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.

According to AXA’s Nasnas, the overall premiums growth seen by health insurance companies in 2018 could not make up for explosions in medical cost. “Many people [in the insurance industry] are afraid [to write] health insurance, and last year the results were awful. 2018 was an exceptional loss-making year, as the costs of new medicines exploded and we had twice the cases of cancer than in the year prior,” he says. Emphasizing his perception that the doubling of cancer incidents related to both case number and costs, he declares that he and fellow insurance leaders were asking themselves in shock what was happening last year. 

In Salameh’s words, the danger faced by insurance companies is to price themselves out of the small and price-inelastic Lebanese market. “We have to re-study pricing every year and have to pay claims, but if we re-study, we face the danger of pricing ourselves out of the market because of medical cost inflation, and because some people are treated at the expense of the paying insured,” she laments.

Enter the disruptors

Impulses to bring new vibrancy to the Lebanese health insurance market in these days come from players such as internationally renowned Cigna, which aims to increase its Lebanon portfolio by about 30 percent in the near term on the strength of its well-tailored product range, and local provider Securite, which banks on a combination of strong ethics, innovativeness—including tech—and service orientation.

As Raed Labaki, recently appointed as general manager of Cigna in Lebanon tells Executive, the company wants to initially attract corporate clients but also companies in the family enterprise and small to medium business communities. “Today we as Cigna Insurance Middle East are distributing our medical insurance products, which are tailor-made not only to international organizations and NGOs [with presence in Lebanon], but also to local groups and local companies. These can be corporate clients who qualify for our first product—and what we call corporate [are organizations with] 100 lives and above, ‘lives’ meaning employees and their dependents. This is our first product. Our second product is for [small and medium enterprises] and what we regard as SMEs in Lebanon are organizations where we insure between 25 and 100 lives,” he says.

For Anthony Khawam, deputy CEO of Securite Assurance, the formula for winning in medical begins with the pillars of innovation and service. Citing a host of catchy innovations that range from providing clients half a dollar of their monthly premium for every exercise mile that they run and capture on their Nike-plus app, to having created a term insurance policy—as a rider on medical or standalone—for paying a cash claim in case of terminal illness. As part of its medical cover, the insurer even promises two-year long waiving of premiums for a client family in case of the breadwinner’s death.

Besides building its service and innovation culture into a modern insurance enterprise, Securite also decided to transit out of services—commonly known as mutual insurance funds in Lebanon—that are not future-proof under the perspectives of the new guaranteed renewability regime in the Lebanese insurance field. “We decided to extensively limit our business in this mutual fund and shift business from this fund to the insurance, because we think that with the new GR regulation, it is not ethical to keep the client in a mutual fund where he cannot benefit from the new GR. We thus ethically and strategically decided to move them to our insurance,” Khawam explains.

The decision means that clients of the group’s existing mutual fund are asked to transition to a formally regulated health insurance cover when their existing one-year contracts expire, which implies that a portion of the growth achieved by the Securite’s health portfolio in last year’s fourth quarter was, in accounting terms, an extraordinary item.

Regardless of this and also regardless of the fact that the insurance market in Lebanon is both saturated with providers and difficult because of fragmentations and special interests, Khawam declares his confidence in Securite’s ability to continue growing strongly. “I am optimistic and not scared of competition at all, because I see everyone [in the market] as having their own play and way of doing things. We have differentiated ourselves in a way that is focused on service and innovation. I expect good growth in Securite’s medical business,” he says.

Cigna’s Labaki likewise professes his optimism. “Cigna looks at Lebanon as a strategic market for the Middle East because there is a large potential for growth in the Lebanese market. Even if this growth has been lower in recent years when compared with the years before, I note that health insurance in Lebanon has been growing ahead of other lines and is still higher than market-average growth,” he says.

As to the incentives that Cigna offers specifically to attract Lebanese enterprise clients, the company is offering SMEs perks that are usually reserved to much bigger organizations. “One of our strong selling points is that for SME in particular, we do write business on medical history-disregarded basis. [This means that] we are not asking them medical questions or [require] medical exams when we enroll them. This is a market practice that insurers usually offer only to large groups, but at Cigna we are also offering this to SMEs. This is something that is regarded as very positive by the market and by our distribution partners in Lebanon,” Labaki says.

Questioning economic motives

Although the scene of medical products offered by Lebanese insurers to their corporate and individual clients (Cigna wants to expand from group to individual offers in the country by end of this year) appear to be improving on wide fronts, overt and hidden questions loom in the multi-angular relations between insured, insurers, health services managers, and medical providers. Beyond the challenges to insurers’ profitability or disparate views of what might be reasonable profit margins for stakeholders in the medical insurance and healthcare system, such questions concern the perceived mentality of Lebanese clients.

Some of the insured seem to approach their health system with sentiments that can range from thinking that the better care is always on the other side of the fence—meaning that they believe care will be superior abroad, in developed regions such as Western Europe or the United States—to assumptions that the most important issue is impressing visiting relatives and friends with the calibre of their hospital rooms. Such predilections can influence decisions that wrongly limit medical plan selections, from not buying a local plan to focusing on the wrong priorities in checking a plan’s medical benefits.   

