Rwanda’s medical underwriters find themselves between a rock and hard place. Health facilities have cushioned themselves by raising their service charges, yet the insurers are bound by contracts that run for a year and premiums cannot be adjusted midway.
But being a transient problem with hope for compensation at least on the near-term horizons the lesser of their worries. More insidious problem is insurance fraud.
Some underwriters are paying out more than 100 per cent of their premium income in claims settlement as a result of opportunistic billing by providers and fraud involving policy holders.
While opportunistic billing and escalation of the cost of medical care are the soft underbelly of and well documented consequence of medical insurance, fraud poses all round threats to society, the medical and underwriter communities.
Losses can be absorbed only up to a certain level and when the snowball effect sets in, everybody will be a loser. The underwriters will go under, patients will lose cover and health providers will lose a predictable income stream. Investment in new technical and physical capacity will stall and service levels will plummet.
The tell-tale signs of this happening are already palpable. Major insurers are losing the appetite for medical underwriting implying that competition will suffer in that segment.
The immediate result will be higher tariffs as seen in the move by RSSB late last year to raise portion of the bill met by the client from 15 to 25 per cent. This has been followed by limiting policy holders’ access to treatment from private facilities.
Unpopular as these measures might be, they are desperate and necessary coping strategies. Without some radical input, the future looks gloomy. Medical insurance will become unviable or remain as an elitist privilege for a few.
But the dangers of fraud go beyond just the insurance industry. Insurance fraud suggests that despite the valiant efforts to fight corruption, some segments of the economy remain a reservoir from which the vice can spring and rise back to epidemic levels.
There is, therefore, a need to study the problem, examine options for deterrence and raise the cost of participation in the scams.
Since there are technology filters already in place, a major disincentive would be to pile the burden of punishment on the facilities and individuals that collaborate to facilitate the fraud, including but not limited to withdrawal of accreditation and professional blacklists.