Rwanda employers in panic as govt raises cost of health insurance

Patients covered by the Rama/RSSB scheme will now pay 25 per cent more for healthcare, while those under private schemes will be paying 15 per cent more for health services. PHOTO | CYRIL NDEGEYA 

By Moses K Gahigi

In Summary

• Industry players appeared to have been taken by surprise although coming towards the end of the year provides them an opportunity to adjust their premiums in policies due for renewal in the new year.
• Although the health ministry says the new tariffs which replace pricing guidelines that have been in force since 2012, are supposed to enable medical service providers improve service delivery and invest in new capacity and equipment, the development has set off a wave of panic among consumers, providers and underwriters, with stakeholders wondering who was going to absorb the cost increase.

Medicare underwriters in Rwanda plan to hold a meeting to respond to a recent increase in the cost of medical services for patients subscribing to medical insurance schemes.

In the recent Cabinet meeting, the government approved upward adjustments that will see patients subscribing to the Rama scheme managed by the Rwanda Social Security Board pay 25 per cent more for healthcare while those subscribing to schemes offered by private insurance companies will pay 15 per cent more.

The lifeline Mutuelle de Sante health insurance scheme to which the majority of Rwandans subscribe has however been spared the new tariffs.

Industry players appeared to have been taken by surprise although coming towards the end of the year provides them an opportunity to adjust their premiums in policies due for renewal in the new year.

“This has just happened so we are going to sit down as an industry to discuss the new tariff changes, to see what impact this is going to have on the market, and how to go about it. We have to speak as an industry,” said John Bugunya, the CEO of Prime Insurance and the head of the Association of Insurance Companies in Rwanda.

Although the health ministry says the new tariffs which replace pricing guidelines that have been in force since 2012, are supposed to enable medical service providers improve service delivery and invest in new capacity and equipment, the development has set off a wave of panic among consumers, providers and underwriters, with stakeholders wondering who was going to absorb the cost increase.

The employer is by law obliged to pay for a yearly medical plan for all permanent employees, money which is paid annually to the insurance companies with a small monthly contribution from employees, which means in case insurance companies choose not to absorb the increment, the burden will be passed onto the employers and patients.

“The insurance companies will increase the premiums, that’s a given, I think the employers and beneficiaries will end up bearing the increment, in fairness we should share the burden with insurance companies, but this is unlikely” said an employer.

Reuben Kibiru, the CEO of Britam, one of the medical insurance players in the market, said with the new tariffs he expects an adjustment in the premiums currently paid.

“In an ideal situation there should be a slight adjustment in the premiums, we need to study the situation and see what can be done, there should be a reaction from the medical providers, then you discuss with clients” said Mr Kibiru.

He, however, said the new tariffs would not affect subsisting policies with their clients until expiry.

“A medical insurance policy is valid for one year, we haven’t yet studied the situation well, we shall do that and find out what the adjustments will be, but for now the contracts will not be adjusted,” he said.

Under the new pricing guidelines, patients covered by the Rama/RSSB scheme will pay 25 per cent more for healthcare including prescribed drugs while servicemen and their families covered under the Military Medical Insurance Scheme (MMI) and those under private schemes will be paying 15 per cent more over existing prices. Those covered under the Community based Health Insurance scheme Mutuelle, will not be affected by the changes.

Illustrating the changes, Health Minister Diane Gashumba said if a drug Rwf10,000, previously, it would now cost Rwf12,500 for RAMA card holders and Rwf11,500 for patients on other schemes.

Employers speaking off the record said a 15 per cent increase in cost is too sharp and unjustifiable. “An increment of 15 per cent is very high, the pain will be felt, 2012 is not a long time to warrant these changes” noted one employer

This comes hot on the heels of recently approved draft maternity leave benefits scheme, where working women going on a 12-week maternity leave will be entitled to their full salary for the last six weeks of the leave.

The scheme that became operational in November requires all employees (male and female) and their employers to contribute in equal proportions an additional 0.6 per cent of a workers gross salary for paid maternity leave.