x Abu Dhabi, UAETuesday 23 January 2018

1000s face cut in health benefits in Abu Dhabi as insurance soars 20%

Take our poll: Insurers end practice of selling cover at less than cost and complain of misuse and waste while employers resist increased premiums.

As the cost of providing health insurance soars for employers in Abu Dhabi, workers face reduced health benefits.
As the cost of providing health insurance soars for employers in Abu Dhabi, workers face reduced health benefits.

ABU DHABI // Thousands of workers face cuts in their health benefits as employers seek alternatives to increases of up to 20 per cent in insurance premiums.

Health chiefs are struggling to cope with runaway costs as insurance providers complain of fraud, misuse and waste.

Many insurers are withdrawing so called "toxic premiums", which are sold at below their real cost in an effort to win customers amid cut-throat competition.

"We used to have employee benefit negotiations with HR managers when insurance policies were used to attract and retain high-calibre employees," said Dr Hazem Al Madi, chief executive of Green Crescent, a top-five insurer.

"Now all our meetings are with the financial controllers: don't increase the premium, reduce the benefit - that has been the trend."

Adding to mounting healthcare costs are practices such as "upcoding" treatment of patients to generate more revenue for hospitals, over-prescribing medication and duplicate billing, where the same procedure is paid for twice.

"It's why you see pharmacies mushrooming everywhere," Dr Al Madi said.

Health chiefs have launched several initiatives this year to control rising costs and tackle weaknesses in the system. such as over-reliance on consultants to do the job of general practitioners.

"The old system compensated the physicians based on competency, not necessarily on care delivered," said Mahmoud Ramadan AbuRaddaha, who heads the government prices and product benefits section at the Health Authority - Abu Dhabi.

Insurers and regulators have also warned against over-prescribing of medicines for both financial and medical reasons.

“Those shopping bags you see full of drugs are an issue,” said Mr AbuRaddaha.

Health authorities are also studying why hospital admissions for Emiratis are three times higher than the average in the capital.

Nationals holding the Thiqa insurance card also visit outpatient facilities about four times more often than basic card holders, according to health authority data.

Abu Dhabi was the first emirate to introduce compulsory medical insurance when it started to link health cover with visas in 2006.

There are three categories of cover, with the Thiqa programme, launched in May 2008, granting all Emiratis free healthcare coverage. The remaining basic and enhanced plans cover expatriates.

Many employers have enjoyed artificially low insurance premiums as a result of a race by insurers to gain market share. But years of losses are starting to bite.

“A lot of insurance companies have been literally purchasing their business at the expense of their bottom line. They are selling insurance products below their technical price … eventually it will turn into a loss that eats up your capital,” said Mr Al Madi.

Booz & Co, the management consultancy, estimates the premium for providing healthcare to someone under the national healthcare scheme is just a quarter of the actual per capita cost of public healthcare provision.

“It feels like the industry is navigating without a compass,” said Jad Bitar, a Booz & Co principal.