Dubai to introduce curbs on healthcare costs

The penetration of health insurance in the Gulf is still among the lowest in the world. Mike Young / The National

Dubai will regulate the rise of healthcare insurance premiums from 2016 to check runaway medical expenses.

The news follows Monday’s annoucement of government plans to have oversight, from next year, of cost increases of private healthcare services provided by clinics and hospitals.

“Regulation of premiums is essential for stability and sustainability of the health insurance market,” said Robin Ali, a consultant for the health funding department at the Dubai Health Authority (DHA). “In [the] Gulf, [there are] lots of expat workers and a transient population, so no size fits all. We are developing our own model.”

He was speaking at the two-day Healthcare Investment Mena Summit in Dubai yesterday.

The growth of health insurance premiums in the Gulf region, which involves massive government expenditure each year, is the highest in the world, according to Alpen Capital.

Every year average insurance premiums rise anywhere between 10 and 16 per cent in the UAE, according to the insurer Axa.

“You rarely witness stability of premiums year on year,” said Sherif Mahmoud, the regional head of medical operations at Axa Insurance Gulf.

The penetration of health insurance in the Gulf is still among the lowest in the world. In 2012, it was around 1.1 per cent compared to 6.5 per cent globally.

The figure for the region is expected to grow to 1.7 per cent in 2017 as countries work on introducing mandatory health coverage.

Premium regulation is rare outside of the United States and some EU countries.

As mandatory health insurance kicks in over the next two years in Dubai, medical inflation is expected to rise as the number of claims goes up. About 3 million residents in the emirate will have coverage, up from 1 million before the new rules.

From next year the DHA will approve price increases of medical services based on 136 indicators, including performance such as readmission rates, patient satisfaction, clinical outcomes and external economic factors such as cost of staffing, rent and the availability of new medicines.

Healthcare providers, however, say they are cautious about Dubai’s plans to regulate prices.

“We have already differentiated into three segments – low, mid and high-income categories – so that everybody can’t charge the patients the same,” said Dr Azad Moopen, the chairman and managing director of Aster DM Healthcare. “There has to be some control. Now with the mandatory health insurance coming in, there will be a natural dampening or controlling of [prices]. If they grade [the providers] properly it’s a good approach.”

Prices of healthcare services across Aster DM Healthcare group increase between 5 and 10 per cent each year, he said.

“Leaving prices to the market forces is the thing to do,” said Sobhi Batterjee, the president and chief executive at Saudi German Hospitals Group. “Price regulation is deep waters.”

Follow The National's Business section on Twitter