In December last year, the Dubai Health Authority (DHA) announced a new mandatory health insurance scheme for residents. The scheme, called Isahd, which means happiness in Arabic, means every employer will have to provide workers with a basic healthcare package. So, will this benefit our finances or not?
“Health insurance is a form of security and our aim is to ensure everyone in the emirate has access to essential healthcare in case they need it,“ Essa Al Maidoor, director general of DHA told Arab Health this week as he revealed the new name of Dubai’s mandatory health scheme.
Under the terms of the scheme, companies with 1,000 plus employees must have cover in place by October 1 this year; companies with 100 – 999 employers must have cover for August 2015 and those with fewer than 100 staff must have offer cover by July 2016. The scheme will also cover tourists in case of an emergency.
In the final phase, all spouses and dependents must also be covered before the end of June 2016. While employers will cover the cost of the employee’s insurance, the employee themselves will be the responsible for their spouse, dependents and domestic workers. However the DHA is strongly encouraging companies to cover this cost themselves.
A boost for low-income workers
While Abu Dhabi employees already have medical insurance for themselves, their spouse and up to three dependents, Dubai does not. This means while in Abu Dhabi 98 per cent of residents are insured, in Dubai the DHA estimates only two million are insured.
This is because some employees only receive insurance for themselves and perhaps a spouse but not children. And many more employees receive no cover from their sponsor at all. This had the biggest impact on low-income workers who relied on government hospitals for treatment.
Hospitals in Dubai, for example, have reported instances where emergency cases discharged themselves because they could not cover the costs of the treatment or aftercare they needed. Sad cases like these will stop once the scheme is introduced with every employee expected to be covered by mid-2016.
Therefore the basic package will be particularly beneficial for the low-income sector. It will include cover for emergency services, general doctor’s appointments as well as referral to specialists, tests and investigations, surgical procedures and maternity care.
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A mixed outcome for higher-income expats
For the professional expat, there are a number of outcomes of this new law.
- In the first, the expatriate already receives health cover as part of their package for them and their families, so the situation will not change unless they have not previously sponsored their domestic workers. In this scenario the only change in cost is the addition of a domestic worker.
- In the second scenario, an employee may have cover for themselves but until now could not afford the additional burden of sponsoring their family themselves. This will be a burden on their finances as they must now pay for that insurance.
- In the third scenario, the expat worker has cover for themselves and up until now has paid extra to sponsor their family and domestic worker. Now with the mandatory health scheme they must compare their existing policy with the new compulsory scheme. Which is better and which is more cost-effective?
According to Dr Haider Al Yousuf, the Director of Health Funding at DHA, the move would only have a “minimum impact” on employees in terms of cost.
“Insurance companies interested in providing the essential health benefits (EHB) package to resident employees with salaries below AED4,000 will have to undergo further qualifying criteria to ascertain their ability to provide an insurance package at an affordable rate. The premium for this package will range between AED 500 – 700 per person per year.”
While bigger companies may absorb this cost and automatically include your family’s healthcare in their scheme offering family cover as a perk, smaller enterprises may find this unsustainable. As a result, the burden falls on you. If you have three children and a nanny to cover, this adds up to quite a sum particularly if you want to upgrade the insurance cover.
The mandatory health scheme basic package will only cover so much. If a complicated medical procedure is needed, this could be something you need to pay yourself and it might be worth topping up the policy to get yourself better protection.
It may be worth shopping around health insurance policies in general to find a package that suits your needs better. However, it could be costlier option too.
The economic impact
From an economic point of view, the introduction of mandatory insurance is quite significant. Ratings agency Standard & Poor’s says it expects a progressive surge in premium income from the introduction of this cover
Although it will be difficult to forecast the total new gross incomes that will be added to the insurance market following implementation of the law, Saudi Arabia and Abu Dhabi are a good examples of what might happen.
Both had compulsory medical insurance introduced in the last decade and as a result medical insurance has become a dominant line of business. In Saudi Arabia, for example, Standard & Poor’s estimate it is about 40% of total insurance premiums and in Saudi Arabia this figure rises to 55%. It means there will be more investment in the Dubai’s health care industry and competition between providers; competition can only be a good thing as it could drive down the cost of a policy.
Another piece of good news, there will be monitoring in place to ensure companies comply with the new law. Failure to comply will see businesses charged a minimum fine of AED500 and a maximum of AED150,000. Repeated breaches carry a maximum AED500,000 fine. This means you will definitely be protected.