Though the Egyptian health care system is characterised by a pluralistic mix of public facilities, it has been strained by rapid population growth and relatively low levels of funding. Consequently, most Egyptians opt for private facilities, fuelling high levels of out-of-pocket expenditure and increasing desire for private insurance.
In response, the government has initiated several reforms aimed at improving quality and access to health care services for its burgeoning population. Demand for medical equipment, pharmaceuticals and health care facilities is likely to follow, offering continued private sector growth and opportunity.
Indicators
Growing at a rate of 2.6% per annum between 2006 and 2017, the population is forecast to reach 128m by 2030, up by 35% from an estimated 95.7m people in 2016. Lower infant mortality, an increasing birth rate, higher life expectancy and stateled efforts to tackle communicable diseases are some of the factors driving this growth.
According to the latest World Bank and World Health Organisation (WHO) data, the infant mortality rate stood at 18.8 fatalities per 1000 live births in 2017, down from 62.9 deaths per 1000 live births in 1990 and below the UN’s global average of 29 per 1000. The neonatal mortality rate – which measures infant deaths within the first 28 days – was low, at 11.6 deaths per 1000 live births in 2017, indicating that Egypt has a high degree of prenatal and neonatal care.
Meanwhile, average life expectancy at birth stood at 71 in 2016, up three years from 2000. However, healthy life expectancy at birth was a decade shorter, at 61, reflecting years lost through non-communicable diseases such as morbidity and disability.
The country’s demographics reflect a youthful population, with 33.5% under the age of 15 in 2016. By comparison, 24m people, or 26% of the population, were over the age of 40 in 2015. As the youth population grows and the cohort aged over 40 is expected to increase to 55m by 2050, health and education infrastructure will be placed under a lot of strain. The Ministry of Endowments reported in July 2018 that the country will require 2500 new schools and 50 new hospitals to be constructed each year to support the current rate of population growth. In addition, more long-term health care facilities will be needed as the population continues to age.
Structure & Oversight
Public health care services are fragmented and currently provided by the Ministry of Health and Population (MoHP), the Ministry of Higher Education (MoHE), the Health Insurance Organisation (HIO) and the Curative Care Organisation (CCO). The MoHP operates an extensive network of government health facilities that offer comprehensive treatment to all Egyptians at subsidised rates. Some 80% of these services are offered to patients free of charge, while user fees cover the remaining services.
The HIO operates as an autonomous public organisation under the MoHP’s supervision, providing a large number of public facilities for those who are covered by its social health insurance programme.
Within the public or parastatal sector, universities operate 76 hospitals, which are concentrated in Cairo and other urban areas. These hospitals provide primary, secondary and tertiary treatment financed primarily through the MoHE. The General Organisation for Teaching Hospitals and Institutes services a small proportion of the population, operating 11 general teaching hospitals and 20 research institutes.
Public Spending
The funding of public sector health care facilities is provided by the Ministry of Finance (MoF). The MoF allocated LE98.7bn ($5.5bn) to the sector in FY 2018/19, representing 7% of the LE1.4trn ($78.7bn) budget. This allocation reflects a reduction of approximately LE5bn ($281m) compared to the LE103bn ($5.8bn) budgeted in FY 2017/18. Despite a reduction in overall government spending, health expenditure per capita increased at an annual average rate of 6.3% between 2001 and 2015 from $72 to $157.
Since 2014 Egypt’s updated constitution mandates that the government allocate a minimum of 3% of GDP to health care. However, the state has thus far been unable to meet this legislated target. Spending in FY 2017/18, for instance, fell below the constitutional threshold, with 1.6% of GDP spent on the sector. As GDP is projected to grow by between 5.2% and 5.8% in FY 2018/19, it remains unlikely that the government will reach the target of 3% in the new financial year given the reduction in the allocated health budget.
