Health Insurance Reforms in the Emirates of Abu Dhabi, UAE
There are 39 health insurance firms in Abu Dhabi but only one company contracts with the government. Having such a huge number of companies one would think that there is perfect rivalry in the insurance sector. However, this is not the case since only one firm offers the Thiqa policy that covers all the citizens in the entire country. Consequently, citizens basically lack the liberty of choice. In the case of the emigrant population, both basic and enhanced policy holders have a selection of 16 and 39 companies respectively (Hamidi, Shaban, Mahate, & Younis, 2013). Since the cost of the policy is regulated by the government, insurance providers compete on account of non price factors thus presenting consumers with substantial choice. This is also the same with enhanced policies where 39 providers tender 9,450 diverse policies. However, two companies manage the larger 46% of the enhanced policies while 17 providers control 51% of the market which amounts to approximately 3% per company. The remaining 20 firms have about 1% of the enhanced policies which is approximately 0.05% per company. It is rather anomalous for two companies to control the market particularly when the policy benefits are mainly regulated by the government. Thus there may be additional factors like first mover advantage or even nonmarket-related aspects which may give details on why the two firms are able to capture such a huge share of the market (Hamidi, et al., 2013).
In a case whereby the MOH and HAAD extended the ability of all insurance providers to contract with government hospitals, the market for health treatment will become more competitive. This will ensure that the two leading providers are not behaving in a monopolistic way. In addition, through improved competition there will be lower chances of price increase and higher probability of efficiency improvements (Hamidi, et al., 2013).
Hamidi, S., Shaban, S., Mahate, A. A., & Younis, M. Z. (2013). Health insurance reform and the development of health insurance plans: the case of the Emirate of Abu Dhabi, UAE. Journal of health care finance, 40(3), 47-66.