The stakes are huge! Healthcare insurance is the second largest component of the overall insurance industry after motor insurance in Oman, and the fastest growing segment as well. Official statistics indicate that the segment has been growing at an average 34 per cent over the past four years. With only around 10 per cent of the estimated 1.85 million expatriates covered by health insurance so far, a potential bonanza awaits insurers when coverage is made mandatory —starting from sometime this year.
Not surprisingly, insurance firms — among other stakeholders — have been busy articulating their positions in the form of representations to the Capital Market Authority (CMA), which is widely expected to serve as the regulator of health insurance as well, on the scope and framework of the proposed scheme. Initial meetings to this end were convened by the Oman Chamber of Commerce and Industry (OCCI). But as can be expected in a market riven by no-holds-barred competition, consensus-building around a common vision or product has been somewhat challenging, say market insiders.
Some insurers have proposed a ‘model health insurance product’ that seeks to balance the interests and concerns of the broad spectrum of the industry’s diverse stakeholders, encompassing insurance firms, private healthcare providers, private companies, Third Party Administrators (companies that do not provide insurance per se, but liaise between the insurer and the hospital), and most importantly, the insured (employees).
The proposed ‘base product’ must necessarily address the following four pre-requisites: Annual Benefit Limit, Coverage Territory, Pre-Existing Health Conditions and Deductibles/Co-insurance before it is submitted to the CMA for its consideration, they argue.
Annual Benefit Limit
Typically a cap on the benefits the insurer will pay to the insured in a year, figures mooted by various insurers range from a low of RO 2,000 to a high of RO 5,000. But higher the limit, greater the premium payable by the employer on behalf of its employees — an issue that can prove to be problematic depending upon whether you’re an employer or an employee, an industry executive warned.
“As the Annual Limit dictates the size of the premium payable by the employer, it is natural for many companies to opt for a lower limit, particularly if they have a large number of workers on their rolls. Here, the regulator has to take a call on what constitutes an equitable Annual Limit, keeping the interests of the blue-collar worker in mind. In our view, a figure of RO 3,000 would be fair and acceptable to the industry,” the executive, who did not wish to be named, explained.
This feature determines whether the validity of a policy is limited to Oman’s geographical boundaries or is also open for use in, for example, some neighbouring states or, in the case of expatriate employees, in their native countries as well. Most insurers are generally of the view that Coverage Territory should be restricted to Oman.
Most insurers are opposed to the inclusion of pre-existing conditions, such as diabetes, hypertension, cholesterol and so on, in the scope of a mandatory health insurance scheme. An executive explained: “Pre-existing conditions present an ongoing cost to insurers, as policyholders will likely take advantage of their coverage to get medication and treatment for their chronic health problems. We reckon that the employers will have to step in and offer to bear this component of the cost for the sake of their staff. Of course, premiums will be correspondingly higher for companies that want to include pre-existing conditions in the coverage being offered to their staff.”
Deductibles and Co-Insurance
A number of insurers typically require that policyholders pay a nominal fee of RO 1 or 2 whenever they visit a clinic or hospital. This fee, known in the industry as a deductible, is designed to deter policyholders from visiting hospitals on a whim and without valid medical cause.
However, in place of deductibles, some insurers use ‘co-insurance’ as a deterrent. Policies based on a co-insurance option require the holders to pay a percentage of the cost of their hospital visit (typically 10 or 20 per cent) from their own pockets. The balance is borne by the insurer. [In rare instances, employers reimburse the coinsurance amount to their staff.]
There is hope that the regulation governing the introduction of Mandatory Healthcare Insurance will contribute to a more levelised playing field for all the market participants. It is widely claimed that some large players tend to use their market size to squeeze heftier discounts from health services providers — benefits that are often denied to their competitors.
Some smaller insurers are calling for the establishment of a centralized database that collates information received from various insurers on their dealings with clients, hospitals, Third Party Administrators, and so on. The proposed system, mirroring the electronic link that currently integrates motor insurance providers with the Royal Oman Police, will help thwart anti-competitive practices in the health insurance sector, while enhancing transparency, they stress.