New insurance mandate commits Egypt to improving its health care system

In January 2018 the Egyptian government approved a universal health insurance (UHI) law to reform its fragmented health care system. The incumbent social health insurance programme, offered through the Health Insurance Organisation, applies only to specified population groups. Those excluded, such as dependants and unemployed persons, are required to utilise subsidised government, military or alternative parastatal health care. Due to the quality of services available in public health care facilities, many Egyptians opt for private facilities funded by out-of-pocket payments.

Defragmentation

The new UHI system aims to defragment the funding pool and the provision of public health services, with a focus on efficiency, accountability and responsiveness. Administration of the system is carried out by three entities separated by functions delineated as financing, the provision of services in primary health care units and service provider accreditation. With purchasing and service delivery functions separated, citizens are free to choose their providers, which will include all private, public and military hospitals that meet international standards and obtain accreditation. In addition to the systemic reforms, technological innovations will be used to automate the information systems between the administrative bodies overseeing the purchase and provision of services. Data gathered may be used to prevent fraud and abuse while monitoring service utilisation.

Compulsory Cover

The UHI law applies to all citizens and will deliver services based on the needs of the patient rather than on their ability to pay. Mandatory subscription fees are charged on a progressive basis, with contributions ranging from 1% to 4% of residents’ income. All public and private sector workers and their dependents are included in the system, and employed family members assume responsibility for the contributions of their unemployed spouses and children. Vulnerable segments of the population and those who cannot afford to pay premium – an estimated 23.7m people – will receive full benefits under the UHI as their contributions are paid for by the state.

Implementation of the UHI will be carried out gradually over a period of 14 years between 2018 and 2032. The first phase was launched in the Port Said governate, while the final stage will see the system rolled out in the most populous governates of Cairo and Giza.

Funding

The UHI system is estimated to cost LE600bn ($33.7bn) and requires at least LE120bn ($6.7bn) annually to ensure its operability. However, as LE98.7bn ($5.5bn) was allocated to health care for FY 2018/19, there is doubt as to whether the Ministry of Finance can fund the system through normal budgetary contributions. Alternative sources of funding will be necessary to ensure the system’s success. Part of the capital required has been secured through a $530m loan from the World Bank, which will be provided over five years under the Transforming Egypt’s Health Care System project. The project will also support the improvement of quality in primary facilities and hospitals, ensuring their readiness for inclusion in the UHI. Further financing for the system is expected to be sourced from contributions, donations, tobacco taxes, and licences for medical centres, hospitals, clinics and pharmacies.

Looking Ahead

The UHI demonstrates Egypt’s commitment to improving health care, and with rising demand for quality service, the sector offers positive long-term opportunities for health care providers and pharmaceutical companies. Although there is a strong multinational drug manufacturer presence in the market, localised production has been limited by delays in the implementation of health care reforms. Once implemented, the reforms are expected to increase affordability and social responsibility towards previously excluded citizens, potentially raising pharmaceutical consumption over time. Although it is too early to determine its success, Egypt’s plan for universal health care and insurance is likely to attract new market participants and improve the quality of life for all citizens.