On the side of providers, universal tendencies to emphasize market justice and contractual agreements exist in the insurance industry as in any other economic entity that embraces its profit orientation. When these priorities clash with social expectations—which can happen easily in socially relevant areas such as healthcare—conflict potentials increase. “In terms of medical treatments, everything is available in Lebanon. However, sometimes it is a doctor who brings a medicine into the country, not the MoPH. In such cases, we as insurance have a problem because we do not deal with doctors. [Any medicine] must be approved and received by MoPH. I want to add that we often support medications if physicians start using them on basis of FDA approval even before such a medication receives the approval by the MoPH. But if a medication is not FDA approved, it is considered as experimental, and we as insurer are not covering it. Libano-Suisse cannot cover experimental. Under other circumstances, however, meaning when dealing with [FDA and MoPH] approved procedures and drugs, we are obliged to cover our clients’ treatments. We need proof that a drug is working,” clarifies Libano-Suisse’s Abdelmassih. 

From the medical side of the patient bed, this issue can look a bit different. As oncology specialist Ghosn tells Executive, “What does experimental mean in the treatment of cancer? As a physician, you have data on every drug that has already been produced and used on humans, even if this drug is not yet FDA approved. This is not an experimental treatment. This is a treatment that has already been discovered, and we [as medical professionals] know that it works because we have data. The [approval] process, which sometimes is merely an administrative process, has [perhaps] not been completed but such drugs are not seen as experimental. One can claim [in such cases] that the drug is experimental, but, in truth, experimental is when you [as doctor] think that you have discovered a drug and are using it on somebody, or if you want to treat a patient with a drug that has never been used on a patient and where no supportive data exist. I agree, however, that sometimes insurers in Lebanon will argue with you and say that a drug is experimental when it is off-label, which is something completely different.”

Inversely to the potentially conflicted perception issues of what procedure is proven, insurance providers tend to perceive the presence of economic motives with lacking or even fully absent ethics—instead of pure medical considerations—as drivers for costly decisions by medical stakeholders they deal with. For Ghosn, this is not an admissible argument, certainly not applicable in the Lebanese healthcare system where shortages in availability of hospital beds are far more common than oversupply of empty beds. “We need to think—and I don’t want to think in another way—that physicians are ethical and that in hospitals, there is no need to admit a patient if the patient does not need to be admitted,” he emphasizes.

Priority one: practicable solutions

In an age where life is enormously intertwined with the capitalist dogma that growth is the measure of all things and productivity the ultimate gauge of economic success, the occurrence of conflict potentials and need for their continual resolution in the administration of health services appears ubiquitous. The existence of economic motives among stakeholders in health certainly can neither be denied nor is likely to disappear in human social systems (short of a fundamental revolution against any and all social norms validated in history). If anyone seeks evidence today on how strong the economic motive has become in the healthcare industry, one just needs to throw a glance at the valuation of relevant companies in financial markets and take notice how, for a very recent example, the share price of a biotech stock in the US dropped by 29 percent in a single trading session last month when the company, Biogen, announced that clinical testing of a new Alzheimer’s drug was stopped because of the medicine’s apparent ineffectiveness.    

Lebanese stakeholders in future medical systems are exposed to global pressures and uncertainties in such healthcare systems only remotely and indirectly but there is much reason to emphasize that societies are today in desperate need for new economic, regulatory, social, and ethical answers for addressing tomorrow’s healthcare needs in all their increasing complexities. 

Instead of theorizing, this means coming up with practical approaches and testing them. As Elie Nasnas of AXA puts it, the danger of fundamentally unequal healthcare provision for rich and poor must be addressed in Lebanon today. “I think it is high time for all players in the health sector, i.e. hospitals, providers of paramedical, doctors, and insurance companies to either work as partners or see the private healthcare collapse. People cannot sustain such costs,” he says, continuing with passion, “I would really call for all players in the sector around health to be conscious that if there is no partnership, there won’t be any future, we are running into a deep crisis. We all should be very much aware of this.”

From the medical side, Ghosn says, “I think that the prices of new drugs such as cancer drugs brought to market from recent research will drop in future, and these prices have already been dropping. I can cite here the experience of the world’s international cancer centers, such as exist in France or the United States. I also want to point out that in these centers, there are funds or foundations that have been created only to support patients that need those expensive medications. Thus, when patients come who need this or that expensive drug and who are in this or that situation—depending on their situations—it is not anymore the government that pays in France or the insurance that pays in the US, but the funds that have been created in each cancer center who support these very expensive drugs.” Citing examples for dedicated cancer funds from the Memorial Sloan Kettering Cancer Center in New York and Institut Gustave Roussy Cancer Center in Villejuif, France where he trained, Ghosn suggests, “Perhaps [following this model] might be the way in Lebanon where insurance companies might all together raise a fund to support their patients. I propose that it would be a good idea to create very nice, transparent funds between NGOs, the government, and insurance companies, with scientific boards who can select patients on scientific basis and set the conditions under which patients can take advantage of these funds. This might help both the companies and the patients, because they will achieve cuts of bills.”

Thomas Schellen

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

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