Health insurers turn to cost-sharing as medical bills soar

Health insurance companies have adopted a new pricing system that asks patients to foot part of the bill in hospitals before accessing treatment, a move which they say has been prompted by the rising cost of medical services.

The new system, dubbed co-payment, is increasingly showing up in medical insurance plans that people buy individually or acquire through employers in response to the need for affordable premiums by corporate Kenya, industry players say.

A significant number of health providers have been increasing their charges yearly over the past three years, citing the rising cost of medicine, food and equipment —which have pushed them to increase premiums to protect their profit margin.

Insurers say the costs have been increasing by an average of 20 per cent yearly over the three-year period in line with the pace at which the cost of medical services has been rising.

With corporate Kenya not willing to absorb higher premiums any more and insurance firms not keen to lose business, insured patients are being asked to meet a portion of expenses for each hospital visit.

The top four medical insurance providers say that the number of individuals or corporate firms under the co-payment system doubled this year, adding that the number will continue to rise in line with expensive health care.

Ms Lydia Kibaara-Nzioki, the head of medical business at Jubilee Insurance Company, Kenya’s largest medical insurer, says that the incidence of co-payment has been driven by the rising cost of medical services, arguing that holders of corporate schemes want the cost of their premiums to remain the same or increase moderately.

“Employers have been asking for co-payments as a cost-cutting measure since it leads to reduced premiums,” she said.

“Five years ago it (co-payments) was virtually nonexistent. But now it is the fastest-growing segment in private insurance,” she added.

At Jubilee, 26 per cent of their schemes are now on co-payment, up from 12 per cent last year, according to Ms Kibaara-Nzioki.

She did not want to reveal the firms, citing client confidentiality.

But Jubilee, which had premiums worth Sh1.4 billion in 2008 under its watch, is not alone.

Other top players in the medical insurance including APA, UAP and CFC are recording a similar shift.

“Co-payments are becoming the order of the day as policy holders look for affordable premiums,” said Mr Ashok Shah, the CEO of APA Insurance.