Dubai: Health insurance makeover

Plans by the emirate’s authorities to tighten regulatory oversight for health insurance and put in place a long delayed scheme for mandatory coverage will likely result in major changes to the sector.

At the end of December the Dubai Health Authority (DHA) said it would be putting in place a new regulatory framework for health insurance to ensure greater accountability by policy writers and to cut down the abuse or overuse of services by the public. The new regime, which the DHA’s director-general, Essa Al Maidoor, has said will come into effect during the first quarter of 2013, aims to reduce insurance fraud, malpractice and alleged cases of unnecessary medication and over-treatment.

Announcing the plan on December 29, Dr Haidar Saeed Al Yousuf, the DHA’s director of health funding, said while health insurance in the emirate is a dynamic, growing sector, a more comprehensive regulatory regime was necessary to protect all players in the market.

“Regulating and monitoring this sector is fundamental to protect members, limit attempts of abuse and further enhance the quality and sustainability of health services,” said Al Yousuf. “It can contribute to preventing fraudulent activities by service providers such as ordering unnecessary investigations or sending claims for services that were never provided.”

Though instances of overcharging or fraud do occur, an arguably larger problem facing the sector is rising costs. With the domestic health insurance sector highly competitive, premiums in recent years have been kept down to attract new clients and retain existing ones. However, this has resulted in shrinking margins for insurers as health costs have risen sharply in recent years. Though the DHA has recommended that health service providers do not increase prices in 2013, market conditions have pressured some into announcing new tariffs.

In mid-January Mediclinic Middle East, which operates 10 health facilities in Dubai, said it would be increasing charges by 6% to offset rising costs. Some of the emirate’s leading insurers have not agreed to the increase in fees, meaning their clients may not have full coverage if they are treated at a Mediclinic facility.

“It’s a very difficult pricing market,” David Hadley, the CEO of Mediclinic Middle East, told English-language daily The National in January. “We are experienced in it, but in essence the price of medical insurance has to go up because it’s such an expensive country to live in and the cost of medical care is rising.”

If more health care providers do move to pass on costs, this will pressure more insurers to raise their premiums, or else face trading in the red.

Another significant change to the health insurance landscape expected this year may alter the fortunes of many policy writers, as the introduction of mandatory health coverage is set to greatly increase turnover.

Though initially planned to come into force in 2009, the emirate declined to enact the measure due to the global economic crisis. As proposed, all employers will have to take out health insurance for their staff. This will include private and public hospitals in the emirate. All residents not covered in work-related policies would be expected to sign up with an insurer on an individual basis.

Though no firm timeline has been set for the implementation of the new scheme, the DHA has said draft regulations to establish the regulatory framework were being considered by the Dubai Executive Council and would be in place in the first half of 2013. If so, insurance firms can look forward to a busy second half of the year, as they will have to deal with a sharp rise in policies being registered: current estimates reported by local media show that up to 75% of Asian and non-national Arab residents have no coverage at present. Though most are in the lower-income bracket, the volume of new business should make up for the low value of per capita policies.