Implementing Mandatory Health Insurance – Lessons from Abu Dhabi

Discussion Material – June 2013

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Agenda

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The Abu Dhabi Experience Potential Lessons for Others Discussion

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Abu Dhabi Largest and wealthiest of the

Emirates in the UAE with 9% of world’s proven oil reserves and one of the highest GDP per capita in the world

Population >2m of which <20% UAE citizens

Ambitious economic diversification program (Ethiad Airways, Formula 1, Insead/NYU/Sorbonne, CCAD, …)

Health System Challenges Prior to Health Insurance

Lack of access

Lack of clinical and financial transparency

Overreliance on public funding

• Lack of meaningful access especially for low-earning individuals

• Lack of choice for UAE Nationals (public sector free only)

• Limited data without ties between financial and clinical performance (“are we getting value for money?”)

• Public funding not based on activity (block budget)• Perceived lack of customer responsiveness in public sector

as a result• Employers not adequately sharing in cost of providing

health care especially for expatriates

Health Care Reform Response

Introduction of Mandatory

Health Insurance

Creation of Pure Regulator

(HAAD) and Modern Payment System

Use of Private Sector/Public

Private Partnerships

Health Financing Reform

Vision• Access to health care for all

• Financing through health insurance• Flexible and efficient financial system

Over 98% of Population Now Covered by Health Insurance

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Enro

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, Mill

ions

Thiqa

Enhanced

Basic

Note Some member numbers may be inflated, as in-year cancellations are not excluded.Source Payer submissions; some insurance data not available ( AXA, and Al Wathba, Noor Takaful Family , Dubai, Green Crescent , Al Hilal Takaful – PSC and

Methaq Takaful)

Mixed model with three tiers reflective of

demographic set-up

The mandatory health insurance scheme was rolled out in three phases

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Preparation & Setup

Feb - Aug 2005 Selection of international

partner (tender): several international companies approached

November 2005 of project in Abu Start

DhabiDecember 2005 Signing of contracts

between Daman and Munich Re

Phase 1 “Rollout“

1st May 2006 Start pilot phase

1st July 2006 All „expats“ of

government and companies with 1,000 employees

Around 250,000 Daman insured members end 2006

Phase 2 “Rollout“

1st January 2007 Health insurance

compulsory for “all Expats“

950,000 Daman insured members end 2007

Phase 3 “Nationals“

June 2008 Compulsory health

insurance for UAE Nationals.

Risk carrier government; Daman Management – TPA.

Basic Enhanced Thiqa

Monthly total salary package ≤ 5,000 AED incl. housing

Exclusively by Daman for 600 AED p.a.

Risk carrier: fully reinsured by Abu Dhabi government (until 2016)

Different benefits, limits and territorial coverage

Risk carrier: Daman with reinsurance from Munich Re

For UAE Nationals

Risk carrier: Department of Finance Abu Dhabi

Insurance products reflect the different needs and demographic characteristics of the UAE population

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Reduced Government Role in Financing

Individuals Employer Department of Finance

Private Providers Public Providers Foreign Providers Administrative

Insurers

• Actively regulated and increasingly competitive health insurance market• Public providers now claiming insurance revenue and open to all payers• Government still a very active player and responsible for some direct

funding

Health Care Reform Response

Introduction of Mandatory

Health Insurance

Creation of Pure Regulator

(HAAD) and Modern Payment System

Use of Private Sector/Public

Private Partnerships

Health Financing Reform

Vision• Access to health care for all

• Financing through health insurance• Flexible and efficient financial system

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Mandatory e-claims for all Standard coded data open

to audits Standard price list regularly

benchmarked for comparability

“The Right Incentives” (DRGs, E&Ms, PBM, co-pays, …)

A Modern Payment System Promoted by an Independent Regulator

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Greatly Improved Transparency – Clinical and Financial

