understanding the factor affecting your health insurance premiums

Michel Boustani

Understanding the factors that affect your health insurance premium

Agenda

• The new Dubai law for mandatory health insurance – an overview

• Basic principles of health insurance

• The factors that affect your premium

• How to manage your health insurance budget

2

The new Dubai law for mandatory health insurance An Overview

UAE Healthcare Market

Healthcare Structure

MOH is responsible for private and public healthcare facilities across all 7 emirates.

Abu Dhabi high percentage of covered population was due to successful mandatory medical insurance which other emirates are considering to implement.

HAAD is responsible for healthcare administration in Abu Dhabi, DHA for Dubai, and MOH for other Emirates.

In Abu Dhabi and Dubai the medical insurance is mandatory, while it is voluntary in other emirates.

Healthcare in UAE is provided by Private and public providers. SEHA, DHA and MOH Delivers public healthcare services.

The administration of healthcare in UAE is complex, with different authorities administrating across different emirates and across different free zones within the emirates.

Source: The prospect group documentary (Healthcare in the UAE), Regional Research House – Shuaa Capital (MENA Healthcare Sector Report, 2012)

x x x

Administrator

Regulator

Medical

Insurance

Administration

Regulation

Law

MOH

37.5% 98% 30% % of Population

Insured

DHA/Private SEHA/Private MOH/Private

Services

Providers

DUBAI Abu Dhabi

Other Emirates

DHA

compulsory

HAAD MOH

compulsory Voluntary

4

- 98% of population is Insured

- 32 registered insurance companies

- Top 5 multinational brokers licensed

- Minimum product standards set

- All providers are following a unified coding system

- New control systems such as DRG and PBM to

control /limit abuse

- Introduced pay for quality

- Regulations and complaint system in place

- 1,250 HCP

- Attracted international providers Cleveland Clinic, John Hopkins …

- Population health statistics available

- Preventive programs and campaigns are being launched

- Affordable and good quality of health care available

Today

- 8% of the population was insured

- Low quality insurance products available

- Very few local brokers

- Government providers with no billing system

- No available statistics on population diseases

- Few reputed healthcare providers

- 950 HCP

- Quality of health care was poor

Abu Dhabi in 2006

Abu Dhabi healthcare market evolution

UAE Healthcare Market

5

The UAE healthcare strategy is to become a preferred destination for domestic patients and a hub for global medical tourists seeking high quality & cost effective procedures & treatments

Dubai Health Insurance Law

The initiation & implementation

• Signed into law in Dubai on 24.11.2013, effective in February 2014

• Minimum healthcare benefits are defined by Dubai Health Authority (DHA)

• Comprises two types of permits:

o Permit to conduct health insurance business in Dubai (43 companies)

o Participating Insurer, authorized to sell the Essential Benefits Plan (7 TPAs)

• Cost of insurance to be paid by employer or sponsor, not to be passed on

to the beneficiary

• Responsibility to obtain health insurance:

o Government of Dubai for UAE Nationals

o Employer for his employees

o Sponsor for people sponsored by him

o Visitors, further instructions to be issued

6


Timelines for Implementation

Phase 1 Groups 1,000 and more employees

Phase 2 Groups with 100 up to 999 employees

Phase 3 Groups with 99 employees and less Dependents (spouses/children) Domestic workers

2014 2015 2016 2017

Employer Size Implementation Deadline

Phase 1: 1000 + employees

31 October 2014

Phase 2: 100 – 999 employees

31 July 2015

Phase 3A: Below 100 employees

30 June 2016

Phase 3B: Spouses and dependants

30 June 2016

Phase 3C: Domestic workers

30 June 2016

All policies must be compliant with the minimum standards by the date of the first renewal after the relevant implementation deadline (subject to a maximum of 12 months from that deadline). In addition, for employees earning less than AED 4,000 per month coverage must be effected with a participating insurer!

01.11.2014

01.08.2015

01.07.2016

7


PI Status

Insurance Companies with PI Status

Insurance Companies without PI Status

about 4 million (2016)

Employees earning =/< AED 4,000 per month, population about 2.2 million Employees earning > AED 4,000 per month, population about 1.8 million

8


Essential Benefits Plan (Dubai Basic Product)

Unlike Abu Dhabi, there is no government subsidy. Hence the entire risk for the Essential Benefits Plan (EBP) is carried by the PI Company. Anticipated launch date is September 2014. Daman has already commenced operations for marketing of this product.

