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Dubai: Premiums on basic medical insurance plans — currently at Dh600 — need to be “increased significantly” to ease the pain of healthcare operators in UAE, according to a top industry source.

But to make it work, employers will have to do their bit in meeting the increased cost of providing health care, while insurance companies have to reduce the discounts being demanded from health care providers. Currently, Dubai has what is known as the ‘Essential Benefit Plan’ (EBP), which offers access to a set of outpatient and inpatient treatment over a 12-month period. All of the blue-collar workforce come under this plan, where the basic premium is set at Dh600.

But now, three years after Dubai and Abu Dhabi mandated compulsory medical coverage, hospital and clinic operators reckon that premium is way too little to cover their costs.

“If it’s Essential Benefit Plan alone, there is a strong possibility that the health care provider will be making a loss,” said Dr. Azad Moopen, Chairman and Managing Director at Aster DM Healthcare. “After you remove the insurance and TPA [third-party administrator] costs from the Dh500, what you are left with is to provide outpatient and inpatient services for around Dh350-Dh400.

“If that proves insufficient — and they do — the hospital and clinic are going to suffer. The healthcare sector wants to see EBPs raised to Dh900-Dh1,000 for sustainability.”

Of the four million or so resident population of Dubai, around 60-70 per cent are in the lower income category, and typically have the EBP coverage.

Need for intervention

It has been a tough two years for the local healthcare sector. New hospitals and clinics keep getting added even as medical insurers set stringent requirements when it comes to paying off the claims submitted. A crisis is starting to brew in the sector, with some facilities closing while others are forced to work with skeletal staff. Sector-wide salaries too have been slashed, including, possibly for the first time, of doctors’ too.

“Look, some clinics may be able to still provide treatment for a Dh500 basic plan — but who can be confident of the quality,” Moopen added.

“When employers are spending huge amounts to keep employees here — towards salary, accommodation, visa and other charges — spending an additional Dh100 per month towards health care is a bare minimum. It is understandable that the authorities want to ease the pressure on employers and keep it low.

“But if they don’t realise the importance of providing for a sustainable environment for health care providers, there will be a quality issue. The authorities will need to address this issue.”

Reasons for keeping it low

At the time when mandatory health insurance was rolled out, it was felt that hospitals and clinics will see a surge in those requiring treatment, both out- and inpatient. And that this increase would compensate for the basic plan being set at Dh500/Dh600.

Sure, in these three years, health care facilities have seen double-digit increases in those seeking consultations and further treatment. But the fact remains the cost of administering health care has risen just as significantly.

Each year, Dubai Health Authority allows health care providers to raise their consultation/treatment costs by 2-3 per cent to cover for inflation. But in the last year and this one, no such increase has been allowed.

“We were hoping even that 2-3 per cent increase would have taken care of some of the losses suffered by health care providers,” said an industry source. “But in the absence of that increase, there is a considerable build up of margin pressures in the system.”

Will employers in the UAE be in a position to cough up the additional funds if the EBP were to raised? Businesses across sectors are cash-strapped, and already in the last two years, they have taken steps to reduce their cost of insurance payouts. This they have done by requiring a higher “co-payment” clause in group policies or lowering the individual premiums, so that only a bare minimum set of services are covered. (Co-payment requires the insured to pay a certain percentage of the consultation/treatment costs, often 10-20 per cent.)

Insurers add to the pressures

Health care providers say that making a desperate situation worse are demands by insurers. According to Moopen, “The authorities have approved the tariff of clinic and hospital, which include consultation, investigation, etc. However, insurance companies ask for a huge discount on the approved numbers.

“The discounts being asked have gone up — and competition among hospitals/clinics has produced a massive undercutting of rates. On non-EBP consultations, the discount demanded have touched 30 per cent.”

He says — and it is a point raised by other health care industry sources — that the authorities must intervene on their behalf and issue a “statutory direction” to all insurers “not to ask for discounts”.

“We have been forced to walk away from small insurers because it’s no longer worthwhile to handle their business. Unfortunately, a number of small clinics may not be able to do so, and they are having an issue.”

Health care providers have brought this matter up with the various health and insurance authorities, either individually or as a common concern. They are still waiting for feedback.