In recent years the government has pushed to reform the nation’s health insurance segment. The state’s plans, which involve shifting the cost of medical coverage from the public to the private sector, have major implications for underwriters, expatriate residents and Kuwaiti citizens. At the heart of this effort are two initiatives. The first of these was launched in 2014 and involves the establishment of a parallel health care system for expatriates. Overseen by the Kuwait Health Assurance Company (KHAC), a public-private partnership that operates on an independent basis, the new system is expected to provide medical care for the 2.93m non-national residents who made up 70% of the population in 2015.
In mid-2014 the state introduced a second key measure aimed at shifting the financial burden of health insurance onto the private sector. Under Law No. 114 of 2014, the state developed a tender in which a private insurance firm would provide health coverage for retired citizens, who numbered 107,000 at the end of 2015. “While many government projects have been put on hold here due to the decline in oil revenues, the state seems eager to move forward with health insurance privatisation efforts,” Khaled Saoud Al Hassan, group CEO at the domestic underwriter Gulf Insurance Group (GIG), told OBG. “This makes sense given the prospective new revenues available in this segment. The new retiree programme, for instance, has the potential to grow the medical segment by up to 50%.”
Driving Factors
These two initiatives have been prompted by a number of factors. Most immediately, like many other states across the Gulf, Kuwait has seen declining revenues in recent years due to the drop in oil prices that began in mid-2014 and the concomitant regional economic slowdown. Consequently, the country is in the midst of a drive to locate new sources of revenue and cut costs, in part by slashing state subsidies. Restructuring the health insurance system stands to improve the government’s bottom line and boost health insurance penetration, thereby benefitting the insurance sector (see overview).
Health care is provided via a public system of hospitals and clinics operated under the Ministry of Health (MoH) plus a number of private facilities. Kuwaiti citizens have access to free medical services in the public system, while expatriates are required to pay a nominal fee of KD50 ($165) per year. Both citizens and non-Kuwaitis pay market rates for private care.
Shifting Costs
Under the new expatriate health insurance scheme, non-nationals will receive care in a parallel network of medical facilities currently being constructed by the KHAC. The firm is owned and operated by the Arabi Group, a local conglomerate, which holds 26% of KHAC shares. An additional 19% of the firm is held by the Kuwait Investment Authority, the government’s primary investment vehicle, while another 5% is owned by the Public Institute for Social Security. The remaining 50% of KHAC is expected to be listed on the Kuwait Stock Exchange. To access the new health care system, non-Kuwaitis will be required to pay an annual premium at a yet-to-be determined price. According to estimates by the MoH from early 2016, expat health fees will rise by around 15-20%. As of mid-2016 the KHAC system was in development, with services expected to launch in 2018-19.
Meanwhile, the retiree programme tender had yet to be awarded as of July 2016, though GIG reportedly submitted the lowest bid. The winning provider will be tasked with facilitating coverage at private hospitals and clinics for Kuwaiti retirees. The MoH will continue to pick up the tab for retirees’ coverage.
So long as implementation of the two plans goes forward, they signify the beginning of a move towards universal private health insurance. In 2014 the MoH announced that the retiree insurance scheme was only the first experimental step in the plan to shift all Kuwaiti citizens to private health insurance plans.
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