UAE | General

Price rise fears over health insurance in Dubai

Mandatory cover may push up cost of living in Dubai

  • By Sharmila Dhal, Chief Reporter, XPRESS
  • Published: 21:00 December 4, 2013

  • Image Credit: Supplied
  • Rising: insurance companies will push up cost of premiums
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Dubai: The mandatory health insurance announced by Dubai Health Authority (DHA) last week has raised fears of a possible hike in prices of services and products across the board including hospitals, clinics, retail outlets and even restaurants in Dubai.

Dr Ayham Refaat, founder of insurance consultant Accumed PM, said one of the main challenges for the market when compulsory health insurance rolls out next year will be to maintain financial sustainability.

“Mandatory coverage will mean greater, even over-utilisation of healthcare services as more people will go to a doctor. It remains to be seen if hospitals and clinics will increase their charges and if insurance companies will push up their prices and premiums.”

He said insurance for all could impact the cost of living. “Health cover will impact the balance sheet of companies and businesses as they strive to go beyond the basic coverage to be competitive in the market. This in turn may push them to increase prices of their products or services.”

Sanjay Tolani, director of Goodwill Insurance Brokers, said: “We are waiting to see how reinsurers will react, but we can expect a rise in premiums. It’s a Catch 22 situation. There will be over-utilisation of the basic minimum package of Dh600, but costs will have to be recovered and the question will be how to spread the risk over the total population. The good news is there’s a bigger population to play with.”

The premise that insurance will push up the costs of products and services hinges on how established a business is. The smaller the enterprise, the bigger the chances of that happening.

A cafeteria owner in Karama, who did not want to be named, said: “I don’t know the details of the law yet, but from what I gather, even if I get a basic package of around Dh1,000 per employee, it will mean an additional expense of Dh30,000 (two-year cover) against the 15 visas of my staff. That’s a big amount.”

Asked if he would increase the prices on his menu, he said: “Who knows, inflation may also go up. We will have to wait and see.”

Manoj Kisani, director of Red Lounge, a chain of four beauty parlours in Dubai, whose 49 employees are already insured for Dh700 a year, said: “For us, insurance cost is a small percentage of the total operating costs which we are capable of meeting. But for companies that are on a very lean profit structure, it may be different. They will tend to pass on the additional costs to customers.”

Dr Ashok Kapoor, specialist cardiologist who owns the Getwell Medical Center in Bur Dubai, said there is a need for a uniform insurance tariff system. “Currently, tariffs vary widely from clinic to clinic and area to area. There is no reason why they should because medical tests, kits and manpower are the same everywhere. We need to arrive at uniform tariffs.”

Asked if he would hike prices at his clinic, he replied in the negative. He said employers will spend a little more to insure employees, but will benefit in the long run as productivity increases. “There is less absenteeism as the evaluation of sick leaves becomes more streamlined and transparent. We have around 60 staff, all of whom are already insured.”

David Hadley, CEO of Mediclinic Middle East, also ruled out a fee hike at the group’s City and Welcare Hospitals and its nine clinics in Dubai. “I can assure you we will not be increasing charges because of the new law. All our 2,500 employees are already covered and I can tell you health insurance has a lot of positives like reduced absenteeism and access to quality healthcare that offset costs.”

Danny, a textile salesman, feared his employer may not provide adequate cover. “What’s the use if I get a bare minimum insurance? Healthcare is so expensive that a single visit to the doctor can cost Dh1,000 with consultation fees, tests and medicines.”

An Indian distributor of a small enterprise said he will have to go beyond the minimum cover of Dh600 a year to be able to attract and retain good staff. “The extent of coverage will be a big factor in the coming days.”

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Comments (9)

Your comments
  1. Added 12:39 December 5, 2013

    What is this Dh600 insurance plan or health card. If you go for normal consultation it will cost more than Dh300. I don't understand the facts. May be some reader might help me. Insurance policy is to cover basic medical expenses for a year. In the above mentioned fact it would mean that issurance companies would raise the bar. Or your policy will not cover anything . It is only a policy to get your visa done.

    faisal, dubai, United Arab Emirates

  2. Added 10:10 December 5, 2013

    I think mandatory coverage will mean greater, even over-utilisation of healthcare services as more people will go to a doctor. It remains to be seen if hospitals and clinics will increase their charges and if insurance companies will push up their prices and premiums.

    Mohamad Reza Ariaie, Bandar Mahshahr, Iran (Islamic Republic Of)

  3. Added 09:47 December 5, 2013

    The law will come into effect in three years and not next year as it takes time to establish and roll-out the necessary infrastructure... If employers are required to fund the health insurance coverage of their expatriate employees, then I don't think there will be a way for them to circumvent the law. If they do, I'm sure they will be penalized! I don't know why every other article these days focuses on the imminent and marked increase in the cost of living in Dubai... I'm hopeful there will be safeguards and regulation to manage the different sectors.

    Karma, Dubai, United Arab Emirates

  4. Added 09:37 December 5, 2013

    Of course costs are already rising, every month some or the other new rule comes and we have no alternative, but to get it done. My daughter sponsors me. We have depoisted Dh5,000 already. Plus each visa renewal costs Dh1,000 for one year. It is very costly. I request the govt offficials to look into the matter seriously. Atleast give some concessions to expatriates born and raised in Dubai.

    usha, DUBAI, India

  5. Added 08:40 December 5, 2013

    The persons who were interviewed belong to industries /businesses where the employee count is negligible compared to manufacturing and construction sector. Even a small contracting company having 50 workers has to shell out Dh1,000 per person means it will be Dh50,000 direct operational cost. with nil or negligible margins currently prevalent in the market, these employers will find it enormously difficult to foot the bill themselves without passing on the cost fo clients. Compulsory insurance for all will only benefit the insurance companies and medical clinics and hospitals. There is no complaint from any employees about medical treatment currently.

    Narayan, Dubai, United Arab Emirates

  6. Added 08:17 December 5, 2013

    People fears of possible hike in living cost is quite selfish to me because if a poor labourer is going to gain access to quality healthcare then why should employers crib about possibility of cost hike. As per my strong belief, labourers have played an important role in the growth and success of UAE, so we should not only strive to make their life better but also provide them higher salaries. We should not cry for the decision of DHA if its going to be mandatory. Why employers are worried about expenses now after earning through the hard work of poor labourers and employees? I would appreciate if authorities and employers look into the salary scale os labourers and make necessary arrangements to give wage hike to poor labourers.

    Muhammad Asif, Dubai, Pakistan

  7. Added 07:59 December 5, 2013

    With mandatory health insurance, cost of living will definitely go up in Dubai. We in Abu Dhabi are already paying for the insurance for the last 4 years. At one point it will become marginal. The problem with mandatory health insurance is that, the cost of treatment will also go up and so the premium every year. The quality of treatment should also be improved.

    Azad Parvez, Abu Dhabi, United Arab Emirates

  8. Added 22:51 December 4, 2013

    Medical Insurance is a basic need of every resident in Dubai, without which for a simple checkup also a resident will have to shell out lot of money. Since its borne by the employers it would add to the annual costs and result in a reduced bottomline at the end of the year. if it can be absorbed that would be great, otherwise passing it on the consumer is the only option or taking a basic plan or asking the employee to contribute is also an option. Lets see how things shape up.

    Girish Bachani, Dubai, United Arab Emirates

  9. Added 21:22 December 4, 2013

    When will the government start giving respite to expatriates. Expatriates have a important contribution in building the nation and have to spend a lot on hospital fees, housing fees, etc. The UAE should try to maintain the cost of living for an average middle class person.

    shaheena, dubai, United Arab Emirates