Gulf healthcare at a crossroad

Spending on health is starting to rocket in the Gulf. New strategies are needed, but insurance is not the answer

In the united states Obam administration have got the most talked about Healthcare Bill. This brings the Helthcare in GCC also to come and thin about the strategies create new policies in order to avoid the same problems US has had or will have.

An easier target is the cost of administration, including insurance. With medical costs rising, and patient expectations growing with them, insurance companies are spending increasing time and money monitoring claims. For every doctor, there are about four other people working in US healthcare. At least 25 per cent of US health spending is actually not going on health.

As the service component of US healthcare expands, the challenge facing insurance companies will grow. If you cannot cost a procedure, how can you insure against it? Insurance companies and healthcare administrators trying to control costs are spending a fortune trying to define the indefinable.

And yet, an insurance-based healthcare model is still regarded as the only acceptable alternative to the tax-financed, free-at-the-point-of-use system associated most frequently with Britain’s National Health Service (NHS), which free-market thinkers revile. And it is coming to the GCC.

The region has been highly successful at increasing life expectancy and reducing infant mortality. This was done using a comparatively small proportion of GDP – probably no more than 4 per cent in the GCC – and a free-at-the-point-of-use system.

This approach is being questioned. McKinsey forecasts GCC spending could grow by 400 per cent to almost $60bn in 2025. Governments cannot afford to pay the entire bill. The private sector should contribute more and that means more health insurance.

The most radical response has come in Abu Dhabi. It has made health insurance compulsory. But the emirate is sweetening the pill by paying the premiums for nationals and offering a sliding scale for foreigners. At best, this will slow the cost rises. It will not halt them.

Saudi Arabia, however, is pursuing a different track. Its Health Minister Abdullah Al-Rabeeah is focusing on investing more in primary healthcare and raising standards. Comprehensive insurance now, is seen to be too complex and politically-sensitive.

There are intrinsic reasons why health costs will rise. But there are lessons to be learnt from other industries. Technology should be used to cut health bills. But this will not happen if people who control health have a vested interest in seeing them rise.

Doctors should be well rewarded for what they do. But it is wrong that the sickness of others should make them rich. Insurance can help, but not with core health services. These are as important to a society’s future as defence and should be treated as such.

The GCC is at a healthcare turning point. It has more than one option. But the region would be making an error of historic proportions if took a course that the US itself, is beginning to reject.