Costs increasing faster than economic growth: CBCS: current healthcare system unsustainable

WILLEMSTAD/PHILIPSBURG – “Even though both countries managed to improve their fiscal stance in 2022, reform of key policy areas is needed to achieve sound public finances. One of these areas is the healthcare sector,” according to Centrale Bank van Curaçao en Sint Maarten (CBCS) President, Richard Doornbosch, in the Economic Bulletin June 2023. This Economic Bulletin includes a feature article on the financial sustainability of the healthcare sector in Curaçao. “For example, in 2019, healthcare expenditures represented 11.6% of GDP in Curaçao, which is significantly higher than the average of Caribbean small states, middle-income countries, and low-income countries. The analysis shows that from a demographic, economic, and fiscal perspective, the healthcare system of Curaçao is not sustainable,” the CBCS president warned.

“The healthcare system is not sustainable because demographic changes, particularly the aging of the population and the prevalence of chronic diseases, pose a burden on the healthcare system and, consequently, the public finances of Curaçao. From an economic perspective, healthcare expenditures have been increasing at a higher pace than GDP,” Doornbosch explained. “As a result, other areas of the economy could be crowded out as healthcare expenditures are taking up an ever-increasing share of GDP.”

The CBCS President further cautioned that the system is not sustainable from a fiscal perspective, as government revenues have been showing a decreasing trend while healthcare expenditures have been increasing as a percentage of GDP. “Although the assessment only covers Curaçao, Sint Maarten’s healthcare system also faces challenges as reflected by the structural deficits in the health insurance funds since 2010. Hence, both countries should reform their healthcare system,” Doornbosch advised. “Possible measures include the introduction of a deductible (eigen risico) for the Basic Healthcare Insurance, improve the gatekeepers function of general practitioners, increase the share of generic medicines, and promote a healthy lifestyle,” the CBCS President concluded.

The Economic Bulletin June 2023 is available on the CBCS website at https://www.centralbank.cw/publications/economic-bulletins/2023.