No pill for the hole in the pocket

Cancer doesn't just attack your body
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Between rising air pollution, contaminated food, and indoor smoking, cancer in Lebanon is becoming  more common and more expensive. While consolidated numbers do not exist, there are some good signposts that point to the direction we are heading. 

MedNet, a leading third-party administrator (TPA) of medical insurance services in Lebanon, offers perhaps the best possible view of the industry. Sarkis el-Zein, vice president of actuarial and reinsurance services at GlobeMed, a unit of MedNet, says that the company serves some 250,000 people in Lebanon, and that its figures cover more than 15 medical insurance providers, including self-insured schemes, mutual societies, and commercial insurance companies. 

Adjusted for inflation, the annual cost of cancer treatment per MedNet member has doubled from 1995 to 2010, while cancer now also has a heavy share of overall healthcare costs for MedNet clients. “Out of each five dollars you are paying, one dollar goes to cancer. This is very significant,” said Zein. 

By his estimates, the share in the Lebanese population that receives some form of healthcare benefits via any provider is about 70 percent. But the coverage blanket for financing treatments of cancer in Lebanon is a badly sown quilt of part overlapping, part contradictory social contracts that originate from a vague mixture of private sector and public sector medical care formulas. 

The insurance net

The National Social Security Fund (NSSF) is the primary — though overly bureaucratic and financially dysfunctional — safety net for Lebanese citizens. It has been augmented in the dispensation of medical care payments by the services of the Ministry of Public Health (MoPH), especially for costly treatments and chronic ailments, such as cancer. According to Zein, even the MoPH cannot provide information on what share of treatment costs their beneficiaries have to pay “because each hospital sets a different share. It is chaotic.”

The country has more than 50 insurance companies that form one part of the provider scene. The other part comprises mutual societies, cooperatives and self-financed insurance schemes of large public sector employers, such as civil servants and branches of security and military forces, or private sector entities such as banks or professional syndicates.  

According to a World Health Organization report, there are an estimated 500,000 owners of health policies issued by insurance companies. This includes people who are entitled to NSSF medical benefits but have bought private insurance to cover the 15 percent portion of treatment costs that the NSSF, as a rule, does not pay. 

What is, and is not, covered

Holders of medical policies from insurance companies using MedNet as a TPA are covered for financial costs of cancer treatment as they are for all other diseases, Zein said. Some 89 percent of owners of individual and family medical policies have “guaranteed renewability” (GR) and policies do not impose financial limits on annual or lifetime coverage, with the exception of a 720-day cap on overnight stays in a hospital during the life of the insurance contract.

Insurance companies holding ownership stakes in MedNet, namely Axa Middle East and Libano-Suisse, market their health insurance products as providing “unlimited financial coverage” and GR from the first day for persons under 46 who buy the in-hospital policy.

However, a view into the market of health policies offered by Lebanese insurance companies overall shows a picture of “many different contracts and different conditions,” said Salim Yared, general manager of Sloop Insurance brokerage and former president of the Lebanese Insurance Brokers Syndicate. 

Several companies that outline the terms of their medical plans on their websites state coverage ceilings. Whereas ceilings on covered in-hospital costs are frequently cited in similar ranges from $50,000 to $200,000, depending on the class of service, the information is anything but straightforward. Some ceilings are described as “per case” or “per medical case” or “per case per year.” Other companies ask prospective clients to call them or use entirely nondescript terminology such as “insured amount” or “hospitalization expenses up to x.” 

While the paucity of online medical policy marketing by Lebanese insurers speaks to the fact that the local health insurance market is not web savvy, the more important cautionary note is that all such ceilings require clearer and more detailed definitions. A small textual difference between contracts can mean that a chronic disease under ‘Contract A’ will be covered without financial cut off; under ‘Contract B’, it will not be covered beyond $100,000 in hospitalization costs in the current year but will be covered to the same ceiling in the following year, provided that the contract includes GR; ‘Contract C’, even with GR, may limit the $100,000 amount to the lifetime of the contract and will not pay another dime beyond the guaranteed amount. 