Eligibility • Anyone earning AED 4,000 or below per month must be insured with a PI company irrespective of

whether the employer procures a “basic product” or an “enhanced product”.

• Insurers are not permitted to deny coverage to individuals who fall under the basic pool.

• The Essential Benefits Plan (EBP) is devised for salaried/employed individuals. Hence, different to Abu Dhabi in that dependants are not mandatorily included. However, insurers can choose to sell the EBP even to dependants.

Index Rate • Each year the index rate for the EBP is set by the insurer based on the range provided by the

Dubai Health Authority (DHA). This index rate can be varied by + / - AED 25

• For 2014, the range provided by the DHA is AED 650 – AED 700.

9

An Overview on DHA Minimum Benefits


First Essential Benefits Plan issued in Dubai

11

Basic Product Dubai vs. Basic Product Abu Dhabi

Basic Product Dubai Basic Product Abu Dhabi

Regulator Dubai Health Authority (DHA) Health Authority Abu Dhabi (HAAD)

Funding Fully funded by employer / sponsor Employee (sponsor) pays for dependents

Employers pay premiums on behalf of each employee and immediate dependents (spouse and 3 kids below 18 years)

Employee/ Individual sponsor pays for additional dependents

Government subsidizes product to cover the balance between premium income and total costs

Financing entity 7 insurance companies (Daman is one of the 7) Daman with the support of Abu Dhabi Government

Service delivery Network defined by Insurance Companies Private providers (vaccinations available within

public providers) Fee schedules have to be negotiated

individually between insurance company and provider

Network defined by HAAD Private providers, SEHA Fee schedules are regulated by HAAD with regular

increases

Eligible population Employees with Dubai visa earning less or equal AED 4,000 per month

Domestic workers Dependents (spouse, children), parents of

expats and small investors are excluded in Daman

Employees with Abu Dhabi visa and employees working or living in the Emirate of Abu Dhabi (with a visa from another Emirate) earning less than AED 5,000 per month without accommodation or AED 4,000 with Accommodation

Dependents of employees are employer’s responsibility

Parents of expats and small investors are included

General Comparison(1/2)

12

Basic Product Dubai vs. Basic Product Abu Dhabi

Basic Product Dubai Basic Product Abu Dhabi

Sum insured AED 150,000 AED 250,000

Co-insurance / deductible

20% co-insurance for out-patient 20% co-insurance for in-patient (with cap of

AED 500 per encounter and AED 1,000 annual aggregate)

30% co-insurance for pharmaceuticals with an annual limit of AED 1,500. Annual limit including co-insurance.

10% co-insurance for Maternity (AED 7,000 normal delivery, AED 10,000 C-section). Annual limit including co-insurance.

Fixed rate deductibles are also allowed provided maximum patient share not to exceed 20% for OP, minimum patient share to be AED 10

100% coverage for in-patient treatment Deductible AED 20 per physician consultation and

additional deductible of AED 10 for specialist. Deductible AED 10 for lab tests and AED 10 for X-

rays Deductible AED 500 for Maternity 30% co-insurance for pharmaceuticals with an

annual limit of AED 1,500. Annual limit excluding co-insurance.

Chronic conditions / Pre-existing conditions

Excluded for the first 6 months for out-patient and in-patient except maternity

Out-patient: Covered High cost diseases (In-patient): the following conditions are covered after 6 months: diabetes, cardio-vascular diseases, chronic pulmonary diseases, cancer of all types, neurological surgery, brain diseases, all types of delivery cases.

Emergency coverage

Within UAED; Covered at 80% Within UAE; Covered at 100%

Benefit Comparison (2/2)

13

What impact will the new DHA law have on the Dubai Health Sector

Impact of mandatory health insurance

Employer view

Employers need to prepare for higher OPEX to fund and sustain health insurance benefits over time.

Development of Daman enhanced plans Projection of health insurance cost [AED]

and % of payroll [Index]

Assumptions: Healthcare benefit cost 2014=100 Medical inflation 12% p.a. Payroll inflation 2.5% p.a.

Note: Total cost for employer is dependent on whether dependents will be covered or not

100

110

120

130

140

150

160

170

2008 2009 2010 2011 2012 2013

6% of health insurance benefits as percentage of total payroll in the UAE in 2011

Index

100125

141157

112

0

20

40

60

80

100

120

140

160

8

6

4

2

0

+57%

2018

8,8%

2017

8,0%

2016

7,3%

2015

6,6%

2014

6%

Index Burning Cost (Regional)

Index Burning Cost (UAE)

15

Basic principles of health insurance

Principles of Health insurance

The function of health insurance is to safeguard against financial loss by having the “losses of the few’ paid by “contribution of many” that are exposed to the same risk.

Healthcare Provider

Member Insured Insurer

Fund manager

Regulatory Body (DHA)

17


Total Health-Care Expenditures

How do the Insurance market actuaries calculate the per Capita Premium ?

Health Insurance Premium Calculation

18

Admin Cost & Profit

Insurance Premium per capita

Health Care Expenses per Capita


Policy Wording

• Contract that stipulates the general terms and condition

SOB

• Schedule of Benefits

Insurance cards

Health Insurance End-user Package

Health Insurance Package

19


Sample Card reflecting the benefits covered

Health Insurance Standard Cover

20

The factors that affect your premium

Source: Daman

Factors that affect your premium

Internal Factors

•Population Demographics

•Organization Culture (Health Oriented Org)

•Business Industry (High/low risk exposure)

•Type of benefits selected

•Member abuse

External Factors

•Medical Trends (inflation)

•Regulatory changes

•Health Authority change in tariffs

•Provider misuse

•Others (Pandemics, weather changes, pollution levels etc.)

22

An organization’s health insurance premium is dependent on it’s health expenditure’s utilization which is an outcome of the below factors

Summary of Ext & Int drivers for medical cost increase

Cost Drivers Description

• Providers deliver more services

• Negotiated multipliers with Providers and underlying pricelist for treatment according to Abu Dhabi Health Authority (HAAD)

• New medication and enhanced treatment options coming to the market

• Billing improvements

• Number of patients out of total membership utilizing the service

• Patient visit frequency at medical providers

• Overall gender and age distribution of insurance group including dependents changes year on year

• Total number of people insured within policy group

Bu

rn

ing

Co

st

(A

verag

e c

ost

per

mem

ber)

Ad

dit

ion

al

med

ical

co

st

driv

ers

Average cost per doctor visit

Utilization (visits per member)

More services

Provider rates & Mandatory Tariff

New treatments

Billing Enhancement

Patient rate

Visits per patient

Age distribution

Number members

Daman Trend estimate

Overall medical inflation is expected to increase at around 13% by 2015


23

Drivers of chronic conditions are the rationale to mobilise our community

Wrong nutrition and lack of physical activities are the main drivers of important chronic conditions like obesity and diabetes

Guidelines by US Department of Agriculture Center for Nutrition Policy and Promotion 1) Daman survey: Lifestyle healthiness of UAE population, 2011 N=2131 2)HAAD Statistics 2012 3) Press releases 2011/2012

Nutrition intake of the UAE

population is significantly below dietary guidelines1)

Nutrition

56% of the UAE population is

never involved in a vigorous

activity. 25% is never involved in

even a moderate activity 1)

Exercise

Obesity 2)

Diabetes 2)

14%

46%

13%

57%

Female expats 30-39 yrs. old

Female expats 50-59 yrs. old

Female nationals 30-39 yrs. old


Future Outlook:

Between 29% and 40% of school children are overweight or obese in the UAE3)

44%

32% Female expats 30-39 yrs. old



24

How to manage your health insurance budget

10 tips that helps you optimize your Health Insurance Budget

Tip 1: Select the right Insurer

Health Insurance is a complex piece hence it’s important to select the right Insurer that can optimize the use of your medical fund and contain it

When selecting an insurer the following criteria should be checked:

- Insurer’s healthcare rates at HCPs (Hospitals, Clinics , pharmacies etc.)

