Healthcare Spending Trends in Dubai Show the Need for Health Insurance Law

Last year, the Dubai Health Authority released its first Health Accounts System of Dubai report. The research focused on healthcare spending in Dubai for 2012. It highlighted several issues in the sector, including a relatively low percentage of medical costs being covered by health insurance companies. Several key findings in the report validated the need for a mandatory health insurance scheme in Dubai:

Health insurance companies only paid for 36% of all expenditure on healthcare

According to the DHA, the Government paid for 33% of the AED 9.9 billion spent on healthcare in Dubai in 2012. On the other hand, insurance companies in Dubai only paid for 36% of total medical costs!

Households paid 22% of all costs out of their own pockets!

No statistic demonstrated the need for mandatory medical insurance as much as the fact that out of pocket spending for healthcare among Dubai residents was over AED 2 billion. This is the highest rate in the GCC, and higher than the UAE-average which stood at 16%. In Qatar for example, residents paying out of their own pocket accounted for 14% of total health expenditure in the country.

Interestingly, South Korea and Switzerland had a higher rate of out of pocket spending than Dubai at 36% and 25% respectively. 

48% of all healthcare spending occurred at hospitals

In general, treatments in a hospital setting are more expensive than in a clinic. This results in higher overall healthcare expenditure, and increases the cost of covering policyholders for insurance companies. In a well-diversified and developed healthcare system, a much lower percentage of healthcare spending takes place at hospitals. For example, the figures in Canada and Switzerland are 30% and 36% respectively.

Clinics in Dubai had a market share of 22%, while pharmacies accounted for 8% of total healthcare costs. As the medical industry develops, it is likely that Dubai residents will receive treatments at clinics more often while reducing hospital visits.

Preventive care is not a priority in the UAE

Only 6% of total medical expenditure was on preventive care. In comparison, 55% was spent on treatment of diseases in hospitals & clinics while 20% was spent on medicines. Of the AED 550 million spent on preventive care, health insurance companies only accounted for 5% of it.

In developed countries, the trend from medical insurance providers is to invest in preventive care such as checkups and screenings for diseases. The theory is that by preventing customers from acquiring diseases over the long term, it will reduce the total healthcare costs and claims by policyholders. However, in the UAE, the population is transient, so insurance companies do not emphasize long-term programs since the average customer is not likely to hold the same policy for a long time.

Children and senior citizens spend the most per person

While children under the age of 4 and adults over the age of 65 only accounted for 5% of Dubai’s population, these two age groups contributed to 18% of all healthcare spending. So which age group tends to have the lowest medical expenses? 44% of Dubai’s population consists of males from the age of 25 to 39, yet they only accounted for 21% of total spending on healthcare.

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