Dubai: Buying an individual medical insurance plan is turning out to be quite expensive for UAE residents, as a combination of high demand and inflationary increases keep pushing rates up.
In the first six months, a ‘comprehensive’ medical plan would require the insured to shell out an average Dh10,000 compared with Dh8,400 in the first quarter of 2020. That’s a straight 20 per cent increase, which many in the industry say is quite unprecedented. Even ‘basic plus’ plans are recording double-digit hikes, with a policy costing around Dh1,150 on average against Dh1,000-Dh1,050 early last year.
The only medical cover policies that have remained unchanged are the ‘Essential Benefits Plan’, which average between Dh550-Dh650. (These are typically for those earning less than Dh4,000 a month, but these days, many above that income stream are picking up these plans.)
The increases on healthcare policies are not related to the COVID-19 crisis. “Nothing materially has changed with the terms and conditions post-COVID-19,” said Avinash Babur, CEO at InsuranceMarket.ae. “Insurers were required by the regulators to cover COVID-19 expenses last year, and there was also the decrease in claims from elective treatments and outpatient visits.
“What has happened is that residents have responded to the COVID-19 situation, and we are seeing a big increase in the take up of upgraded and more comprehensive medical insurance plans. This trend has only accelerated.”
Constant pressure on medical costs
In a recent statement, the multinational insurance brokerage Marsh had this stark warning: “The cost of health and benefits plans is increasing rapidly. While the pandemic meant saw costs dip slightly research by Marsh shows that, on average, medical costs outpace general inflation by almost three times.
“As we emerge from the pandemic, it is anticipated that businesses will face a sharp rise in costs as the cancellation of many elective procedures and a fall in preventive and emergency treatment has led to worsening health conditions in the immediate and long-term.”
Insurance industry sources say the same applies to individuals scouting for the right medical insurance cover for their dependants. Of course, for the self-employed as well.
No option but to trade up
Until the pandemic struck, many residents were comfortable taking out the Dh550-Dh650 Essential Benefits Plan for their non-working dependents. At the time, these plans covered multiple options in terms of network coverage – i.e., the places where the insured could get treatment – and in the medicines they could get. But recently, the health authorities in have tightened that up, by reducing the number of medicines available under a basic plan to around 900 from more than 2,500 earlier.
This meant that residents had to “trade up” on their health insurance plans if they still wanted to buy their regular medicines. The only other option was to pay the full price out of their own pockets at the pharmacies.
This is why the 10-20 per cent increase in medical insurance plans is proving such a worry for residents. But sticking to a bare minimum basic plan too has downsides.
“Those covered by such plan will enjoy the “essentials” of care,” said Babur. “But when it comes to what’s on offer, this lower-cost option can prove “you get what you pay for” in terms of freedom of facility choice and contribution towards costs.
In comprehensive, the pharmacy, physiotherapy and maternity cover can be enhanced to offer greater clinic/practitioner choice and corresponding benefits, meaning the insured can choose a treatment tailored to his/her needs or home/work location. Another important element is that the level of network can be selected, allowing direct access to specialists and hospitals without the need for pre-referral from a general practitioner
'Other' costs in a basic plan
“Basic plans usually carry a higher deductible - or ‘co-insurance’ - meaning that the insured has to pay a higher share of the costs for each consultation. This will be either as fixed amounts or percentages per check-up, treatment, procedure or admission. These can mount up.”
Cover limits are also generally lower, which also adds to the costs that the insured has to meet from his/her income. Medicines and maternity are capped with covers up to Dh1,500 and Dh7,000 and “within these limits, the insured would be required to pay a contribution such as 25 per cent,” said Babur.
“While pricing of these basic plans remains relatively static year-on-year due to regulatory controls, the cover they provide also remains the same with no real enhancements. This means that the plan may not keep pace with the changing needs of the insured.”
Which will immediately have them thinking of ‘comprehensive’ or ‘basic plus’. But this also the point they will come across the 10-20 per cent increase on these policies. At a time of the COVID-19, they will have not much option but pay up.