The central dilemma is that no standard contracts for health insurance exist in the Lebanese market. Whereas providers have agreed on sample contracts with reference characters for most insurance lines, discussions of a model document for medical policies were abandoned years ago due to irreconcilable views among companies, according to an industry executive who spoke off the record. 

No standards or standardization

Medical insurance contracts are not standardized and providers use a very wide range of policy forms that differ from one company to the next, confirmed Paula Abdel Massih, the head of the medical committee at Lebanon’s insurance collective Association des Compagnies d’Assurances au Liban (ACAL).    

Different contract conditions usually translate into different policy pricing. This is problematic for individual buyers because their focus on price often trumps choosing a policy that actually fulfills their needs. As some Lebanese insurance companies do not specify upfront the risks for policyholders, such as if and when the coverage would actually cut off during treatment of a chronic condition such as cancer, insurance policy holders all too often find out about stress points in their contracts only when they need their insurance most badly. 

On the side of limiting their risks, Lebanese insurance companies uniformly demand that prospective clients disclose medical conditions that have been diagnosed or treated previously. Insurers may decline inclusion of those conditions in a new contract and will refuse payment of claims on recurring diseases where policyholders have falsely stated to have no pre-existing condition in their coverage application.

Zein acknowledged that disputes due to allegedly false statements or treatments also exist in the client base of MedNet, but he described the numbers as “very low” without giving a specific count. This speaks to the question of insurance disputes and arbitration where some mechanisms are in place but transparency regarding the frequency and targets of complaints leaves much to be desired. 

Once upon a time, about 1998, an insurance commissioner at the Lebanese Ministry of Economy and Trade (MoET) said she wanted to introduce a white book on insurance companies, where consumers can see which providers have a track record of high client satisfaction and low rates of complaints and disputes. As with many fairy tale endings in the Lebanese Republic, the commissioner soon moved to another country. 

The current website of the insurance control commission hosts a helpful (Arabic) text on rules for insurance arbitration at the MoET, called article 48. Among the ideas Economy and Trade Minister Nicolas Nahas circulated this year are plans to elevate Lebanon’s capacity on insurance arbitration to regional leadership. That may prove difficult.    

When premiums jump

Besides disputes over coverage exclusions and payment cutoffs, another risk for the insured is that while the GR component of insurance policies provides security on continuous coverage for individual and family policy owners, it does not guarantee affordability over time. Besides premiums adjustments because of cyclical cost increases in the health care sector, the annual renewal schedules of premiums mean that the insured have to pay more when they enter a higher age group. In one example where Capital Insurance Co made its premiums schedule visible online, the premiums of an individual in first, second, and third hospitalization classes would jump by 20, 30 and 35 percent, respectively, once they moved from the 56-to-60-year-old age group to the 61-to-65 bracket.  

Premium costs and age-related increases of premiums for the privately insured are not set on a social need basis but on actuarial indicators. “If I see that the whole individual and family portfolio needs a rate adjustment by 15 percent, we adjust the rates by 15 percent for all members. We do not single out those that have diseases,” Zein said.

Buyers beware

While the bulk of Lebanese insurance companies offer contracts that neither cover all imaginable health risks nor meet societal needs of specific income and age groups, the companies will generally promise tangible and clearly quantified benefits and provide accordingly, or even a bit better. But some providers promise less. According to Sloop’s Yared, some insurers write exclusions of cancer and cardiovascular diseases into their contracts, with the reasoning that the MoPH is assuming responsibility for the treatment of Lebanese citizens.  

Insurance companies that put exclusions on cancer treatment into their contracts do not actually sell them at a discount, but rather bet on the sales talks and the lack of diligence by policy buyers to get away with evading risks they should provide for. The reason why customers let themselves be talked into buying questionable policies is insufficient diligence. “People have a blurry image of what they are buying,” Yared said. 

Compliance of policy contracts with best practices is not enforced by the government or under any self-regulatory initiative, meaning that it is up to the customers to verify that their policies provide for their needs. The problem is that insurance buyers rely mainly on the word of the sales person and trust in what they want to believe rather than what the contract says. Also in Zein’s experience, “people do not read their policies.” 

But when it comes to insurance claims, here is where the buck stops. If claimants think they are covered because they failed to read their policy, Zein proffers: “That is their problem.” 

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail