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Health insurance in times of chronic diseases

Apr 09

Health insurance in times of chronic diseases

When cost inflation meets desperation

For all the good that numbers can do for explaining economic and social trajectories, statistics provide limited utility. This is exacerbated into rapidly decreasing utility when social and economic issues are of immense complexity and have divergent, contradictory, or confusing data points attached to them. Things get even worse when an issue extends beyond economic or social relevance and enters the realm of the existential. In the juxtaposition of current data trends for chronic diseases and medical risk management efforts with the help of insurance, there is ample room for confusion.

In the tome of medical knowledge, there is much information about chronic diseases, especially cancer. The incident rates for the disease are rising globally in absolute numbers. According to the World Health Organization’s International Agency for Research on Cancer (IARC), the occurrence of the disease in 2018 was estimated at 18.1 million new cases and 9.6 million deaths. The risk of developing cancer during one’s lifetime is one for five in men and one for six in women, the IARC states.

However, there are figures suggesting a still frightening but more nuanced picture. According to new estimates published last month by the European Society for Medical Oncology, 1.4 million EU citizens will succumb to cancer in 2019. However, while this total represents an increase of 4.8 percent when compared with 2014, factoring in population increase and ageing over the same five-year period reveals that age-standardized death rates for cancer have overall been diminishing—by 6 percent for men and 4 percent for women.

When compared with the development trajectory of the disease from 31 years ago, the EU death toll of cancers between 1989 and 2019 would have been 5.3 million higher than it actually was. Theoretically, under unabated cancer trends from 1989, the burden of cancer deaths in 2019 could have been expected to reach well over 1.75 million people, 359,000 more than are now predicted for the year. So it appears that a combination of better understanding and avoidance of carcinogenic substances from dangerous particles to chemicals, improved advanced screening of populations for cancer risk, lifestyle adjustments, and advances in cancer treatment over the last 30 years have had a strongly positive impact on the progression of combating one of humanity’s historic scourges.

Lebanon, as Dr. Marwan Ghosn, professor and chairman of the hematology oncology department at the Saint Joseph University’s Faculty of Medicine, tells Executive, shows a total count of between 12,000 and 13,000 new incidents of cancer for the latest research year, 2016, by the count of the National Cancer Registry (NCR) at the Ministry of Public Health (MoPH), which Ghosn describes as one of the best in the Arab countries. According to him, the NCR data translates into an annual new cancer incident rate that is about half of what is being observed in the developed countries in Oceania and Europe that have the highest such rates.

As Ghosn explains further, the high medical cost inflation rates that are plaguing healthcare systems and public or private health insurance providers worldwide reflect a shift whereby highly-touted cancer treatment breakthroughs that allowed moving from bone marrow transplants to the administration of drugs in targeted therapies, which, on balance, were essentially cost-neutral at the time, have been followed by later achievements in the fields of targeted therapy and immunotherapy.

These scientific achievements have resulted in the ability of treating up to 40 percent of all cancers today with either targeted therapy or immunotherapy (predominantly the latter) but also contributed massively to medical cost inflation as the drugs used for them are several times more expensive and need to be administered for longer periods when compared to older treatment methods.

Moreover, Lebanon has a health system with practically full capacity for treating cancers. “For 98 percent of the patients and 98 percent of the medical situations, I can propose and perform an ideal treatment—in multidisciplinary fashion [meaning] perhaps not in one hospital and together with other physicians, because I will not do it alone. Using this multidisciplinary approach, 98 percent of the patients can be treated within the Lebanese system at a level that is up to international standards and comparable to best places in Europe or in the United States,” Ghosn says.

Concomitant with Ghosn’s observations of Lebanon’s moderate cancer rates and good treatment capacities are numbers compiled on the website of the World Cancer Research Fund, a non-profit that places Lebanon in 48th position out of 50 countries listed, with an overall incidence rate of 242.8 people per 100,000 population. For delving yet another notch deeper into the issue, observations for the years 2005, 2010, and 2015 are available in the MoPH NCR statistics.

The data displayed in the NCR graphs support the perception that cancers—in Lebanon as everywhere else—in their overwhelming majority are afflicting age groups from their 50s and onward, and men more than women. The numbers further suggest that the overall trend for new cancer cases in Lebanon is pointing upward but a) needs much detailed study and qualification of the data and b) that this data is morally, as well as practically, unsuitable as a vehicle for cheap populism or panic mongering.

But life is not the sum of average trends, average people, and average experiences. Thus the numerical story on the page of cancer incidence rates in Lebanon cannot hide the existential fact that no data point, however scary or apparently benign, can weigh up to the sensation of sitting—far too recently—in a condolence hall of a church in central Beirut and witnessing the traces of shock, grief, struggle, resolve, and coping on the faces of a family that just lost their daughter to cancer at an age when she should have been embarking on her career. The existential questions that relate to chronic diseases and especially cancers to this day can not be encapsulated or even begun to be addressed by discussions of trends or statistics in the fight against the disease.

