Privatizing coverage: Emerging threats to universal healthcare in Lebanon

Article | 30 January 2024

Lebanon’s ongoing crises and delay in enacting structural reforms for social health protection creates a vacuum that private and political entities are starting to fill. Facing the stagnation in policy making and low public funding, several private initiatives emerged, seeking to bypass Lebanon’s main social insurers rather than building on their legal mandate and role in providing health coverage to the population. Such efforts favor short term coverage at the expense of broad risk pooling and solidarity in financing, the core building blocks of a social health protection system that would ensure universal health coverage.

Structural challenges precede current crises.

Even before 2019, uninsured families, making up around 40% of the Lebanese population, struggled with access to medical consultations, hospital beds, treatment, and medications. The majority relied on personal money, charitable organizations, or coverage provided by the Ministry of Public Health for their hospital expenses.

The social health insurance system is highly fragmented, with six employment-based social insurance schemes each offering its own benefit package, at its own tariffs, and without any coordination. In 2019, 44% of the insured population was covered by the NSSF, 16% by the army or police, 21% by private companies, 11% by mutual funds, and 6% by the Civil Servants Cooperative.

The multiplicity of risk pools and purchasing entities results in the depletion of more resources to finance a less equitable and less adequate outcome. Indeed, fragmentation means that for each of these entities, the risk pool is smaller, and the cost of purchasing medical services for their members is higher than if collectively bargained.

Unifying the public insurance bodies has long been recommended as a step to tackle the fragmentation, as it would bring the majority of the insured population into one public risk pool, which would facilitate cost reduction and improve bargaining power. However, experts say that political and sectarian concerns as well as unequal benefits work against the chances of such a merger.

The compounded crises since 2019 have only revealed and exacerbated the existing gaps and inequities in health coverage.

With the loss of value of the Lebanese Lira and the dollarization of medical services, medical inflation reached 600% in 2022. Social security contributions and the budgets of national institutions, of which the Ministry of Public Health, have drastically lost their value. For the National Social Security Fund, the social insurer of the private sector, this loss of value combined with the under-declaration of salaries by employers, has meant that the NSSF sometimes fails to cover more than 10% of the healthcare bill.

While most private insurance schemes were quickly dollarized and regained pre-crisis prices and tariffs, they only covered less than 4% of the population as of January 2022 as most households cannot afford paying private insurance premiums.

Patients have had to fill the gap from personal funds when they can afford it, or resort to other support channels, such as relatives, friends, or non-governmental organizations. Various accounts from employers have confirmed that in certain cases, employers are directly reimbursing health services for their employees. While the ratio of out-of-pocket expenditures from total health spending was already high in Lebanon before the crisis; it has since become the default method of financing.

Hence, the immense cost of healthcare has been effectively privatized to be covered by households. This means more inequality in access to healthcare, which is subject to disposable income and access to support networks. Many low-income individuals are also resorting to negative coping mechanisms such as delaying or skipping doctor visits, medical tests, treatments, and surgeries. In the long term, this only skews healthcare further towards hospital care and away from primary healthcare in a context where it is already predominantly curative rather than preventative.

Private initiatives amid policy stagnation pose a significant risk to equity in the long term.

The state has been slow to react. Since 2013, several draft bills, with the stated objective of ensuring universal health coverage, have been presented to parliament but to no fruition. These bills, commonly referred to as the “health card” proposals, put forward various financing modalities - a mix of contributions and earmarked taxes – to feed into a new health insurance fund under the MOPH. Earlier this year, MP Bilal Abdallah proposed a draft bill to increase the revenue of the MOPH budget dedicated to the health coverage of uninsured Lebanese residents, by proposing new taxes to be earmarked for this specific purpose. This bill is currently under discussion in parliament.

Lebanon's delay in enacting structural reforms for social health protection creates a vacuum that private and political entities are starting to fill. With this delay of state leadership on health coverage reforms, several stakeholders have made calls or attempts at providing private health insurance as a replacement for public insurers.

In the private sector, following mounting distrust in public institutions, employers are increasingly not complying with social security legislations. Many of these employers are also shifting gradually towards purchasing group insurance policies at preferential rates for their staff, as a replacement for NSSF coverage. This pattern of de-facto privatization poses a threat to the role of the NSSF as the main insurer of private sector workers. Indeed, this trend leads to decreased financing for the NSSF, which leads to a further reduction in the fund’s coverage rate, a further deterioration of trust. This ultimately threatens the sustainability of the NSSF, and its ability to fulfill its mandate.

Other proposals calling for more direct privatization have also emerged. For example, the Lebanese Business Leaders Association (RDCL) have presented recommendations for a privatized model that would make enrollment at NSSF optional and introduces a three-tiered benefit package provided by private insurers with the choice of insurance provider and package tier left to employers. The proposal also envisions a new national fund financed by international humanitarian actors, and managed with private insurance companies, that would subsidize coverage of those who are not employed or cannot afford to pay premiums. While different public-private partnerships’ models could be devised in a way that utilizes private sector expertise, such a proposal bypasses the principle of social solidarity in the financing of health coverage and could lead to inequities in access to healthcare.

In parallel, there have been less organized calls from certain public entities, such as the public sector teacher’s league and the makhateer’s mutual fund, to move in a similar direction which bypasses the CSC and the NSSF. Political parties are also moving towards private initiatives that would improve health coverage for their constituencies. Indeed, one political party negotiated preferential packages for its constituency with a private insurance company; and another mobilized certain hospitals to offer discounts for certain segments of the population.

Despite the urgency of providing alternatives, these initiatives, though sporadic and small in scale, risk further entrenching clientelism and decreasing trust in public institutions. Maintaining a strong and sustainable social security institution is crucial to achieving universal health coverage. Reforms are urgently needed to restore trust in public insurers, and avoid the cycle of less compliance, lower contributions, and lower benefits.

Lebanon should take leadership on the issue in order to provide universal health coverage to the population.