. The data reveals a significant deviation in growth paths, raising doubts about the government's long-term ability to fulfill its commitments for healthcare expenditures.
Research
These conclusions are part of an upcoming study aimed at quantifying potential shortages that the healthcare sector will face if demographic trends persist and if financing mechanisms for healthcare are not handled carefully.
The research aims to warn stakeholders that factors driving the disproportionate rise in healthcare expenditures compared to other public goods will put pressure on policymakers to, for example, increase taxes.
However, policymakers can choose, on the one hand, to downscale other government services to cover medical care shortages, or on the other hand, to restrict and/or reduce medical care in order to prevent other sectors of the economy from suffering damage and impeding economic growth.