'Mandatory health insurance in GCC calls for effective regulation'
January 12 2016 08:33 PM
Healthcare insurance
Healthcare insurance

By Santhosh V. Perumal/Business Reporter

With mandatory healthcare insurance coming into place across the Gulf Cooperation Council (GCC) region and medical pricing and inflation set to rise, regulation in the sector remains priority to ensure a sustainable healthcare funding model, according to a report.

Historically governments in the GCC nations footed the bill for most of the healthcare needs of their citizens. However, recognising that the ‘welfare state’ approach is expensive, and in the long term, unsustainable, Saudi Arabia, Qatar, and both Abu Dhabi and Dubai in the UAE, have introduced mandatory health insurance, said a report by Healthcare Insurance Forum.

Finding that the introduction of mandatory health insurance across the region is resulting in changes for healthcare providers, regulators and insurers; it said ‘whilst governments, insurers and healthcare providers recognise that the system needs to adapt, the changes are not without challenges.’

Health ministries in the region have traditionally played a variety of roles, from regulator to funding body to service provider but low per capita health expenditure and high oil prices are in the past; countries are introducing new funding models for healthcare, based on private health insurance, it said, adding internationally, both high and low income countries are turning increasingly to private health insurance to fund healthcare and the GCC countries are no exception.

Increasingly the (GCC) region’s nations are looking at an employer-funded model, with employers having to provide insurance for their workers and, in many cases, for their workers’ dependents. Many nations have started by introducing a market model where employers pay for healthcare insurance for their expatriate employees, but they are shifting towards the total population being covered by such a system, it said.

‘This has resulted in a different emphasis for governments, which are reducing their share of the healthcare provider market, and an influx of private providers. Regulation of the sector remains a top priority,’ it said.

For insurance providers competition is rife, it said, adding governments have granted multiple licences to private insurers, which has led to intense competition.

Insurers now face the challenge of finding ways to operate profitably and to differentiate themselves from their competitors. Naturally, state-owned insurance companies remain in the market. Given their history and existing relationships, they have a competitive advantage, the report said.

‘As schemes are rolled out around the region, insurance companies will need to ensure that they are both efficient and effective. If they are to survive, they will need to work hard to build their client base and networks with health providers,’ it said.

Finding that pricing medical insurance remains a challenge for insurers because of the quality, and quantity, of available statistics in the Middle East; it said as more reliable information becomes available it will become easier and more accurate pricing strategies will be introduced.

With compulsory insurance, the number of people covered is increasing, and demand for services is increasing, resulting in general medical inflation, the report said.

As a greater proportion of the population is covered by private insurance, as more reliable data on actual costs becomes available over time, and as general inflation affects wages and prices, healthcare services are likely to become more expensive, it said, adding consequently premiums are also ‘likely to rise’.

Premium inflation is usually a result of increased claims, so employers need to consider ways to reduce claims. It is generally accepted that some illnesses related to workplace stress can be counteracted by focusing on prevention, rather than treatment, it said.

With estimates suggesting that across the Middle East up to 50% of the money spent on healthcare may be wasted, it is vital that the sector look at improving both efficiency and effectiveness, according to the report.

Countries that have introduced mandatory health insurance have already made inroads in this area, focusing on ensuring that drugs aren’t over-prescribed and that only the necessary testing is done.

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