More than a year has passed since the regulations implementing the Abu Dhabi Health Insurance Law No 23 of 2005 (the “Health Insurance Law”) came into effect. The law was implemented in stages, and has applied to all expatriates living or residing in the Emirate of Abu Dhabi since January 2007. This article examines the scheme and the challenges that have been identified since the scheme has been operational, and comes amid plans for a similar scheme in Dubai and rumours that a scheme may be implemented at federal level too.
General Background
The Health insurance Law and its regulations (the “Scheme”) not only deal with the provision of financing for healthcare, but regulate all aspects of healthcare for expatriates in the Emirate of Abu Dhabi.
In terms of the Health Insurance Law, the General Authority for Health Services is responsible for the implementation, monitoring and ensuring compliance with the Scheme. This body has recently been rebranded as the “Health Authority for the Emirate of Abu Dhabi” (the “Health Authority”).
The regulations set out requirements that all participants in the broader healthcare sector in Abu Dhabi including, healthcare providers, insurers, third party administrators (“TPAs”) and insurance intermediaries, have to comply with if they wish to offer healthcare services to expatriates.
How is the Scheme enforced?
In terms of the Scheme, a legal duty is imposed on sponsors and employers of resident expatriates to ensure that those on their sponsorship, or in their employ, have valid health insurance in place. Employers are not only responsible for the insurance of their employees, but also their employee’s spouses and up to three children under the age of 18 years. As the Scheme is only applicable to expatriates, it does not require UAE National employees to be insured at this stage. By and large, the Scheme exercises control by controlling the funding of expatriates healthcare.
To enforce compliance by sponsors and employers, the Health Insurance Law provides fines for sponsors and employers that fail to ensure that insurance is in place and provides that they will be responsible for the cost of healthcare services provided to uninsured persons in their employ or under their sponsorship. As a further means of ensuring that employers procure insurance for their employees, no employee’s work permits are issued or renewed in Abu Dhabi, unless evidence is provided that such employees have health insurance. It is likely that annual renewal of trading licences will also need to be accompanied by evidence of appropriate insurance being in place for employees and dependants.
Regulations Applicable to Health Insurance Companies and Intermediaries
All insurance companies and intermediaries who wish to sell health insurance are required to be registered by the Health Authority. The Health Authority also requires these entities to have established a place of business in Abu Dhabi. This has presented difficulties for service providers, with the result that until recently only one Third Party Administrator has actually been registered with the Health Authority. In addition to the registration requirements, the regulations provide for administrative issues, such as allowing the outsourcing of certain administrative functions by insurers and providing safeguards to ensure the independence of the various parties involved in the provision of health insurance.
The regulations provide for the mandatory scope of cover to be provided by insurance policies, together with standard exclusions. A ‘basic cover’ provides cover for low-paid workers, and is offered at a subsidized rate of AED600 per year. This can be supplemented at market rates for higher earners, with provisions also applying to visitors’ emergency cover.
Regulations Applicable to Health Care Service Providers
Healthcare service providers including doctors, clinics, rehabilitation centers and pharmacies are also required to register with the Health Authority, if they wish to provide healthcare services to persons insured under the Scheme which, due to the requirement that all expatriates have to have health insurance, means that by implication virtually all service providers have to be registered. Again, the regulations set out details of the requirements that must be met for registration and contain provisions that attempt to ensure the independence of healthcare service providers.
The Health Authority’s Responsibility under the Scheme
In order to monitor the implementation and compliance with the Scheme, the implementing regulations provide that the Health Authority is allowed to apply to the Ministry of Justice to appoint “authorised officers” to investigate complaints and violations of the health insurance scheme. Such “authorised officers” have recently been accredited by the Ministry of Justice, so another aspect of the Scheme is now operational. In addition to authorised officers, the regulations require the Health Authority to form a “complaints unit” that is responsible for assisting in the investigation and resolution of complaints and disputes between the various participants in the Scheme and for providing recommendations to the Health Authority. Authorised officers report to this body. In terms of the regulations, health insurers and service providers are required to submit any dispute to the complaints unit for amicable settlement, once the dispute resolution provisions (contained in the respective agreements) have been exhausted. Insurers are accordingly required to provide suitable procedures in their policies to resolve disputes with policyholders.
Issues arising from the Implementation of the Scheme
The Scheme has certainly been an unqualified success in terms of numbers of lives insured, which we understand now approaches one million. Employers and the insurance industry have no doubt experienced some problems in adapting to the Scheme, nevertheless there have been obvious benefits to those insured under the Scheme. There are a number of issues that could usefully be addressed. We summarise some of these below:
- The requirement that all service providers have a business presence in Abu Dhabi presents a large problem to the insurance industry, and particularly the service providers such as brokers and TPAs. Often these providers are regulated at a federal level, and where there is no commercial reason for these providers to have a base in Abu Dhabi, the Health Authority’s requirements simply impose an additional layer of cost and bureaucracy. The requirements also hinder the development of effective outsourcing channels for back-office work.
- The schedule of benefits set out under the regulations does not allow for flexibility in relation to benefits offered. It also makes it difficult for companies to choose to self-insure for particular benefits, such as maternity care. A more flexible approach, particularly for higher income insureds, would allow more choice, without compromising the ultimate aims of the scheme.
- A number of international insurance providers, for whom the UAE is a small but key market, have difficulties in adapting their standard products which are available worldwide to the rigid requirements of the basic benefits package.
- The Scheme encourages group medical insurance policies, but makes it very difficult for insurance companies to offer individual health cover.
Developments Going Forward
While the Abu Dhabi health insurance scheme has clearly ensured that all expatriates can be assured of healthcare in a manner that is affordable to the expatriate and the Emirate of Abu Dhabi, and it has created additional opportunities for the local insurance industry, its implementation is not without challenges for both employers and the insurance industry.
At a time where at least another two healthcare schemes are being investigated for Dubai and at a federal level, it would certainly be of great use to employers and the insurance market if health insurance requirements could be standardized across the UAE. That presents challenges for the Abu Dhabi authorities and those responsible for implementing schemes in Dubai and elsewhere in the UAE.