Who will take care of you?

GCC governments don’t want to fund expatriate healthcare any more and companies are going to have to take on the burden. That brings with it a whole set of challenges for companies, healthcare providers and insurers.

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By  David Ingham Published  March 12, 2002

Shifting the healthcare budren|~||~||~|Addie Van Rooij, human resources manager at Compaq, spent around $10,000 per person last year on employee healthcare. “It is a lot of money,” concedes Van Rooij, but he says that it is the inevitable price for retaining the best.

“A company like Compaq needs to attract the best people,” he says. “We strive therefore to have an overall package that is absolutely competitive to any other packages we find in the IT industry, both to retain and attract people.”

But what about the old adage that there’s no point investing in people because they never stay long enough? Van Rooij says he was told this before he came to Compaq Middle East. So he did his own research and discovered that rather than the two years everyone likes to talk about, Compaq Middle East employees stay with the company for an average of four and a half years.

The need for companies to think beyond the salary when they devise compensation packages is taken up by Hazel Cowling, an expert on HR issues at consultant, Biz-ability. “Compensation and benefits are always a key focus of HR departments that are ever conscious of providing competitive packages so that they can attract the right calibre of staff to join and stay with the organisation,” says Cowling. “Having said this, the focus for reviewing compensation packages for staff at non managerial level has been very much on basic [salary] and the normal add on benefits such as accommodation and transport, rather than healthcare.”

Dr Ray, CEO of Welcare Hospital, says that the best companies are the ones that take care of their people. “No company can make it big without having a dedicated set of employees,” says Dr Ray. “By and large, all good companies have good medical care.”

The need to take better care of your employees isn’t the whole story, however. Governments across the Gulf have recently been making it clear that they’ve had enough of funding public healthcare. The current AED 300 per head per year that you pay in the UAE for a health card doesn’t anywhere near cover a public healthcare budget estimated at AED1.6 billion for 2002.

Kuwait already has mandatory health insurance, Saudi Arabia has legislation pending and the UAE authorities have said that legislation will be in place within six months. Arabian Business has obtained documents from the Ministry of Health that indicate insurance will be compulsory for expatriates and will be linked with the issuing and renewal of visas.

The Ministry has specified three insurance bands. Class I will cost AED 850 per year and cover persons aged 20 to 40. Class II will cost AED 1500-2000 and cover persons above 40 years of age. The third type of insurance, according to the document, covers dental and ‘cosmetic treatment’ and is subject to the agreement of an insurance company. Further information, such as what is covered and what is not, was not available, but it is known that cover limits will be very low.

Detail or not, what the documentation does make clear is that the UAE government, like others in the GCC, wants to shift the healthcare burden. That raises a whole bunch of questions, however, such as who pays: the employer or the employee?

“Some employers that pay for their employees’ healthcard take the money out of their salary,” says John Young, manager for employee benefits at Alliance, a major UAE insurer. “I have no doubt that the same will happen here.” If that’s the case, then the financial situation of unskilled workers earning a few hundred Dirhams or Riyals per month is likely to become worse.

The situation for multi-national and larger national companies is different. Many already have health insurance for their employees and have done for some time. Employees under such programmes use cards issued by their insurance company in the same way they use government health cards.

The issue for companies that provide insurance and for the providers of the insurance is cost. According to Hazel Cowling, cost is one thing that has held many private sector companies back from providing cover. “I would not totally agree that the reason for not investing in health cover is about the amount of time employees stay in the Gulf. This, I believe, is much more down to basic costs of healthcare, especially when considering providing this to large numbers of staff,” she says.

Cowling quotes a figure of AED 2,500 per person when asked what companies ought to be budgeting for healthcare. Insurance companies quoting lower premiums, she advises, often don’t pay out.
||**||Insurance not a bottomless pit|~||~||~|
One thing that everyone involved — HR managers, medical institutions and insurers — makes clear is that insurance is not a bottomless pit that should be milked. Medical insurance, as a business, is “high frequency, low severity,” according to Alliance’s John Young and is not highly profitable. He freely admits that Alliance did not make money out of health insurance for many years and that even last year, when it did make a profit, 82% of all premiums collected went straight back out in claims.

“This is not a credit card,” says Young. “You wouldn’t insure a crumpled car and expect someone to pay up. Health insurance is there to provide you with help for unforeseen conditions that arrive after you’ve taken out the policy,” he adds.

One thing that Young has begun to do is actively interact with clients. He will visit employees throughout the year and explain to them that milking health insurance means less comprehensive cover in future years, or leads to higher premiums for their company that are passed on to them as employees. “It’s important for them to know that this is a very valuable employee benefit,” says Young.

