Universal health insurance: Gateway to privatization or protector against high treatment costs?
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The universal health insurance bill currently up for vote in Parliament is intended to update the structure of a social protection system on its last legs and improve the provision of health services by expanding insurance coverage to all Egyptians.

Parliament’s Health Committee approved the bill in principle on Sunday, which the Cabinet signed off on in April. The Doctors Syndicate was calling for the health committee to hold a hearing on the bill before it is put to the general discussion in Parliament. The hearing is meant to take place later this week.

During a press conference with French President Emmanuel Macron in Paris last month, President Abdel Fattah al-Sisi identified “health” as one of several social rights not granted to Egyptians.

The bill aims to unify under one umbrella the multiple health insurance systems currently available, to ensure they follow specific quality assurance standards. Coverage would expand over approximately 13 years until becoming universal for all Egyptians. Under the bill’s terms subscription would be compulsory, and higher-income groups would pay higher subscription rates to subsidize medical treatment for lower-income groups.

The bill has met considerable controversy. Some are concerned that such a law would see households incur burdensome insurance fees at a time when Egyptians, who pay approximately 60 percent of the costs of direct health services out of pocket, are already bearing the brunt of a significant increase in prices of medical goods and services. There are also concerns that the law could lead to the privatization of government healthcare establishments.

What healthcare services does the government currently provide?

Government spending on healthcare is allocated to establishments that provide subsidized health services to all Egyptians, such as public hospitals and to state-funded health services.

Public healthcare funding takes different shapes depending on the establishment. Hospitals under the jurisdiction of the Health Ministry are mainly reliant on government funding, while Curative Care Organization (CCO) hospitals are not funded through the state budget, but through sources such as fees paid for specific services. Some institutions, such as the National Cancer Institute, maintain operations by receiving donations.

Some public hospitals are not directly affiliated with the Health Ministry. A significant number of them are university hospitals, which fall under the jurisdiction of the Higher Education Ministry. These include central Cairo’s Qasr al-Aini Hospital, and are used by lower-income people due to the wide variety of services they offer at cost.

According to the latest estimates released by the Central Agency for Public Mobilization and Statistics (CAPMAS), Egypt has approximately 659 public hospitals and 5,314 health offices and healthcare units — establishments that are smaller than hospitals.

Insurance services fall under the jurisdiction of the Health Insurance Organization (HIO), which provides its services primarily through the hospitals it operates. The HIO was established in 1964 to provide insurance services to government workers. Its services were later made available to private sector workers as well, a provision regulated by various pieces of social insurance legislation. The organization has also come to provide for other groups that are not part of the workforce.

State-funded health services, however, are provided to groups that do not have insurance and cannot afford medical treatment. CAPMAS estimates that 1.8 million beneficiaries received medical treatment under this program in 2015.

Why develop the health insurance system when we have all these services?

Currently, public establishments are not capable of providing services to all patients who cannot afford to seek private care.

“Public hospitals in their current state are not enough to support poor people, as the higher cost is paid outside hospitals, i.e. for medication,” Ahmed Shoukry Rashed, adjunct professor at the Frankfurt School of Finance and Management and a specialist on the economy of Egypt’s healthcare, tells Mada Masr. “There must be a comprehensive insurance coverage that protects the poor throughout all stages of treatment.”

The universal healthcare coverage being advanced in the bill would help mitigate the high out-of-pocket contributions Egyptians are currently paying and decrease poverty-induced disease, according to Rashed.

A 2016 study by the Economic Research Forum (ERF) shows that citizens’ out-of-pocket contributions to the costs of direct health services are far higher than those of any other country in the Middle East and North Africa region, where the average contribution is 45.6 percent. According to the latest USAID-funded National Health Accounts, released by the government in 2012, Egyptians pay 59.6 percent of the costs for direct health services.

The state has increased medication prices twice since 2016 — once in May 2016 and then again in January 2017 — against the backdrop of the Egyptian pound’s devaluation on the informal and formal currency exchange markets, which has adversely affected the cost of imported active ingredients.

“The latest wave of inflation triggered by the reform measures, which have been implemented since the fourth quarter of last year, has undoubtedly contributed to increasing costs of medical treatment and caused a large number of Egyptians to fall into poverty,” says Rashed. “This is all the more reason for haste in reforming the health insurance system.”

