Like the funds of most public institutions and state-owned companies, the National Social Security Fund’s (NSSF) revenues have melted away with the Lebanese lira’s depreciation.
The exchange rate used to calculate social security contributions, based on declared salaries, is still at LL15,000 to the dollar.While it is ten times higher than the parity in force before the crisis in lira, it is six times lower than the market exchange rate.
As a result, the NSSF can no longer cover the growing medical expenses of its 1.4 million beneficiaries. Within this context, some insurance companies are trying to position themselves as an alternative, by offering health coverage packages at lower prices than the market average, even including reimbursement for surgery and hospitalization costs, presented as comparable to that of the NSSF.
Variable appetite among insurers
This is a promise that Commercial Insurance, known as Comin, is confident it can keep. For several months now, the company has been conducting an active campaign to attract new clients who were almost exclusively dependent on the NSSF.
“This is the case of many Lebanese who didn’t think they needed private health insurance until the crisis led to the state collapse,” said Roger Zaccar, Comin’s managing director.
“We have been able to reduce prices by eliminating brokerage fees, since package holders can buy and manage their [insurance] package directly with us via the application we have set up,” Zaccar told L’Orient-Le Jour.
He stressed that “if the NSSF can no longer fulfill its mission, insurers can come in and fill the gap.”
This type of arrangement exists in some European countries, including Switzerland and the Netherlands, where public authorities entrust the management of basic health coverage, which is compulsory, to private players.
Other members of the Association of Insurance Companies of Lebanon (ACAL), were less optimistic. “There are limits to what an insurer can offer to maintain its financial equilibrium so that it can compete with or even replace the NSSF,” said Assaad Mirza, chairman of Capital Insurance and of ACAL.
“The first ones engage in a profit-generating activity whereas the latter have a public service remit and can afford to make a loss. However, the private insurer can’t currently reduce the costs involved in the provision of healthcare, whether in terms of the taxes on the healthcare costs it covers [25 percent on average of the policy price] or the considerable difference in service prices between private and public hospitals,” he said
Mirza said ACAL is currently holding discussions with the Public Health Ministry and some hospitals to launch a product that provides an acceptable level of coverage at affordable prices. “But it must be complementary, not a substitution,” he added.
The limits of Neo-liberalism
Albert Dagher, economist, professor and author of the 2022 book, Comment une élite prédatrice a détruit le Liban (How a Predatory Elite Destroyed Lebanon), said “Every time a public service is privatized, the price goes up for the consumer, with no guarantee that the service will improve. This is particularly true for developing countries.”
He continues: “ If the private sector is interested in a public service, it is first and foremost because it has the potential to generate money; other considerations are always secondary.”
Dagher is opposed to the idea that the privatization of public services is the only viable alternative for a functional state. This especially holds for Lebanon, where the establishment of the NSSF by then President Fouad Chehab in 1963, was born from a lengthy process and came to serve a large part of the Lebanese population.
“History proves me right, given that the quasi-divine dogma of Neo-liberalism that guided the destruction of public services in favor of the private sector is now showing its limits,” Dagher said.
The NSSF’s point of view
Finally and unsurprisingly, NSSF Director General Mohammad Karaki also rejected the prospect of sidelining the NSSF in favor of the private sector.
“There have been attempts in the past, particularly in the 2000s, but they have not been successful,” Karaki said.
“This is mainly due to the fact that insurers tend to exclude people at risk, or to charge them more. An insurer may be able to charge rates comparable to those of the NSSF for young policyholders, but the older they get, the higher the premiums they charge.”
Karaki said that it is not possible to compare the NSSF, whose mission is to provide r the entire population with medical coverage, with private insurance.
Karaki stressed that countries where the state entrusts healthcare services to the private sector do so in a structured manner and not by default.
“The public authorities set the rules, define the basket of treatments and control policy prices, and competition is based on quality of service. We are far from being able to guarantee the same conditions in Lebanon today,” he said.
Karaki believes that the NSSF can become operational again with a budget ranging between LL20,000 to LL22,000 billion a year (between $220 million and $245 million calculated at an exchange rate of LL90,000 pounds to the dollar, which is the average market level for several months).
“We have recently increased the price of consultation reimbursements 20 times, to $12. This is an improvement, even if it still doesn’t fully cover market prices. For generic drugs, the amounts have been multiplied by 15, and by 12 for brand-name drugs,” he said. “The insurers will be able to supplement the NSSF services, but not replace them.”
This article was originally published in French in L'Orient-Le Jour. Translation by Joelle El Khoury.