The need to be sensible as individuals is a theme taken up by Addie Van Rooij, HR manager at Compaq. If a simple treatment can he had at a local clinic rather than at the more expensive American Hospital, he says, employees are encouraged to go to the local clinic.

Then, if urgent or emergency treatment is required, employees will go to American Hospital. Such principles are not set in stone, but all depend on the trust and loyalty between the employer and employee. “If your people are screwing the system, ask why they are doing it,” he says.

Compaq also tries to practice the idea that prevention is better than cure. By looking at the company’s health record, HR can identify consistent ailments or seasonal problems and take preventative measures. “We might, for example, ask our doctors to come in and do the flu vaccination,” says Van Rooij.

If it sounds like Compaq is looking at its employees’ health records, that is not the case, he says. Rather, he tries to look at wider statistics and identify trends. Trying to strike a balance between reducing costs and protecting patient confidentiality is another challenge that faces the region as it moves towards private healthcare provision.
||**||Hospital and clinic charges|~||~||~|
It isn’t just individuals that might be milking healthcare insurance as well. Clinics and hospitals have also come in for their fair share of criticism. “We all face the same problems with certain doctors and certain hospitals,” says John Young. “All of us are having problems with one particular hospital with inflated costs.”

Addie Van Rooij confirms the problem. “There is still a lot of difference between the good [healthcare providers] and the bad ones, and the ones that are good exploit international companies because they know they want to come to them,” he says. He also says that hospitals can be very inefficient when it comes to billing and fail to reveal to customers that they are not covered for certain treatments.

John Young at Alliance reveals names of certain institutions that he believes are too expensive. He has been calling for industry players to work together more effectively to deal with this and other issues, such as ethics and business practices. He says he doesn’t want the industry to necessarily beat up providers, but to speak to them as a single voice and work out a compromise.

“They [healthcare providers] have to make a profit and so do we,” says Young. “We know that these hospitals have invested huge sums of money in expensive equipment... but I think we, as a representative group, should be talking to hospitals and working together with them.”

He also wants the industry to come up with a voluntary code of practice that will deal with some of the complaints hospitals and policy holders level at the insurance industry. The most common complaints revolve around policy holders being misled about what is covered and what is not.

“We should have minimum standards for the policy form, for the claims procedure and the selling process,” Young argues. “There is no-one that will monitor me in terms of complaints. I’m not happy and don’t think I will be until we can have a code of practice that insurers follow on a voluntary basis.”

Greater industry co-operation would also allow insurers to share intelligence on individuals and companies that are a bad risk. Currently, when a client comes to an insurer, the insurer has little way of knowing about a client’s history unless it uses stealth. “We all sit here and moan, but let’s work together,” says Young. “We need to pool resources and reach common solutions to common problems that benefit us all.”
||**||Direct relationships|~||~||~|
If you don’t like your insurance company, you could always try another alternative. UAE-based Welcare is one local hospital that offers ‘direct relationships’ with companies.

The idea is that a company receives a discount from a healthcare provider dependant on the amount of business that it sends the way of that healthcare provider. Bills go direct to the client and there is no insurance company involved. “Many companies find this arrangement much more convenient because it costs them less,” says Dr Ray. “They don’t have to pay for each and every person.”

That sounds very much like hospitals are almost competing with the very insurance companies that give them so much of their revenue, in some cases anywhere up to 70%. However, Dr Ray tries to argue that the arrangement is not a competitive one. “We aren’t in competition with any insurance company,” he insists. “We are like partners.”

Dr Ray says that a company entering such an arrangement might expect to receive a 10-15% discount over normal prices. However, there are drawbacks.

Patients must be treated at that hospital’s premises, whereas insurance covers treatment at most institutions. Plus, what happens in the case of serious emergency treatment that might cost a lot of money?

Dr Ray says that many insurance packages often don’t cover very serious situations because pre-conditions aren’t covered. Where he admits such ‘direct’ arrangements can have shortcomings is in the case of healthcards.

In the UAE, in order to have a labour card an individual must have a health card. Under the law, these can be issued by the government or an insurer. Some hospitals have succeeded in obtaining dispensations that allow them to issue legal health cards, and Welcare is also lobbying for it to be allowed to do the same.

It’s clear that what may have seemed like a peripheral issue a few years ago is now becoming more important. The government wants to relieve itself of the burden of funding healthcare and companies are increasingly having to take on the responsibility for themselves.

But with this change in reality come some potential problems. Will companies themselves refuse to pay and shift the financial burden to their employees, making the plight of low paid individuals even worse? Will the widening of the insurance pool also mean a big surge in dividends? Will healthcare providers also take advantage of the situation? All these are questions that the authorities, businesses and insurers will have to grapple with in the coming months and years.||**||

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