Private health poses new challenges (page 1 of 2)

By WILLIAM MILLER DUBAI

Health care may be free for most Gulf Cooperation Council (GCC) nationals, but local governments are growing weary of paying the price. Now, there are moves underway to at least partially privatize health insurance in the region, particularly for expatriates. But the changes are mostly cosmetic, and may prove too little, too late.
Three years ago, Saudi Arabia and Kuwait made their intention clear to make medical insurance compulsory for all expatriates living within their territory. The UAE also appeared to be on the way to charting a similar course in the near term. Three years later, almost no progress has been in made in any of the three countries.
State subsidies. The logic behind the initiatives was clear - Gulf governments could no longer continue to foot the astronomical bills run up by their state-sponsored health care programs. While higher oil prices took the strain off GCC government budgets during the last two years, the specter of global recession and lower yields from oil now looms large. There's now widespread agreement about the urgent need for the Gulf states to progressively reduce their role as subsidized health care providers. But that does not mean that any action will be taken.
At least twice in the past 18 months, Saudi Arabia has had to extend its target date for new health insurance legislation. The government announced that all expatriates would soon need to have medical cover, but did so before even the most basic insurance laws were in place. More recently, the kingdom has been working on the process and legal requirements to facilitate the passage of the new laws. But there is no guarantee that the status quo will change anytime soon.
"Saudi Arabia does have lots of potential, but insurers will be interested only if the rates are determined by the natural laws of the marketplace. Any intervention by the state to curb premium rates will have a hugely detrimental effect," said an underwriting manager with a London-based insurance company. "There is no way insurers will be enthused by the prospect of charging a minimum premium and offering a full cover. The principle for both the insurer and insured should be: you get what you pay for."
According to conservative industry estimates, the prospective premium income for medical underwriting from a market like Saudi Arabia could well be in the range of 5-10 billion rials ($1.4-2.8 billion) annually. Kuwait, which has made a bit more progress, also has legislation pending which will make it mandatory for all expatriates to have health insurance before seeking work or residency permits.
In the UAE, chaos has reigned since the formation of a 14-member technical committee - comprising representatives of local insurance companies - assigned the task of looking at ways and means of expanding the role of private medical insurance provision and bringing out a uniform tariff card. The committee submitted its recommendations to the government in 1999; since then, no progress, no results.
"The whole process achieved nothing," says a senior manager at a leading UAE-based insurer, who was also a member of the advisory committee. "There was a wide gap between what the government wanted us to do and what we felt we should be doing to make private medical underwriting a profitable enterprise for us in the UAE."
In the cards.