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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