According to the WHO, government spending on health should amount to at least 4-5% of GDP to enable the provision of universal health care, suggesting that the 3% mandate may be insufficient as the Egyptian government begins to roll out its universal health care plans. The WHO also recommends that out-of-pocket payments be cut to 20% of total health spending, a challenge that Egypt’s current social health insurance and subsidised public health care sector has yet to address.
Hospitals & Facilities
According to a 2017 report by research and consulting company Colliers International, the HIO, the CCO and other parastatal health care providers offered 57,000 beds across 268 hospitals in 2014, in addition to the MoH’s provision of a further 41,000. Despite these offerings, the public health care system faces several challenges in the form of overcrowding, limited specialists, lack of medication and poorly enforced clinical guidelines for managing chronic diseases. Consequently, few Egyptians make use of public sector facilities, and many households prefer private sector hospitals and treatment.
In 2014 the private sector provided 33,000 beds across 1400 hospitals. This reflects an average rate of 24 beds per hospital, compared to 105 per public unit and 212 per parastatal facility, suggesting that the private health sector remains fragmented with room in the market for mergers and acquisitions.
Together, the private and public sectors provided 131,000 hospital beds at an average rate of 1.5 beds per 1000 people in 2014, which is below the world average of 2.7 beds per 1000. Egypt likely needs to increase its provision of hospital beds to at least 2 per 1000 people to improve the quality and quantity of health care services. This means that an additional 26,000 beds is required by 2020, with investment valued at $6bn to $9bn. Demand is expected to pick up over the long term, with an estimated 179,000 new beds – at a cost of between $38bn and $60bn – needed by 2050.
The ratio of health professionals to patients offers some optimism; there were 3.3 doctors per 1000 individuals in 2017, which is higher than the ratios in the US, the UK, Saudi Arabia and Jordan. Although Egypt remains competitive internationally on this metric, there is a shortage of specialists and para-medical staff in the country due to a relatively high level of emigration to Gulf and Western countries.
Insurance
The HIO provides compulsory health insurance for formal sector workers, school students, infants, pensioners and widows. Funding for the HIO is raised through the collection of mandatory payroll contributions by workers and employers, supplemented by funds from the MoF. In 2017, 54.1m Egyptians, or 58.8% of the population, were registered beneficiaries of the social health insurance programme.
A 2010 Egyptian Family Observatory Survey found that, although 80% of households have at least one member covered by the HIO, only 25% of insured households utilise the system as a result of low-quality services and excessive red tape. Data from the Egypt National Health Accounts in 2008 showed that 8.1% of insured individuals used HIO facilities for outpatient health care, while inpatient use stood at 21%.
The country has had difficulty realising significant benefits for those covered under public health insurance, but growing demand for better health care services has led to an increase in private insurance penetration. Lamia Hamza, health insurance analyst at Marsh, a global insurance brokerage and risk-management company, told OBG that the rise in demand for private insurance has been the result of improved awareness of insurance benefits and increased market sophistication, particularly since 2011.
Following the flotation of the Egyptian pound in 2016, which saw the currency lose one-third of its value, resultant higher costs of medication and equipment has had a knock-on effect for health care providers and insurance companies. Premium increased by 25-35% in 2016, encouraging growth of service networks to provide better value to consumers and proving advantageous to multinational insurers that are able to offer more competitive benefits. Despite the 2016 rise in premium, the insurance sector suffered losses in 2017, causing some insurers to raise prices by above 65% to achieve a profit in 2018 (see Insurance chapter).
The government has highlighted plans to expand coverage and improve insurance inclusion through diversification of the insurance sector. These plans include the development of micro-insurance and takaful (Islamic insurance). In 2017 state-owned Arab Misr became the 35th insurer in Egypt, providing sharia-compliant insurance, a niche offering that represents a market share of 9% in the country.
Changes to the Insurance Act proposed in April 2018 are expected to improve supervision of private insurance firms and tighten regulations in the sector. Draft regulations to establish a policyholder protection fund aim to bolster consumer protection in the case of insurer insolvency. The proposed amendments could also see the introduction of specialised medical insurance companies and requirements for a separate insurance licence in the health sector.
