By David T Youssef
The term 'health insurance' is somewhat misleading, says David T Youssef.
The term ‘health insurance' is somewhat misleading. In fact, in reality it is more about ‘fund management', and like any other fund it needs managing and deciding how best to allocate limited resources. In this case the resource is money. A new health insurance law was passed in Abu Dhabi at the end of 2006 that has affected every single company within the emirate, as well as companies throughout the UAE.
The law states that every employee who is an expat must hold private health insurance provided by the employer, with an insurer that is registered with the Health Authority of Abu Dhabi (HAAD). The issue with health insurance has become a huge debate internationally. Globally, healthcare is affected by factors such as inflation and world economies, regional demographics and medical advancements.
With such a transient population and a booming economy, every expat should and will be covered.
The flipside to this is that people are living longer and surviving illnesses that couldn't be treated 20 years ago. In Europe, governments traditionally cover the majority of healthcare costs but in reality it is paid for through tax increases. In the UAE there are no general health subsidies in place.
The National Health Service (NHS) in the UK is a system which essentially rations healthcare - it has to deliver healthcare to the general public on a limited budget. GCC governments are trying to pass on the full burden to the private sector. Looking to the future, people's lifespans are increasing, while the cycle of inflation and healthcare costs are going to continue to spiral.
Without government subsidies those costs would escalate so rapidly that the healthcare system as a whole would suffer. All residents in the UAE are already witnessing high inflation across the economy as a whole. It is anticipated that the law will be rolled out over the next 12 months, and while not necessarily in this format, it will ultimately affect individuals and employers, despite the fact the law will pass the responsibility of health insurance to the employer. The issues that have arisen in Abu Dhabi include the varying benefits provided by different insurers as well as competitive pricing.
The capital city has specified that for a health insurance provider to sell in the emirate they must be licensed in the UAE and have a branch or office in Abu Dhabi, while the insurance policy product must also be registered in the emirate. Traditionally it has been the responsibility of The Federal Ministry of Economy to regulate insurance, however Abu Dhabi has created a new department to oversee and administer the new law.
This means any broker, third party administrator, risk manager and insurer must be licensed, registered and have an office in Abu Dhabi. This limits competition and only increases the cost of doing business, which ultimately has to be passed on to the consumer in the form of higher insurance premiums.
The government has partnered with private health insurer Damam, that has been given a five-year government subsidy exclusively for government-owned hospitals in order to offer benefits at reduced prices to ensure health insurance is affordable to all employers. In the absence of subsidies, it is imperative the UAE government looks towards the future in terms of spiralling inflation. One of the queries relating to the law is accountability.
A resident must have their private health insurance before they apply for residency, but as residency lasts three years and health insurance is renewable annually, there is the potential that people will only be covered for the initial year and then lapse for the two remaining. Private health insurance is a positive move forwards in the UAE - with such a transient population and a booming economy, every expat should and will be covered, which will protect the individual as well as the local economy.
David T Youssef is global deputy managing director for Goodhealth.