Insurers wary of national health scheme
INSURERS have proposed that the National Social Health Insurance Scheme should cover the informal sector instead of the formal sector as planned. Recently, the health ministry suspended the launch of the scheme, which was supposed to have taken off in July this year, to next year, due to pressure fr
By Charles Bwogi
INSURERS have proposed that the National Social Health Insurance Scheme should cover the informal sector instead of the formal sector as planned. Recently, the health ministry suspended the launch of the scheme, which was supposed to have taken off in July this year, to next year, due to pressure from stakeholders.
The ministry opened a platform for debating with the stakeholders. However, the stakeholders are wary of the ministry’s failure to change certain aspects of the scheme like targeting the formal sector before rolling out to other sectors of the economy.
The commissioner for health planning, Dr. Francis Runuumi, said a study carried out in 2001 revealed that the formal sector had about 400,000 employees. He said if 4% is deducted from each employee’s gross salary and 4% contributed by the employer, about sh90b would be raised in the first year before the scheme is rolled out.
“The benefits of national health insurance schemes the world over first target the poor and the informal sector because formal sector employees always have schemes covering them,†an industry expert said.
He said even in Uganda, many formal sector employees have health insurance arrangements with insurance companies and health management organisations like AAR and IAA.
“This implies that it is the informal sector which needs the scheme more than the formal sector and should therefore be the beginning point.â€
He said the social nature of the national health insurance scheme contradicts the business nature of the scheme because most formal sector employees are covered.
The expert proposed that if the ministry insists on the formal sector, it should begin with civil servants in order to give confidence to the private sector to join the scheme.
“The private sector should be given an opportunity to demand for the scheme after seeing the wonderful benefits the scheme has delivered to the civil servants to avoid the unpleasant situation of having the scheme imposed on the private sector,†the expert predicted.
He said Uganda has 300,000 civil servants and about 100,000 private sector employees.
Another expert said the health ministry and the Government need proper administrative and management structures run by health and insurance experts before the scheme is rolled out.
“The ministry lacks any technical insurance person and yet it feels it is almost ready to roll out such a huge scheme,†the source said, adding that such a scheme would require experts to handle the different aspects like health service provision, regulations, insurance and distribution.
The insurance industry, which also offers health insurance products, through players like Jubilee Insurance Company, Liberty Life, UAP Insurance and Insurance Company of East Africa, also expressed fears that if the scheme fails, it might make the public detest the health insurance products it provides.
“People had lost faith in health insurance after the collapse of Pan World Insurance Company, the sole provider of the product then. This faith had started to come back after several big players started rolling out the product, but this might be lost again if the proposed scheme is mismanaged which is likely to be the case under its current structure,†the source said.
He said failure of the health scheme would be a big blow to the insurance industry, which is already struggling with historical miscalculated policy bottlenecks like the 1987 currency reform which killed people’s faith in life insurance.
The currency devaluation exercise, which was part of economic reforms at the beginning of President Museveni’s rule, reduced people’s life insurance policies to almost nothing, a nightmare that the insurance industry has had to live with up to today. Life insurance accounts for less than 10% to the premium written by the industry.
There is also discontent about the health ministry administering the scheme due to its tainted record with the Global Fund.
INSURERS have proposed that the National Social Health Insurance Scheme should cover the informal sector instead of the formal sector as planned. Recently, the health ministry suspended the launch of the scheme, which was supposed to have taken off in July this year, to next year, due to pressure from stakeholders.
The ministry opened a platform for debating with the stakeholders. However, the stakeholders are wary of the ministry’s failure to change certain aspects of the scheme like targeting the formal sector before rolling out to other sectors of the economy.
The commissioner for health planning, Dr. Francis Runuumi, said a study carried out in 2001 revealed that the formal sector had about 400,000 employees. He said if 4% is deducted from each employee’s gross salary and 4% contributed by the employer, about sh90b would be raised in the first year before the scheme is rolled out.
“The benefits of national health insurance schemes the world over first target the poor and the informal sector because formal sector employees always have schemes covering them,†an industry expert said.
He said even in Uganda, many formal sector employees have health insurance arrangements with insurance companies and health management organisations like AAR and IAA.
“This implies that it is the informal sector which needs the scheme more than the formal sector and should therefore be the beginning point.â€
He said the social nature of the national health insurance scheme contradicts the business nature of the scheme because most formal sector employees are covered.
The expert proposed that if the ministry insists on the formal sector, it should begin with civil servants in order to give confidence to the private sector to join the scheme.
“The private sector should be given an opportunity to demand for the scheme after seeing the wonderful benefits the scheme has delivered to the civil servants to avoid the unpleasant situation of having the scheme imposed on the private sector,†the expert predicted.
He said Uganda has 300,000 civil servants and about 100,000 private sector employees.
Another expert said the health ministry and the Government need proper administrative and management structures run by health and insurance experts before the scheme is rolled out.
“The ministry lacks any technical insurance person and yet it feels it is almost ready to roll out such a huge scheme,†the source said, adding that such a scheme would require experts to handle the different aspects like health service provision, regulations, insurance and distribution.
The insurance industry, which also offers health insurance products, through players like Jubilee Insurance Company, Liberty Life, UAP Insurance and Insurance Company of East Africa, also expressed fears that if the scheme fails, it might make the public detest the health insurance products it provides.
“People had lost faith in health insurance after the collapse of Pan World Insurance Company, the sole provider of the product then. This faith had started to come back after several big players started rolling out the product, but this might be lost again if the proposed scheme is mismanaged which is likely to be the case under its current structure,†the source said.
He said failure of the health scheme would be a big blow to the insurance industry, which is already struggling with historical miscalculated policy bottlenecks like the 1987 currency reform which killed people’s faith in life insurance.
The currency devaluation exercise, which was part of economic reforms at the beginning of President Museveni’s rule, reduced people’s life insurance policies to almost nothing, a nightmare that the insurance industry has had to live with up to today. Life insurance accounts for less than 10% to the premium written by the industry.
There is also discontent about the health ministry administering the scheme due to its tainted record with the Global Fund.