In the immediacy of the coronavirus crisis, the most pertinent insurance question for the holder of a medical policy is simple: Who will pay if I need to be hospitalized? The answer, as with many things in Lebanon, depends. According to Nadine Habbal, acting head of Lebanon’s Insurance Control Commission, slightly more than half of Lebanon’s health insurance policyholders have coverage for coronavirus-related hospitalization costs. Their providers either have written no exclusions of pandemics into their contracts or have waved such exclusions as a service to their clients, she tells Executive. Another category consists, she says, of “companies health insurance portfolio is divided into two parts: some policies that don’t exclude pandemics and the remaining policies that exclude pandemics. (For additional information, see Q&A).
Notwithstanding that commercial insurers listed on the ICC website, by Habbal’s assurance, honor their health insurance obligations in COVID-19 cases, the picture is not automatically clear as to how large a percentage of health insurance policyholders will be admitted without any questions and how many would be faced with incongruences in admittance procedures when in need of hospitalization for the disease. According to Elie Torbey, the president of the Association des Compagnies d’Assurances au Liban (ACAL), coverage of COVID-19 cases is to date clear and secured for one client category only: all those who are medically insured as foreign workers in Lebanon under coverage (up to a ceiling of $20,000) that is mandated under labor regulations. “In our opinion, most of the Lebanese are not covered by insurance in corona cases,” Torbey tells Executive. “Just two or three companies in Lebanon cover the corona cases for Lebanese [policyholders], but only because they are linked to head offices abroad. They are [units of] international companies and since their head offices says they will cover COVID-19 cases, they will have to follow coverage.”
According to him, the total population with private sector insurance is composed of 845,000 policyholders, of whom almost 200,000 are holders of expatriate medical insurance policies designed for foreigners who are employed in Lebanon. After accounting for the expats, 670,000 Lebanese policyholders with existing health insurance contracts remain, and many of their policies explicitly exclude coverage of pandemics. “A limited number of the insured are covered for COVID-19,” Torbey reiterates.
The problem about actuarial calculation of premiums for coverage of the pandemic is the lack of data. Given that a global pandemic on the magnitude of the coronavirus infection might happen once every 200 or more years, no data exists upon which a rational calculation could be based, Torbey explains. “That is what we are afraid of,” he says. “We are afraid of the frequency and the severity of cases. If we have data, we can calculate how much we should require from the clients if we want to impose an extra premium for the future, and then we will cover it. We don’t want to shift from problems of covering coronavirus cases to a situation where we have a problem that might go as far as bankruptcy of a few insurance companies if they are highly affected by the cost of treating coronavirus cases inside Lebanese hospitals.” Ten to 12 Lebanese insurance providers have large medical portfolios and could be highly exposed to COVID-19 risk, he says, but to his view, exposure of insurance companies to the pandemic would in any case require placing caps, meaning a maximum limit, on risk exposure per company.
In addition to the fundamental difficulty of assessing the pandemic’s coverage risk, the situation of insurance payments for in-hospital treatments of COVID-19 appears to have not yet been sorted in two further respects. According to Torbey and other sources in the insurance industry, private sector companies are, at time of this writing, still engaged in pricing disputes with hospitals and discussions with ministries. In their negotiations, which Torbey says are progressing now on the level of the office of Prime Minister Hassan Diab and his staff, insurers are asking to be invoiced for treatment dues for coronavirus infection at or near the discounted rates that hospitals receive from the National Social Security Fund (NSSF) for patients with NSSF coverage.
On their parts, hospitals demand insurance companies to pay rates that appear to exceed the NSSF rates by as much as 150 percent, based on information that ACAL gleaned from a number of invoices that had already been sent to insurance companies after they assumed responsibility for coverage of COVID-19 treatments.
However, it seems that the NSSF rates are not suitable as benchmarks for determining full treatment cost in the coronavirus scenario, given that hospitals, according to Torbey, argue that they are incurring extreme costs for protective gear needed in care for pandemic patients and that such gear, which is purchased on basis of dollar prices and reportedly accounts for 30 percent of total patient care cost, is not included in the NSSF’s coverage.
What is furthermore missing and yet to be developed is a rule for tariffication of treatments under a medical code for the novel coronavirus infections. Medical codes are standardized and detailed scientific catalogues that come into force when approved by health authorities. They entail information on diagnosis, procedures, drugs, and prices of treatment for a classified disease and note correlations with other ailments if such are applicable. Guidance on such codes for coronavirus infections is internationally evolving with the pandemic; interim or emergency codes have been issued by the World Health Organization and some developed countries over the past two months while research into clinical and epidemiological features of COVID-19 is still far from complete.
In Lebanon, medical codes are developed and regularly reviewed by a committee of high-powered medical professionals and officials for the Ministry of Public Health (MoPH). While Habbal confirms that the medical code for the novel coronavirus is needed and that discussions on this issue are progressing with support from the minister of health and MoPH teams, there is no indication of the code having been completed.
However, seeking to give a signal of hope for the people with private sector insurance, Habbal points out that a recent ministerial decision by the economy minister through Ministry of Economy and Trade (MoET), the administrative superior of the ICC, has been issued to remove any ambiguity on the inclusion of pandemic coverage from future health insurance policies in Lebanon. “As part of our efforts to improve the medical insurance offering in Lebanon, a ministerial decision was issued on April 15 requiring insurance companies to introduce a compulsory pandemic cover in every new or renewed policy,” she tells Executive in a Q&A. “This will enhance the insurance protection for existing and new insured members, and would present a better value proposition that is uniform for all.”
Insurers confirm the receipt of the MoET’s ministerial decision but did not enthuse about it. On one hand, their first worry is about dealing with existing policyholders (an issue not addressed in the new ministerial decision) and finding a solution for the tangled situation of insured clients whose needs are neither provided for by their contracts with Lebanese insurers nor included in treaty coverage of local insurers with international reinsurance companies. “Our priority is to cover existing policies,” Torbey says. “We are working now with the prime minister’s office to find a solution for the existing, non-covered clients. We should find a solution for those clients, because it is clearly mentioned in our policies that pandemic is excluded; so if we have to pay, we will be paying from our own pocket.”
He also is not exactly cheery about the long-term risk implications of the new decision. “We are not overly in favor of this because if they cover pandemic it is not mentioning corona [specifically],” Torbey says. He emphasizes that another pandemic might just be too much for Lebanese insurers to cover and alludes to principles of risk mitigation under which large aggregate risks such as pandemics and earthquakes are tasks for governments rather than commercial insurance markets.
This general principle of governments’ responsibility for handling national-scale disasters, however, does not answer the question if either the Lebanese insurance sector or the country as a whole would emerge intact if another, equally severe pandemic to COVID-19 were to hit Lebanon next year. Even the thought of such a possibility reminds that in insurance and governmental preparations for eventualities of catastrophes alike, fortuitous timing and utmost actuarial diligence in planning may both be needed—and certainly appear to be so in this Lebanese spring of 2020.