Healthcare insurance schemes taking shape

Sep 27, 2005

Health insurance is taking shape in Uganda again after a decade, a development experts think will make private healthcare affordable to many.

By Charles Bwogi
Health insurance is taking shape in Uganda again after a decade, a development experts think will make private healthcare affordable to many.
A new government legislation and private players are reviving the scheme, which collapsed with Pan World Insurance Company about seven years ago.
“Health insurance policies are meant to offer social-health protection to all groups of people.
“In fact, we have packages that are as low as a $1 a year to bring the poor on board,” said Microcare’s Dipankar Mahalanobis managing director.
Microcare is the first health insurance provider in Uganda.
Microcare also provides health insurance services cover to people living with HIV/AIDS.
Many insurance companies offering health and life insurance have been excluding coverage for people living with HIV/AIDS.
“If you can attach a price to something, then you can insure it. It only becomes a problem when the price is to too big to make economic sense,” Mahalanobis said.
OracleMed Health, a South African-based company has also joined the market. It has signed a partnership with East African Underwriters to offer the services.
Recently, the Government hired a Washington- based insurance policy legislation firm, LeBoeuf to analyse insurance policy. Health insurance was one of the areas considered.
The development will put an end to the dominance of the health insurance by Health Maintenance Organisations (HMOs) like IAA and AAR, who are offering health insurance products.
HMOs range from relatively established organisations that take fees from clients.
The fees are used to pay medical expenses, while retaining what is left at the end of the year as profit to clinics that agree to provide unlimited specific services for an annual fee to community-based health financing schemes.
“The Insurance Act does not provide for the regulation of HMOs. However, based on information obtained from interviews with stakeholders, risk-bearing entities who operate as insurers and healthcare providers conduct business in Uganda,” the LeBoeuf report said.
By HMOs asking for payment for services upfront, and giving a promise to deliver, they have been operating as risk-bearing entities, insurers and health are providers, putting the public at risk.
“The risk is that the client only has a mutual relationship with the service provider.
“His promises are not guaranteed by any deposits as it is with an insurance company. So in case of a big claim or an act of insolvency on the providers’ side, the client loses out completely,” Mahalanobis said.
Before any company is licensed to write insurance, they must deposit sh1b with the Uganda Insurance Commission as protection to clients.
They must also have a re-insurance cover from a renowned reinsurance firm and prove expertise in handling insurance.
AAR’s customer service manager Deborah Adong said they have a reinsurance cover with Lloyds of London so that clients get what is promised even in case of any problem to the company.
“Every package we sale has an insurance attachment to it,” she said.
Adong, however, believes many other HMOs have no insurance aspect in their packages since there is no regulator to ensure they fulfill the requirement.
In Kenya, seven HMOs went bankrupt, costing the public billions of shillings.
This prompted the Kenyan government to require HMOs to operate as insurance service providers.
The LeBoeuf report recommended that the risk- bearing activities of HMOs should be regulated by the Uganda Insurance Commission.
It said the Commission should determine appropriate margins of solvency and reserve requirements that apply to insurance for HMOs.
But Mahalanobis said health insurance is complicated, which could explain why it took a while for any company to commit itself in that area, offering a chance to HMOs to take advantage of the vacuum.
Pan World Insurance Company’s collapsed is associated with the health insurance business.
“It is a highly specialised business that requires a lot of experience in health administration, a strong IT data system and a solid reinsurance cover,” Mahalanobis, said.
Ends

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