Who is covered now, and how would coverage expand under universal insurance?

Only 8 percent of the population was covered by the country’s insurance system until the 1980s, even though the system has been around since 1964. In the 1990s, however, the breadth of coverage extended to 36 percent of the population, according to the World Health Organization. The HIO estimates that approximately 60 percent of the population is currently covered by health insurance, according to the latest figures on the HIO’s website and statements made by Deputy Health Minister for Health Insurance Affairs Aly Hegazy.

The government has expanded insurance coverage since 1992 to include school children. It also sought to expand coverage through two laws passed in 2012 that target breadwinning women who are not covered by an insurance program and children below school age.

During the 2014 National Farmers Day celebration, Sisi announced that a health insurance bill was being drafted to cover farmers and agricultural workers. Parliament approved the law during its last term, but the government has yet to implement it due to what it stated were difficulties in gathering demographic information.

The poor quality of services provided by the HIO and the excessive red tape around its health services have contributed to a low number of beneficiaries, with only 25 percent of Egyptian households seeking the program’s services out of the estimated 60 percent, according to a study published in the American Journal of Economics in 2015.

If the universal health insurance law is implemented, the fragmentation of insurance services will end. Out-of-pocket spending on health services is also projected to decrease gradually, lowering the risk that patients would be straddled with financial burdens due to treatment costs, according to Rashed.

“There is a number of widespread diseases in Egypt that can have a devastating impact on Egyptians’ standards of living, such as diabetes,” Rashed says. “Health insurance is meant to reduce the possibility of such fluctuations.”

How does the government plan on expanding coverage to achieve inclusivity?

If passed, the law will be implemented governorate by governorate, according to Health Minister Ahmed Rady. This would start next year, and it may take until 2032 to fully implement the law, with Cairo being the last governorate to see rollout.

The law aspires to change the philosophy of how citizens are brought into the healthcare system in order to maximize coverage. The current philosophy provides select members of a household with insurance coverage — such as a state-employed father insured under the social insurance law (Law 79/1975) or a schoolchild insured through Law 99/1992 — while other members of the same household remain uninsured.

The new law would oblige each household to subscribe in order to include excluded groups, such as housewives and fathers or sons who work in informal sectors.

The bill also sets a new definition for wages from which insurance subscriptions are collected. It includes all wages an insured person receives — if someone works for two employers, their subscription would be calculated according to their total income from both employers. This new definition will provide the HIO with a larger revenue from subscriptions.

This will have a positive impact on the HIO, according to Alaa Ghannam, head of the health unit at the Egyptian Initiative for Personal Rights (EIPR). “The expansion of coverage to include more beneficiaries and compulsory subscription will give the HIO a chance to augment its financial resources,” he tells Mada Masr. “The lack of resources has contributed to a degradation in the quality of the HIO’s services in the past.”

“There is a pressing need to issue supplementary legislation that encourages community involvement in planning and observing the implementation of the health insurance system,” he adds, “allowing for the achievement of universal coverage, which the new insurance system aims to accomplish.”

What will the institutional structure of insurance look like under the new system?

The universal health insurance system would render the current institutional structure of Egypt’s health insurance system a thing of the past. If the new law is passed, former President Gamal Abdel Nasser’s 1964 decree to establish the HIO would be superseded, and the organizations responsible for the provision of healthcare would take on a new structural form.

Rather than running hospitals, the HIO — which would be renamed the Universal Social Health Insurance Organization (USHIO) — would be commissioned to purchase health services using the money from subscriptions and its other financial resources including the state budget, pursuant to the bill’s stipulation that funding be separated from provision.

Within the frame of its new duties, the USHIO’s board would sign off on the prices of the provided health service package and devise strategies to manage insurance funds.

All health service outlets under the HIO’s jurisdiction would be handed over to a new body, the General Healthcare Organization (GHO). The GHO would also manage and have jurisdiction over establishments now affiliated with the Health Ministry, the Curative Care Organization, the General Secretariat for Specialized Medical Centers and other public hospitals.

