As regulatory authorities, insurers, healthcare service providers and consumer interest groups in the Sultanate debate the way forward for the introduction of compulsory healthcare insurance in 2018, they will inevitably cast their collective gaze across the wider Gulf and Middle East to see what is trending in this region.
And what they will likely see is a diverse, disparate and constantly evolving industry shaped largely by the protracted global economic downturn, say experts, with little common ground between Oman and other countries, particularly in terms of the demographics of their respective populations.
But on one key issue, all sides seem to accept the inevitability of cost-sharing being a dominant feature of policies offered by insurers going into 2018. Health insurers seeking to limit their exposure and rein in medical insurance inflation are expected to resort to a number of cost-sharing strategies, including premium-sharing, co-insurance, and deductibles.
According to Steve Clements, Director — Health & Benefits business Middle East at Willis Towers Watson, the UK-based global multinational risk management, insurance brokerage and advisory company, cost-sharing is increasing in vogue in healthcare insurance markets around the world.
A comprehensive survey of the global industry conducted by Willis Towers Watson reveals that, among other things, cost-sharing strategies are fairly well-practiced methods. One such strategy is ‘cost-shifting’ or co-insurance, where the employee is asked to participate in the cost at the point of claim or when paying the premium.
“Globally, co-insurance or sharing of percentages of cost of claim at the point of claim, or annual deductibles, is a fixed financial contribution to the cost of claim; this shifts some of the cost to the consumer. These are well practiced, well-developed strategies and it can also be helpful in influencing consumer behaviour with regard to non-communicable diseases and lifestyles,” he said.
In the Middle East, however, only about a fourth of the insurers said they were using co-insurance as a cost-sharing strategy. A much higher number used annual deductibles — the amount paid by a user for eligible medical expenses in a calendar year. After the deductible amount is met, the user pays nothing or gets to share the remaining costs with their company up to the out-of-pocket maximum.
Premium-sharing
Also notable, says Clements, is the very low prevalence in the Middle East of premium-sharing, where the employer pays a portion of the premium and the remainder is deducted from employees’ paychecks.
“Only about 20 per cent of insurers said there is premium-sharing between employer and employee,” said Clements, citing the findings of the survey. “Many multinational companies may be providing employee benefits — including health insurance — which is significantly above the mandated minimums. These companies may now start to look at how the cost can be shared in terms of providing those benefits to their employees.”
Beyond cost-sharing, insurers are likely to weigh other strategies to manage costs, according to the industry expert. Leading strategies adopted globally involve the use of designated hospital networks to provide certain kinds of treatments; stipulation of preapprovals for inpatient services; and limiting some kinds of services, and second medical opinions. Many of these strategies are prevalent in the Middle East, particularly with regard to health provider networks, he noted.
Another big concern for healthcare insurers is the issue of continuing medical insurance inflation averaging around 7.8 per cent globally, said Clements. When adjusted against general inflation in the market, this figure reaches just over 5 per cent, while in the Middle East and Africa (MEA) region, medical insurance inflation is around 6 per cent.
Insurance inflation
From the standpoint of the insurers, there are five key drivers that are responsible for pushing up medical insurance inflation above general inflation. These include: the growing healthcare spend on basic medical services performed on an outpatient basis as well as the wider hospital sector; in-patient providers of care; pharmacy spend; maternity care; and dental care.
In the Middle East, the big inflation cost stems from basic medical services performed on an outpatient basis, the consultant said. Maternity care is a significant driver of cost as well, as are pharmacies, dental care, and inpatient cost to a lesser extent, he observed.
Several external factors also contribute to the uptick in costs, said Clements. One leading concern expressed by insurers is the rising cost of technology. “The wonderful advancements in medical science, drugs, robotic treatments of diseases, and so on, that we want to have access to, come at a high cost. We are starting to see this as being the overriding concern from insurers about how can they make available access to these treatments, but to do it in a cost-efficient way.”
Then there is the issue of non-communicable diseases, notably cardiovascular, cancer and respiratory ailments, that generate the highest claims for insurers. The trend is particularly higher in the Middle East than the global average.
“The ‘Top 3’ diseases are linked to lifestyle choices, and preventative issues can make a difference in mitigating the risk and the severity of the claim. As a market we can look at our ability to manage, control and change behaviours for these three diseases,” he said.
Also worrisome for insurers is the extent to which the healthcare providers are looking to extend their profit margins, as well as the overuse of care by medical practitioners recommending too many services.
“We consumers are perhaps overly demanding in our access to care that may be not so appropriate in terms of best clinical practice. I think we all become Google experts when we get some symptoms; we try to find out what’s wrong with us — we pitch up at the hospital, with a preconceived notion of what we need as treatment, perhaps becoming increasingly demanding consumers of healthcare. Sometimes we measure the quality of healthcare by volume rather than by actual outcomes. This is something we all need to take on board as consumers about using care more appropriately.”
Other areas of concern relate to the questionable lifestyle choices of consumers, poor dietary practices, lack of exercise, too much smoking, and other behavioural choices. “So there are opportunities for us as a community to work harder to drive behaviours in the right direction in relation to some of those choices,” he added.
CONRAD PRABHU
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