A decision to defer extending a comprehensive state health insurance scheme to the expatriate community in Qatar means that private insurance companies will be able to tap into the segment for at least another 18 months.
Under the new health scheme, launched in August 2013, coverage was to be extended over five stages. In February, Dr Faleh Mohamed Hussain Ali, the acting CEO of the National Health Insurance Company (NHIC), announced that comprehensive compulsory medical insurance for expatriates – one of the final stages expected to be in place this year – would not be implemented until late 2016.
Despite the short-term reprieve for private sector companies, the country’s underwriters will need to find alternative revenue streams in the long-term to maintain premium growth in the wake of the full implementation of the scheme.
The National Health Insurance Scheme, known as Seha, has been rolled out over the past few years. The first stage focused on women’s health services, and other stages progressively increased coverage to all Qatari nationals. The last two stages, covering white-collar and blue-collar expatriates, were to be rolled out in early and mid-2015, respectively.
Currently, the premiums for Qatari nationals are paid by the government. However, for expatriates, who make up the majority of the country’s 2.3m population, the cost of their coverage is to be met by their employer, at rates set by the NHIC and paid to the insurer.
However a delay to the full implementation of the programme is in part due to the sharp rise in demand on Qatar’s health services stemming from the progressive introduction of the scheme. With comprehensive free healthcare now extended to include more than 190 private medical facilities that accept Seha insurance, along with the existing state centres that previously offered cost free services to Qatari nationals, many hospitals and clinics are struggling to meet demands, the NHIC’s Ali said.
Temporary relief for private insurers
For Qatar’s insurers, the delay amounts to something of a temporary reprieve, allowing them a further opportunity to operate in the health care market.
Under the regulations governing the scheme, private insurers are only being allowed to participate in the health segment by offering additional benefits. The NHIC has sole responsibility for issuing the basic health benefits, unlike in some other countries in the region where coverage is carried out by private firms under compulsory health insurance systems.
According to industry experts, opportunities for the private sector under the health insurance programme will be extremely limited. The full implementation of Seha is likely to drain away premiums from the private sector, with Qatari citizens who had existing health coverage, employers who had policies for their staff and expatriates who had taken out medical insurance, all shifting to the state system.
The increasing profile of the state insurer in the market – which may be construed as a competitor – will weaken the position of private insurance companies, limiting their potential for growth, while also having a negative impact on the sector in the longer term, according to Elias Chedid, the COO and Deputy CEO at SEIB Insurance.
“The NHIC should be complimentary to the private sector in every sense of the word and not a replacement. Otherwise, it would be drying the market and simply forcing private health insurers out,” Chedid told OBG. “Ultimately, while you will see benefits in the short term of having a single insurer, in the long term we run the risk of complacency underpinned by a lack of innovation due to lack of competition,” he added.
This sentiment was echoed by Ali Saleh Al Fadala, Senior Deputy Group President and CEO, Qatar Insurance Group. “The National Health Insurance Company is now aiming to prohibit all public entities in the country from using private insurance, virtually ending any sort of competitive environment and removing the private sector. This is a step backwards in my opinion,” he told OBG, adding that costs of the project are already running over budget. “Given current declines in oil prices, we doubt the scheme will be able to cover all expatriate residents in the country as originally intended”.
Though opportunities will be limited in the basic health care market, Qatari insurers will have the incentive to target the higher end of the health sector, which could generate higher revenues per policy. The surge of visits to medical facilities since the first stages of Seha came into force resulted in an equally higher volume of processing and administrative charges, along with payouts, which would have kept earnings margins tight. Rather than targeting the mass market, insurers could set a premium on providing coverage for higher-end services.