Over the years, Uganda’s Health Insurance industry has been and still remains on a steady growth and predominantly being among the fastest growing insurance lines in Uganda after life insurance. Across the region, Uganda has also been holding the flag in providing the most affordable primary healthcare within the region.
In 2021, according to IRA’s industrial report, Ugandans paid about 269B UGX to licensed private health insurance providers a rise from 162B UGX in 2017. This depicts a 66% growth over the period of 5 years. It’s also important to note, that in 2021, if you are subscribed to health insurance, you are among the lucky 375,000 Ugandans out of 47 Million people (Less than 1% of the population), currently covered by private health insurance providers.
Furthermore, over 98% of those, have cover by virtue of being sponsored by their employers. This leaves about less than 8,000 individuals that pay for their health insurance out of pocket.
This builds up a fundamental question, whereas we still boast of having the most affordable healthcare services and health insurance in the region, why do the statistics depict that a Ugandan is only able to afford health insurance if paid for by their employer? Whereas health insurance is still seen as not affordable by majority of Ugandans, it’s important to note that most insurers would agree that the current level premium offering is not sufficient to provide the desired level of healthcare to its insured or prospected members, and this is why.
Using 2021 as a case study, Insurers paid over 90% of the premium collected to meet healthcare needs of their clients in terms of claims, this would be an equivalent of about 243B UGX, which is an average of 650,000 UGX per person covered. Typical insurers in Uganda, do not own hospitals, and therefore the beneficiaries of such sums are external parties (Government and Private Healthcare facilities) to guarantee an acceptable level of healthcare to itsmembers.
The cost of claims indicated above excludes about 27B UGX paid out to intermediaries in form of commission and about 54B UGX to meet their company over heads, among them office rent, statutory obligations like NSSF, PAYE name it.
This would mean that insurers had to solicit for over 54B UGX from other financing modes to take care of their members healthcare needs. This clearly tells you that the current premiums structure is not sufficient to cover claims.
Fundamentally, potential investors into the health insurance market would be asking whether it has ever been a wise move to put money into Uganda’s health insurance industry. Simply put, it would cost a shareholder a minimum of an extra 140,000 UGX per insured per year to take care of the health of its insured members on top of what he’s currently receiving from them, in form of premium.
One would ask, how did we arrive here? One would deduct that since majority of the Ugandans don’t pay for their health insurance out of pocket, the cost of claims has since been left in the hands of insurers, with minimum effort coming from their members to join the quest of reducing the cost of claims.
The insurers have also since cried foul play from the healthcare facilities citing inconsistent claim tendencies among some, in form of unpredictable healthcare average cost increments and unnecessary hospital visits. Let us give an example, If you randomly askedan insured member where they seek healthcare services from, they will be quick to mention these below; AARHealthcare, IMC, Case Hospital, Life Link, AgaKhan, IHK, Nakasero, Kampala Hospital, Norvik, UMC, St Catherine,and Platinum.
From the above, it’s clear that the health insurance industry’s sustainability is as good as a deliberate symbiotic relationship between insurers and healthcare facilities, coupled with policy holders being control of their health and claims utilisation to guarantee more affordable health insurance.
The public should be able to pay the right premium to access their healthcare providers of preference (The right premium doesn’t have to be expensive). These healthcare providers ought to give insurers predictable costs of healthcare for them to price their products appropriately. Once all stakeholders are in one accord, we shall start seeing more affordable health insurance products for the masses.
Together, we can create a sustainable health insurance industry that guarantees affordable health financing mechanisms for the consumers and thus attaining universal healthcare coverage objective, where we all win.
The Writer is an Actuarial Consultant with Kenbright Africa.
Ernest Magezi Barusya
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