- Insurer’s rule engines & claims management system capabilities:

- Eliminate duplicate claims - Reject unnecessary treatments - Control dispatch of Pharmaceuticals

- Insurer ‘s BI, use data to analyze patterns , trends and challenge HCPs

- Insurer’s holistic solutions & tools that help empower HR & improve the health status of your organization

- Insurer’s understanding of Healthcare regulations


27

HR becomes “Health Guardian” - a driver for healthy change in the organization

Tip 2: Empower HR

Empower and inspire the HR function with tools, knowledge, calls to action and recognition. HR’s focus shifts from “administrator” to “health ambassador”

Daman

Knowledge

Resource

HS/DM

Member Empowered HR function

Daman inspires the HR manager

Daman supports Human Resources with the right tools and content

Daman provides calls to action to inspire their members

Health Support services


28

Tip 3: Know the health Status of your Org

Know the Health Status of your organization. Select an insurer that provides a 360 degree view on your organization’s health


29

Tip 4: Take health initiatives, understand your org health 1/2

Objective

Increase health awareness and early detection strategies

Detect illnesses before they reach critical stages

Describe sources of information and support

Conduct tests focusing on body composition analysis and future diabetes risk

Campaigns at your premises

Offer personalized reports for each participant and overall statistical report to HR

Service


30

Organize Health Screening Campaigns

Tip 4: Take health initiatives, understand your org health 2/2


31

Once you know the health status of your organization, take action by launching Campaigns

Tip 5: Provide Health Support, enroll members in HS programs

Asthma Program

Maternity Program

Cancer Program

Diabetes Program

Second Medical Opinion

Rheumatology Program

Health Screening campaigns

International Provider Coordination

In the UAE, almost 90% of deaths are caused by chronic lifestyle-induced diseases and injuries Prevention & Health Support programs will help improve the life style and reduce the cost Encourage your members to enroll in Health Support programs


Programs & Services

32

Tip 6: Become a health oriented organization 1/2

Awareness & tools

Create Platforms

Call to Action

Create Purpose

Metrics


33

Once you’ve benchmarked the health of your organization use platforms and strong calls to action to inspire your employees

Health Oriented Organization 2/2

High

Performance EMPLOYEES

HR becomes the driver for healthy change in the organization

Knowledge

Resource

HSD/DMP

HOO Tool

The platform

Empowered HR function


34

Support Human Resources with the right tools and programs that are unique to the organization

Tip 7: Introduce controls to your scheme

Did you know that 70% of the premium contributes for out patient expenses and more than 50% of those cases do not require physician intervention

Controls will help avoid the abuse of the few, that penalize the many

Type of controls:

- Co Payments

- Deductibles

- Limits

- Exclusions of non medically

related benefits

- Right selection of benefits

- Gate keepers (Telemedicine)

Don’t be too generous with benefits offerings the first year


35

Tip 8: Introduce Health Insurance Inductions

Myth that antibiotics cure coughs and colds are still rife, 90% of such cases do not require antibiotics

Inductions will help control your budget

• Benefit induction

• Explaining the benefits provided by the organization

• How to best utilize your benefits

• Creating awareness on how to limit abuse

• Unnecessary treatments that harm your health

• Use of second medical opinion

• Challenge your physician

• Giving health tips

• How to cure a simple cold

• When to consult your physician

• What necessary checkups to conduct

• How to improve your life style


36

Tip 9: Select a long term insurance partner

Health insurance is a costly employee benefit that delivers peace of mind and increases employees productivity and retention

Tip : Changing to an under priced insurer’s premium can

only harm your scheme

• Your insurer needs time to observe trends, analyze patterns,

take action and evaluate impact of benefits

• The premium is a result of the organization’s utilization,

changing insurers for lesser premiums doesn’t save you

money on the long-term and has a negative impact on

member’s experience


37

Tip 10: Buy your peace of mind


38

Thank you

Contacts: Michel Boustani Executive Vice President / Director Sales – UAE National Health Insurance Company - Daman Mobile: +971 50 8137019 Direct DXB: +971 4 4360211 Direct AUH: +971 2 6518299 Email: [email protected]

mailto:[email protected]

understanding the factor affecting your health insurance premiums

Business

mandatory health insurance

health insurance premium

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employees phase

dubai health authority

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administration of healthcare