Health Care Reform Response

Introduction of Mandatory

Health Insurance

Creation of Pure Regulator

(HAAD) and Modern Payment System

Use of Private Sector/Public

Private Partnerships

Health Financing Reform

Vision• Access to health care for all

• Financing through health insurance• Flexible and efficient financial system

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PPP started with MunichRe as an operator of DAMAN providing systems and management

Building trust with the government after successful execution of mandatory health insurance, MunichRe became a shareholder

Now both are jointly expanding locally (broader product range) and regionally (KSA, Qatar, …)

DAMAN – Example for a Successful PPP Model

Daman is one the leading specialized health insurance companies in the region

• Support the reform of the healthcare system• Ensure the health insurance of expats working in the Emirate

of Abu Dhabi

Today: 2.3 million members (409,173 “enhanced”; 1,287,511 “basic”; 689,189 “Thiqa”)

Initial problem / challenge

• Daman fulfills its important role within the reform process of the healthcare system in Abu Dhabi

• Daman is expanding outside the Emirate of Abu Dhabi• Daman has created 1,500 jobs in the Emirate and employs

more than 100 Emirati Nationals

Client value

• Daman is the first specialized health insurer in the UAE, licensed 2006 (no other lines of business)

• Daman is owned 80% by the government of Abu Dhabi and 20% by Munich Re

• Munich Re appointed as strategic partner responsible for the establishment and operation of Daman (Management Agreement)

• MR is the exclusive reinsurer for all enhanced products as an incentive alignment

• Daman is the exclusive provider for the government subsidized basic product (Abu Dhabi government is risk taker / reinsurer)

• Daman is managing the Thiqa program for the Abu Dhabi government

• Utilizes the insurance back-office IT system MedNext from Munich Re

• Employer is responsible for full payment of insurance premium by Abu Dhabi law

• Employee has to pay a small deductible / co-insurance per out patient visit

• Strong growth since inception with four main branches and more than 23 service points across the UAE

Solution provided

Membership development 2006-2012 (incl. thiqa)

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Critical Success Factors

1. Political/social support: Full government support at all levels2. Win-win objectives: Social objective for AD government , viable investment for

MunichRe, AD government shareholder of new regional champion3. Competitive partner selection process: RfP process with participation of major

international players4. Seamless execution: Exceeding plans (both operational as well as financial)5. Robust legal framework and good regulation: Support from law/bylaw and creation

and continuous upgrading of HAAD6. Appropriate risk allocation and controls: Economic incentives for DAMAN to

succeed while mitigation of risk for DAMAN in government contracts (basic/thiqa)7. Technology and skills transfer: Development of local layer of management

independent of MunichRe8. Good governance: Management of potential conflicts of interest between (a)

government-funded and private business; (b) public majority and private shareholder

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Agenda

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The Abu Dhabi Experience Potential Lessons for Others Discussion

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Clarify Your Intentions First

Protect against risk of financial ruin and increase access to services?

Shift financing burden from government to employers/employees?

Increase financial/clinical transparency and increase efficiency through better incentives?

Make people happy through more choice (public and private) and increase customer responsiveness of providers (money follows patients)?

What is your ability to stomach potential cost increases as a

result?

As a Result, Regional Design Choices Can Vary

Abu Dhabi Saudi Arabia Qatar (planned) Dubai(as-is)

Mandate for all expatriates*

yes no ? no

Insurance for locals with choice

of private providers

yes no yes (no)

Modern payment system**

yes no yes (yes)

Subsidy for low-earning

individuals

yes no ? no

*including domestic staff**including mandatory electronic exchange of all information and partial risk transfer to providers (e.g., DRGs)

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Carefully Prepare for a PPP

Are you ready to accelerate the implementation of health insurance with imported technical skills in a PPP structure

Can you clearly communicate your intentions to an external partner in a PPP venture

Can you manage the complexity inherent in the creation of an able regulator and are you willing to adequately staff and pay for such a function which is needed as a counterpart in any PPP structure

Do you have the contract management skills to set up and monitor a PPP structure with incentives for both sides to succeed

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Agenda

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The Abu Dhabi Experience Potential Lessons for Others Discussion