‘Significant number’ of companies to downgrade healthcare cover for staff

ABU DHABI // A significant number of companies plan to downgrade their healthcare benefits for workers amid budget cuts and concerns over the rising cost of health insurance.

Michael Bitzer, chief executive of the National Health Insurance Company (Daman), said many companies were looking to remove or trim what many felt were “luxury add-ons”, such as dental and optical insurance cover.

“We have seen a significant trend of downgrading,” said Dr Bitzer.

“We had boom years when clients said ‘give us the best, give us coverage of the Moon’.

“But now it is the opposite because they have budget constraints. They ask if we can give them lower rates, lower benefits.”

Dr Bitzer said the austerity trend was understandable.

“I think it makes sense to cover major diseases, but dental and optical, for example, are more consumables,” he said.

“They may have given it to their employees for the past couple of years but now they are in a budget-focus phase and they have to cut some luxury elements.”

GCC countries, including the UAE, depend heavily on government finance to meet healthcare needs.

For employers, the increasing cost of health insurance is a growing concern, because it adds to employment costs.

The overall cost of healthcare insurance premiums rose to Dh11.1 billion in 2014, up 12 per cent from Dh9.9bn in 2013, according to the Insurance Authority.

Pacific Prime, a healthcare insurance broker, said premiums grew 9.5 per cent last year and had risen by an average of 10 per cent a year for the past five years. In contrast, annual inflation had been about 2.5 per cent.

“Rates go up and employers are concerned, this is true,” Dr Bitzer said. “But all over the world healthcare costs are rising because of new technologies, new drugs. I think it is fair that people and employers shoulder more of the healthcare costs.”

Dubai resident C B, who works for a company in Jumeirah Lake Towers, felt the effect of her company’s reduced spending on healthcare benefits.

“Last year my optical cover was enough to at least help me get what I need for optical care – about Dh2,500,” said the South African. “But this year it is Dh500. I cannot do anything with that.”

C B said her company also cut dental benefits and she had to pay part of the cost for her family’s insurance coverage.

“My company received huge complaints from the staff about the change in policy,” she said.

“One good thing is they promised to amend it when the renewal is due in July, so we will see what happens then.”

Dr Sven Rohte, Daman’s chief commercial officer, said the Middle East was facing significant economic challenges amid the oil price slump as corporate revenues were falling and medical costs were rising.

“These rising costs will continue to push premiums higher,” he said. “Health insurance costs in the UAE now equate to a significant portion of the total payroll and are expected to rise over the coming years.

“The seemingly obvious solution is to reduce benefits and trim overall coverage, but this would not make employees any healthier or provide them with the health care that they may need now or in the future.”

As chronic conditions such as diabetes and heart disease account for the majority of healthcare claims, Dr Rohte said Daman and employers had to work together to encourage residents to become healthier and fitter.

“Employers need to take initiatives to support insurance members to become healthier, which will reduce costs in the medium to long-term,” he said.

“Insurers and HR departments have the same goals in mind – for employees to be in good health in order to be productive contributors at their workplace.”

newsdesk@thenational.ae