Access
Private health insurance is generally arranged by companies on behalf of their employees. Individuals who are not employees, or are dependants, are not covered, and few can afford an individual private insurance policy. According to Hamza, only two in 100 individuals have private insurance outside of their employment.
Likewise, the underutilised public HIO primarily covers citizens who are employed in the formal sector through deductions from their salaries, with the MoF paying contributions on behalf of children and other vulnerable demographics. Informal sector workers, unemployed people, the poor and dependants are excluded from the HIO, but subsidised government facilities are available to these groups.
According to a 2015 report by the World Bank, despite more than 95% of Egyptians living within 5 km of a public health facility, both the wealthiest and poorest income segments of the population prefer private in- and outpatient providers. As a result, outof-pocket expenditure constituted 62% of total health expenditure in 2015, according to the WHO.
Uninsured individuals are among those who opt for private treatment rather than state-subsidised hospitals, and 6% of those households face financial catastrophe due to high private health care costs, exacerbating the country’s rate of poverty.
Government Intervention
In an attempt to address some of these limitations, the government has introduced a number of reforms. In July 2018 Egypt secured a five-year, $530m loan from the World Bank to help finance these measures. The loan will help fund the World Bank’s Transforming Egypt’s Health Care System initiative, which supports the implementation of a universal health care system (see analysis), and seeks to improve the quality of care in 600 health care facilities and 27 hospitals, together with the introduction of new digital equipment.
Furthermore, the loan includes an allocation of $35m for the government’s programme to prevent hepatitis C, increasing demand for related vaccines. The systematic screening and treatment programme, which was launched in 2014, has treated over 1.6m citizens. Prior to its launch, Egypt had one of the highest hepatitis C infection rates in the world, with one in 10 infected with the virus in 2008. The World Bank’s funding will enable the government to treat 1.5m patients per annum, bolstering efforts to eradicate the virus.
With a rapidly growing population presenting a significant threat to policy and development, the Ministry of Social Solidarity launched the “Two is Enough” campaign in June 2018, which seeks to reduce the birth rate of 3.5 per woman in 2018 to 2.4 by 2030 by raising awareness of birth control methods through the implementation of 100 NGOs. The campaign will support the $19m family-planning strategy rolled out in May 2018 by the MoHP in conjunction with the US Agency for International Development (USAID). USAID will provide technical assistance and training to the MoHP to strengthen the programme.
Non-Communicable Diseases
Cardiovascular disease, diabetes, cancer and other non-communicable diseases (NCDs) are the highest causes of death in Egypt, as per the WHO. One in 10 Egyptians is diabetic, according to a 2017 study by the International Diabetes Federation, while in 2016 the WHO reported an obesity rate of 32% in people over the age of 18. A 2017 health survey conducted by the Central Agency for Public Mobilisation and Statistics, in cooperation with the MoHP and the WHO, found that 63% of citizens aged 15-69 are overweight and 35% are obese. Furthermore, the survey found that 73% of Egyptians do not exercise regularly and around 22.7% are smokers. A growing phenomenon of smoking shisha was reported, while electronic cigarette consumption stood at 1.2%. The survey further reported that the population consumes 3.4m tonnes of sugar per year, which is approximately 35 kg per person, aggravating the risk of Type-2 diabetes.
The high prevalence of these lifestyle diseases represents about 40% of hospital demand and accounts for 84% of all deaths in Egypt. To curb the strain placed on the health care system, the Transforming Egypt’s Health Care System project will also include the screening of 20m adults for NCDs and related risk factors.
Outlook
Egypt’s reform efforts offer positive prospects for the health industry over the short to medium term. However, as public spending in the sector struggles to catch up, long-term sustainability remains difficult to predict. While population growth may slow in response to interventions, the large and ageing population will continue to drive demand for medical and insurance facilities, increasing the need for pharmaceuticals, devices and new technologies.
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