The medical pages of insurance

While medical insurance cannot protect against anyone’s risk of being afflicted by cancer, health insurance plays an important role in determining the country’s ability to cope with two aspects of medical development: first, to manage the increased cost burdens of diseases, and second, to incentivize and promote social shifts that can reduce risks of being afflicted by chronic diseases.

Like in the case of the numbers on cancer, the trends of development of medical insurance in Lebanon are very ambiguous. Although the national performance of the Lebanese healthcare system is amazingly—and to some surprisingly—strong (see Executive health report 2018), and although health insurance in particular last year outperformed other insurance lines in terms of growth momentum on the back of future-minded regulatory impulses (for more on the guaranteed renewability (GR) measures by the Insurance Control Commission (ICC) at the Ministry of Economy and Trade, see Executive insurance coverage August 2018), the picture of commercial health insurance in Lebanon in spring 2019 is far from exuberance or glory.

For Elie Nasnas, general manager of AXA Middle East Insurance, the main problem in the medical line is not, as one might expect, the notorious price competition in the overcrowded Lebanese insurance sector. “We have a major issue, and it is not the competition among our peers. This issue is the competition between the cost of health and the purchasing power of the Lebanese people. This [competition] is completely imbalanced,“ Nasnas tells Executive.

AXA is one of six insurance companies in Lebanon that together own about 60 percent of the market share pie in a sector that has 40 commercial insurers reporting medical business in their portfolios. According to data published for the fourth quarter of 2018 by the ICC, health insurance gross written premiums for the year-to-date 2018 at end of the fourth quarter reached LL770.3 billion ($508.8 million) and followed hot on the heels of the premiums for the life insurance sector with LL782.6 billion ($516.9 million). Life, medical, and, with some distance, motor insurance constitute around 83 percent of the insurance industry’s LL2.53 trillion in gross written premiums for 2018.

As the latest numbers published by the ICC indicate, the bottom 20 of the 40 insurance companies with medical portfolio content together account for not even LL50 billion ($33.2 million) in cumulative premiums—a combined market share in the 6 percent range of the health total. Some of the currently smaller players, such as Lebanon newcomer Cigna, an US health insurance specialist that in 2017 had taken over the license of Zurich Insurance Middle East, and local player Securite Assurance, which boosted its medical portfolio from LL750 million to just over LL2.2 billion year-on-year in Q4 2018 alone, however, are strongly performing in terms of growth and ambitions.

Around another 15 companies comprise the middle field in the market with numbers that testify to anything from their mainly insuring affiliated financial groups with sizeable headcounts for health, to standalone operators in more or less profitable market niches, such as Libano-Suisse Insurance whose numbers for 2017/18 show slight improvement from LL44.4 billion ($29.4 million) by end Q4 2017 to LL46.4 billion ($30.8 million) a year later, according to the ICC quarterly publications.

However, the picture at the top of the market where companies such as MedGulf, Bankers, Allianz-SNA, Fidelity, GroupMed Insurance, and AXA Middle East are writing health business in the range of $50 million and up (per company), is not unambiguous either. In this segment one finds several groups that have, by Lebanese standards, very large accounts from leading corporate conglomerates and professional orders or syndicates (such as the orders of engineers, lawyers, or physicians). Competition for such large accounts has long been quite intense in Lebanon and having $50 million and above in their medical portfolios for an insurer does not necessarily translate to being at the top in profitability. (All numbers cited above are for gross premiums).

Paula Abdelmassih, medical director at Libano-Suisse Insurance, attributes the uneven evolution of insurance markets in part to burdens that the newly introduced guaranteed renewability regulation imposed on commercial insurers but not on other stakeholders in the healthcare system. “Our coverage terms and conditions are reviewed annually, and sometimes one has to increase rates, change products, or take other steps to keep up with developments and follow up with new procedures and technologies applied in the coverage. When you as an insurer are today granting guaranteed renewability, this has an impact that must aways be calculated. GR is putting a lot of pressure on insurers, and we don’t think that the distribution of the GR burden is totally fair. The new GR requirement should not only target insurance companies, but also hospitals as they are charging commercial prices to insurers,” she tells Executive.

Her colleague Joyce Salameh, marketing and quality director at Libano-Suisse Insurance, explains that a new value-added service program introduced one year ago under the title Health Plus was mainly purposed to defend the insurer’s market position. “Because people lately have become very price sensitive, by introducing Health Plus we have created a marketing instrument to differentiate ourselves in the market. I cannot say that sales skyrocketed because of the [new value-added service]. This was okay as the purpose of Health Plus was to widen our service offerings. The feedback on the new services, and the way we handled cases, was very good. People were happy and impressed with what we did,” she says.