Rising Healthcare Costs in the UAE

The UAE has seen tremendous development in recent years, with the largely oil driven economies of the region doing better than many in weathering the challenging financial climate of recent years. Indeed, the UAE saw its economy grow by 4.3 percent in 2011 due in great part to the prices of oil, although certainly helped along by non-oil sectors such as the tourism industry.

However, as many developing and developed countries alike have come to realize, increasing access to modern technology, food and conveniences often brings with it increases in certain diseases and healthcare expenditure in tow. Preventable diseases such as type-II diabetes, heart disease and certain types of cancer that are often referred to as lifestyle diseases often play a large part in rapidly growing the amount spent on healthcare both by governments and individual citizens seeking care.

The UAE has felt such a pinch quite acutely in recent years, with their expenditures on healthcare rising to approximately US$1,200 per person per year, bringing them into the top 20 countries in the world for money spent on healthcare per capita. While this may be seen as good news for healthcare providers and the pharmaceutical industry, the growing costs and the underlying health problems causing the rapid rise in health spending have serious implications both for the quality of life of the citizenry as well as the financial wellbeing of the countries as they try to ensure access to quality services.

Much of the growing healthcare budget is due to the rapid rise in lifestyle diseases in the UAE and the Gulf region in general. Indeed, 19.2 percent of residents in the UAE have diabetes making it the country with the highest prevalence of the disease in the Gulf region. In 2010, providing treatment for diabetes alone cost the UAE US$5.5 billion annually, comprising 14 percent of healthcare spending in the Emirates.

While healthcare expenditures as a per capita amount rising dramatically, it still only comprises approximately 3 percent of the UAE’s GDP. While this is expected to rise to close to 3.5 percent of GDP by 2015, it still does not come close to the United States, which spent enough on healthcare to equate to upwards of 17 percent of their GDP. However, much like the rest of the Gulf Cooperation Council (GCC) Region, the healthcare system in the UAE is largely subsidized by the government, in fact over 70 percent of healthcare spending in the GCC region comes from public sector funding.

However, with the increasing rapid rise in the cost of providing healthcare to the citizens and residents of the Emirates, there is an increasing push to bring in more private sector participation in funding healthcare. It has led many Emirates in the UAE and also other countries in the GCC to begin to consider enacting compulsory health insurance legislation.

So far, only two Emirates have made concrete steps towards restructuring how healthcare is financed through the implementation of mandatory health insurance; Abu Dhabi and Dubai. Abu Dhabi initially required that employers purchase health insurance for expatriate employees in 2005, although it later introduced laws creating the framework for the state to insure all resident UAE nationals under the thiqa health insurance scheme. Abu Dhabi’s initiatives now cover over 98 percent of the population of the Emirate. Dubai on the other hand, had mooted plans for compulsory health insurance in 2008-9, especially for expatriates, although the plans were put on hold with the global financial crisis.

However, in 2012, a draft law for mandatory health insurance at a federal level was briefly published. For the short time that it was available, the draft law conceived of a federal health insurance authority that would work with local health authorities in each emirate and establish how providers would be accredited and regulated. Although it was not laid clear how this would work in practice or how it would interact with existing health insurance regulations at the emirate level.

One thing is certain though, that as healthcare costs continue to rise ever more swiftly, individual Emirates or the UAE as a whole will have to take action in the near future to ensure continued access to quality healthcare services for their citizens. This seems most likely to take the form of requiring employer-provided health insurance coverage, however it remains to be seen how exactly this system would be put into place and managed.