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Makeshift measures and healthcare hurdles
November 18, 2017, 2:13 pm
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Healthcare sector in Kuwait has over recent years witnessed some welcome momentum, resolving some of the persistent capacity constraints and improving the quality of healthcare delivery. However, with falling oil revenues causing the government to rein-in expenses and rationalize healthcare spending, the health sector is likely to face severe challenges in the coming years, especially from a rapidly growing population, looming demographic shifts, and the rising incidence of non-communicable diseases (NCD).

With nearly 86 percent of Kuwait's annual outlay on health expenditure coming from government coffers, the current low oil price scenario has understandably led to several cost-cutting measures and streamlining of services in the healthcare sector. While long-term strategies to relieve this fiscal pressure by rationalizing operational costs, encouraging greater private sector participation and privatization of certain health infrastructures are the right measures to pursue, the government's immediate response has been to increase health charges levied on expatriates.

In October, the Ministry of Health announced a new law that substantially increased the fees for expatriates seeking medical services at public hospitals and clinics. The revised fees include KD30 per day for use of Intensive Care Unit (ICU), KD10 for each visit to outpatient wards, KD10 for each day of stay in the inpatient ward. A medical check-up at the maternity ward would now cost KD15, while KD50 would be levied for each normal delivery. In addition to the above fees there would be separate charges for surgeries, x-rays, laboratory tests and other medical treatments.

Adding to the woes of expatriates, in mid-November, the Minister of Health Jamal Al-Harbi, announced that the annual health insurance paid by expatriates would also be increased from KD50 to KD130, and that separate health insurance hospitals and clinics would be built to treat expatriates. Earlier, low-income earners, who form the majority of the expatriate population, had to pay only KD2 to see a doctor at a public hospital and many of the health services were offered for free or at a nominal charge.

While pricing low-income expatriate workers out of healthcare services might seem an attractive interim proposition, the long-term consequence of such a short-sighted policy remains to be seen. Moreover, such makeshift measures are unlikely to make any substantial dent in the long-term challenges faced by the country’s healthcare system.

In the coming decades, rapid population growth, shifting demographics and rising incidence of non-communicable diseases (NCDs) are all likely to be a more significant threat to healthcare in Kuwait than expatriates causing congestion at hospitals and creating inconvenience for citizens.

Population in Kuwait, which has nearly doubled since 2000 and is growing at an annual rate of 2.9 percent, is expected to cross the five million mark by 2020. While the growth in population will add to the stress on existing health infrastructure, the shifting demographics are projected to be an even greater strain on health services in the country. 

In the coming decades, the demographic shift — from a tapering of the productive population (those aged between 15 and 59), and an increase in the number of dependent population (those below the age of 14 and above the age of 60) — is likely to exacerbate the pressure on health facilities and services. Historically, a dependent population is more reliant on healthcare services, while a productive population is expected to provide the fiscal resources for such services through taxes, insurance premiums and other contributions. As one tapers, and the other increases, this not only increases fiscal constraints on the health system, but also in the delivery of efficient healthcare.

Aside from the demographic quotient, the country is also currently facing a huge increase in the incidence of non-communicable diseases (NCD), which threaten to further swamp the healthcare system. Chronic NCDs such as cardiovascular, diabetes, cancer and respiratory conditions are rising dramatically in Kuwait. In addition, as per a recent global health survey, Kuwait has one of the highest percentages of obesity in the world, with nearly 40 percent of the population being obese. In absolute terms, this number is even more alarming, considering that the country has a total population of only around 4.4 million.

According to a World Health Organization report, NCD’s were estimated to account for 73 percent of the total deaths in Kuwait in 2014. Equally important is that NCDs incidence is greatest among the working age population who form the largest and most productive segment of the demography. The increase in incidence of NCD is mainly driven by a stationary lifestyle with very little physical activity and dietary habits that are complemented, and perhaps complicated, by high level of personal income.

The changes brought about by the demographic and epidemiological transition is likely to have a profound impact on healthcare outlays in the country. It is expected that in the coming years, the cost of treating NCDs will account for a major chunk of the total government healthcare spending. Based on population growth and average growth in inflation, as projected by the International Monetary Fund (IMF), Kuwait's annual healthcare expenditure is expected to grow at a compound annual growth rate (CAGR) of 7.5 percent and cross KD8 billion by 2020 from the KD5.2 billion in 2014.

Despite this health outlay, Kuwait's spending on healthcare at 3 percent of GDP is relatively modest, especially when compared to other advanced global economies that spend more than 9 percent of GDP on health. Moreover, the country's per capita health expenditure at $1,385 in 2014 is also far below the average $3531 per capita spent by other Organization for Economic Cooperation and Development (OECD) countries.

One reason for this mismatch is that, almost 50 percent of the annual operating budget of the Ministry of Health is slated for paying salaries and benefits of staff. Based on a modest CAGR of 7 percent, this operating budget is projected to reach KD5 billion by 2030, from around KD2.6 billion in 2015. Rationalizing operational costs should be a priority for the health authorities.

Despite challenges, the government remains committed to enhancing healthcare services in the country. The government’s New Kuwait 2035 national development strategy envisions, among other things, improving service quality in the public health system. The development plan specifically targets health care reforms that emphasize the delivery of quality healthcare and cost-effective service improvements. As part of this development plan, more than a dozen new hospitals or expansions of current health facilities are planned for completion by 2023.

Other long-term plans include encouraging private players in the health sector. The Kuwait Direct Investment Promotion Authority (KDIPA) has highlighted the healthcare sector as one of its major destinations for investment opportunities. Boosting private participation and investments in the health sector will not only help diversify the economy and offer increased employment opportunities for citizens, it will also be a more effective solution to the Kuwait's growing healthcare challenges; at least, it will be more efficacious than making healthcare unaffordable to people who need it the most.


 

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