Economic Update
The government is moving ahead with its plans to improve health services in Abu Dhabi with new legislation in force this week to regulate the provision of private healthcare.

The ministry of health has announced plans to cap the profit margins for medical fees charged by all private healthcare providers in the emirate in an effort to combat fluctuations in pricing.

Ali bin Shukar, the under-secretary of the ministry of health, told the Khaleej Times, “We have already approached international health financial management institutions to provide us with the expertise we lack locally. These organisations will assist the ministry in studying the costs of curative services at the national level to control the market and set standard fees.”

However, “standard fees are expected to be enforced by the end of 2007”, Sukar continued.

Meanwhile, the general authority for health services (GAHS) has begun to phase-out the national health card for non-nationals as the implementation of the new national health insurance law gets under way. On September 10, the validity period for such health cards was reduced to four months at a reduced purchasing cost of Dh100 ($27.23) for expats over the age of 18. This allows for the full implementation of the new national health insurance scheme from the beginning of January 2007. Under the health card scheme, nationals and residents were able to access health care in the emirate for free.

The new law approved in June this year by Sheikh Khalifa bin Zayed Al-Nahyan makes it compulsory for all employers and business owners in Abu Dhabi to provide health insurance for their expatriate employees. Under phase one of this legislation, which was introduced on July 1, all Abu Dhabi government offices, government contractors and all private businesses with more than 1,000 employees are obligated to provide health insurance coverage for their expatriate employees, their employees’ spouses and up to three dependents under the age of 18. This is expected to affect approximately 250 businesses in the emirate.

The second phase, which will come into force at the beginning of January 2007, makes it compulsory for all expatriates to be covered by their employers and is expected to affect more than one million people.

Daman, the new national health insurance company established under presidential decree in 2005, estimates that approximately 100,000 people had health insurance prior to the introduction of the new legislation although precise statistics are not available. This would suggest that insurers in Abu Dhabi are about to witness a huge increase in the volume of business, which is one of the main reasons behind the establishment of Daman as a national provider with the administrative capabilities to handle this growth.

Daman, which is the sole provider of health insurance for government institutions and a government supported product for private sector employees earning a wage below Dh4000 ($1089) a month, aims to have 250,000 members by the end of 2006 and approximately 500,000 by the end of 2007. This projected increase is indicative of the expected growth in the sector as a whole. Observers expect several companies to compete with Daman to provide health insurance for private sector employees earning more than Dh4000 per month.

This reflects a growing trend in the region for compulsory health insurance, with Saudi Arabia, Bahrain and Kuwait attempting to implement similar compulsory schemes. Michael Bitzer, CEO of Daman, told OBG, “Even without the compulsory implementation of health insurance, the market was growing rapidly in the region with the Gulf Cooperation Council (GCC) countries experiencing annual growth of more than 20%.”

It is expected that the new law will act as a stimulus for further privatisation and competition in the healthcare sector in Abu Dhabi. Health insurance is seen as a means of providing the underlying financing mechanism for the improvement of services through privatisation. Many analysts also see this as a move to end the subsidisation of healthcare provision for non-nationals, allowing the cost of improved facilities to be offset by employers and businesses.

Bitzer added, “An important point is that the whole system will work only if insurance companies and healthcare providers work closely together. Our long term success depends on the quality of the healthcare facilities here.” He continued, “The health insurance law provides a stimulus to the emirate and is seen by many healthcare providers as an opportunity for further investment in Abu Dhabi.”

The health sector is certainly in a period of transition in Abu Dhabi with the emirate attracting a number of internationally renowned healthcare and research centres. The much anticipated Imperial College Diabetes Centre was recently opened in the emirate in a move aimed at providing high quality care and research to combat the increasing problem of diabetes in the emirate. John Hopkins Medicine also signed a ten-year affiliation with GAHS in February this year, which includes the management of the 469-bed Tawam Hospital in Al-Ain.

Such developments are seen as a platform for further initiatives in the sector with a new cardiac centre thought to be in the pipeline. The regulation of private healthcare providers and the new health insurance law are setting the tone for increasing development in this sector and laying the foundation for a healthy future.