The regulation of private health insurance

It’s amazing how the managers of Ghana’s National Health Insurance Scheme (NHIS) would always want us to believe they are on top of issues, despite their many conspicuous shortfalls.

I have always maintained that just as the Ghana Football Association (GFA) is only known for the Black Stars, the National Health Insurance Authority (NHIA) is only for the NHIS. Indeed the not-too-strong a regulatory regime is not only having an effect on Ghanaians, but also putting some health insurers out of business. 

Private Health Insurance Scheme

Unlike the NHIS, private health insurance is largely patronised by the middle to high income earning groups in Ghana, due to its relative high cost. Unlike what pertains in the US health care system, which is heavily reliant on private health insurance with about 58 per cent of citizens having some kind of private health insurance coverage, the case is different in Ghana. 

The reason is that the premiums on the private health insurance are relatively higher with better, more reliable and expanded service provision. This is different from the NHIS which is supported by the state even though citizens may be required to pay a premium. The target is generally the average to low income non-SSNIT contributors and/or their dependants; more of a social intervention policy.

The headache of private health insurers

In Ghana, the NHIA is the industry regulator. Over the period, private health insurers have complained of both the regulatory inadequacies and the lack of enforcement by the NHIA. Indeed, there is that quiet feeling of neglect! Unfortunately, the regulator appears to be largely focused on the state-partly-sponsored NHIS, with very little attention to the activities of private health insurers, who are reeling their heads under a system that is hanging on a sandy ‘cementless’ foundation. This, unfortunately, is seriously undermining the survival of the health insurance industry in Ghana.

Unstable entry and exit

Currently, the industry has ‘easy’ entry and exit barriers; players with very limited expertise and resources come in and fold up, after a few years. Some of these insurers hold monies in trust for their members, because premiums are often paid in advance, and are expected to pay for the healthcare needs of those members. In the unfortunate event of a player folding up, the consequences are dire. 

For instance, following reports of the folding up of one of the leading health insurers, a medical officer intimated that when she reported to the NHIA about the collapsed company’s indebtedness to her facility, the regulator advised her to personally pursue the beneficiary clients to redeem her indebtedness, as the NHIA didn’t have the mandate to intervene. 

Following from these reports, some health facilities have, lately, decided not to accept private health insurance cards from patients, fearing that the accruing medical bills may either be unduly delayed or not be paid altogether.

The state of supervision

From my discreet interactions with industry players, the perceived weak supervision by the NHIA has given room for some players to have an unhealthy and unsustainable market pricing policies that could undermine the industry’s stability. Indeed, most private health insurers set premiums without recourse to sound actuarial computations. This, invariably, makes it difficult for some of them to pay claims when due, since they simply don’t have the cash flow. 

In their bid to outwit the competition and close new businesses, some players are allegedly developing the habit of deliberately reducing their premiums below acceptable actuarial limits, thus giving them unfair advantage.

In the wake of this regulatory regime and unethical practice by some industry players, speculations have also been rife about how some private health facilities shamefully attempt to ‘make up’ from the system by either inflating medical bills or requesting payments for no medical care provision. Similarly, there are speculations that some health facilities even give out expired or near expiry drugs, in an attempt to sell out their stocks to patients who don’t need them! These practices, unfortunately, affect the cash flow of the players.

Hope in sight?

The above notwithstanding, it is refreshing to hear about the launch of the new regulatory guideline that regulates the solvency of schemes. This guideline which was communicated to all private players to comply within six months effective April 2015  is expected to safeguard the policy holder’s interest from being compromised by unprofessional stewards of premiums. 

I believe it would eliminate the incidence of schemes dying off from unfair business practices as enumerated in this article.

Way forward 

In the short term, the NHIA must live up to its regulatory responsibility, by paying attention to the needs of the private health insurers. Over the long-term, government must decouple the management of the NHIS from the regulatory function of the NHIA in order to give the NHIA more focus. In particular, the monitoring and evaluation unit of the NHIA must be strengthened to be able to adequately verify claims submitted by service providers. 

This might not be foolproof, but it certainly will minimise the inadequacies that have led to the closure of some private health insurance companies, as they could not sustain the cash flow shocks. 

Besides, there might be the need for a centralised technology-based claims vetting interface, managed by the NHIA, where all service provider claims are lodged for initial verification before transmitting to the respective health insurers for further review, processing and payment. 

Additionally, the NHIA in collaboration with the Ghana Medical and Dental Council, should adopt and enforce a sanctions regime for medical practitioners and facilities allegedly engaged in deliberate over-billing and/or requesting payment for services not offered. 

Moreover, industry players must also adopt strong internal control mechanisms (including actuarially determined pricing) in order to improve their operational efficiency. — GB