The GHO would provide health services to insured groups following quality standards established by a third entity, the General Health Accreditation and Supervision Authority (GHASA). The GHASA would supervise the quality of insurance services provided by competent establishments.

The bill stipulates that the GHASA’s regulatory reach would extend to all establishments and professionals in the medical and health service sector where services are provided to insured individuals (health insurance subscribers). The GHASA would have the authority to cancel or suspend the license of any establishment that violates the conditions set forth by its board.

What household-based subscriptions will the new system offer?

If the head of a household is a worker insured by the social insurance law, they would pay 1 percent of their wages to an insurance provider, provided that their wage is not under the national minimum set by the government.

If they are a business owner, member of a trade union or someone working abroad, they would pay 4 percent of their withholdable wages or of their net income as indicated on their tax return, provided that they are not paid less than the minimum wage.

The head of a household would also pay 2.5 percent of their wage to ensure health insurance coverage for a nonworking spouse and 0.75 percent for their children.

If the head of the household is a pensioner, he or she would pay 1 percent of their monthly pension to an insurance provider, provided that the pension is higher than the minimum wage. Widowers and ongoing pension payment recipients would pay 2 percent of the monthly pension, with the same minimum wage threshold.

Evasion of subscription fees would be difficult under the new system, as the bill stipulates that providing proof of payment must be shown to secure essential government-issued papers, such as renewing a national ID or passport, or enrolling in public or private schools.

What are the main criticisms of the bill?

During an April press conference it organized, members of the Committee To Defend The Right To Healthcare voiced their opposition to the bill, saying the new system would burden limited-income households by expanding the scope of compulsory insurance subscriptions, especially as student subscription fees would increase from a meager LE4 per year to 0.75 percent of their household head’s income.

The bill does acknowledge that some groups would not be able to afford to pay subscriptions at all, however, and stipulates that the state must cover their expenses. EIPR commended the bill for setting out a clear definition of these groups, which would be “guided by the national minimum wage set by the government and by inflation rates.”

Still, Ghannam tells Mada Masr that determining what constitutes a minimum wage for informal workers would be a substantial obstacle to the law’s implementation.

EIPR’s criticisms of the bill were more focused on its finances. According to a paper published on their website in May, the bill does not set a maximum for fees incurred upon receiving outpatient services.

Looking at health insurance models internationally suggests that “subscribers” contributions are a way to prevent excessive use of services and consumption of unnecessary products,” the report said. “Therefore, we propose that the bill specifies a maximum for these contributions.”

The Doctors Syndicate issued a statement on Monday following the parliamentary committee’s approval of the bill, airing concerns about the privatization of healthcare services. According to the syndicate, the proposed system is based on insurance contracts with hospitals that meet certain quality standards, raising questions about what will happen to government hospitals that are currently unable to meet the criteria. The statement asks whether these would end up being developed by the private sector, and adds that the high fees imposed on clinics and medical practitioners may additionally impact doctors from lower-income brackets.

Why do some consider the bill a gateway to privatizing health insurance?

The bill establishes a health insurance management system whereby the private sector will play a pivotal role in planning and providing services. Some experts fear that this may allow companies to take over the system and manage it in a way that favors their interests.

According to Mohamed Hassan Khalil of the Committee to Protect the Right to Healthcare, this risk stems from the fact that the bill stipulates the formation of a committee within the USHIO tasked with setting the prices at which it would purchase health services from providers. What’s more, half of that committee’s members would be from the private sector. Khalil says that such a committee may create of a conflict of interest.

The bill stipulates that private-sector service providers would constitute 25 percent of the pricing committee and independent experts another 25 percent.

Opponents of the bill have also raised concerns about the separation of funding and provision. As the USHIO’s primary role would be to use subscribers’ money to fund services provided to them, while service providers would be medical establishments considered eligible to provide healthcare according to a set of quality standards, public and private hospitals would compete to provide insurance services. If the poor quality offered by a public hospital sees it fall behind in this competition, the hospital might be dismantled.

“The bill would turn public hospitals into for-profit establishments,” says Khalil. “It would put them at risk of being excluded from the insurance system, depriving them of a main source of funding and creating the possibility that they may be sold to private actors who might turn them into investments, such as real-estate developments.”

Translated by Salma Khalifa