Why universal health insurance needs to be regulated effectively

With Parliament expected to debate and possibly approve the Universal Health Insurance (UHI) Bill of 2022 this week, the Insurance Commissioner of the Tanzanian Insurance Inspectorate (Tira), Dr. Baghayo Saqware, in this exclusive interview with The Citizen News Editor Samuel Kamndaya details the authority’s willingness to regulate the arrangement and why UHI represents a turning point in the history of Tanzania’s healthcare and economy at large. Excerpts:

Q. In short, what kind of Tanzania can we expect under the UHI to be effectively regulated?
A. We should expect a country where the delivery of health services and the economy have completely changed. An effectively regulated UHI system will create a situation where insurance companies accumulate funds through UHI premiums. These funds are held with commercial banks. When banks have enough liquidity, people get loans at affordable interest rates. Its multiplier effect is easy to see.

Given the bill establishing Tira as the overall regulator of insurance schemes, how prepared is your institution to take on that mandate?
First of all, it should be noted that the genesis of UHI is the need to improve the delivery of health services among Tanzanians. It is a constitutional provision that obliges the government to ensure that all Tanzanians have access to quality health care. In order to achieve that, you need four main things: physical infrastructure in the form of hospital buildings, diagnostic equipment, healthcare professionals, and funding. If you critically analyze the four, you’ll find that we have the buildings, we have the equipment, and we have experts too. However, funding has always been a challenge. In the early days of our country’s independence, the government could fully take care of the financing part, but later it became clear that this exhausted public resources. We switched to cost sharing, which is also expensive. We then decided that health insurance must be compulsory for all civil servants and that is why the National Health Insurance Fund (NHIF) was created. However, this also left a good part of the population working in the informal sector. We had to do something.

At one point it was said that the NHIF was not doing well financially as he was an expert in the field, why was that and what to expect with the UHI?
The problem lies in how we live as Tanzanians. Many of us tend to take out health insurance when we get sick. It doesn’t have to be like this. When a family member falls ill, see relatives calling and making contributions so they can get health insurance for their sick colleague. This contradicts the way the insurance sector works. An insurance company must have funds available in good time before the customer makes a claim. You must insure your car so that you can claim a refund from an insurance company in the event of an accident. However, the UHI decision has nothing to do with what happened at NHIF.

Which of the provisions in the UHI bill would easily define its main objective?
Basically, the UHI requires citizens to have health insurance because the health of Tanzanians is a constitutional matter of the government. We also decided that we should have a standard package. It also seemed good that the sector needs to be regulated and eventually if we are to make it effectively mandatory it needs to be tied to other services. For this very reason, it has been proposed, for example, that if you want to study or apply for a driver’s license or car insurance, you must also present a health insurance card.

Among the questions raised by some lawmakers during the debate on the bill was that instead of giving the regulatory mandate to Tira, a new body could have been formed to assume the UHI regulatory role. What do you have to say about this?
In short, there have been many misunderstandings regarding this particular aspect. Tira will regulate insurance benefits, not health benefits. Our task will be to outline the standards to be followed by hospitals providing services under an insurance agreement. The current situation is that if a customer of NHIF is upset with the service they received, they contact NHIF to complain. The regulatory goal is to protect the interests of both the insurance provider and the customer. It should be noted that insurance companies do not operate with their own money. They work with money owned by individuals who contribute through their insurance premiums. Therefore, the way the insurance company makes use of it needs to be regulated. For example, if the NHIF wants to invest in a real estate project, the regulator must step in and issue policies on how funds intended for members’ health must be invested.

In short, how ready is Tira to take on the mandate?
Tira has now been in existence for 26 years since it operated as a department in the Ministry of Finance. As such, it has enough experience and expertise to carry out the job. Second, there are already several guidelines for conducting insurance activities in the country. Third, Tira has an organizational structure that is ideal for such a mandate. It has a board of directors, the chairman of which is appointed by the president, while the members are appointed by the finance minister. There is an Insurance Ombudsman and an Insurance Court of Appeal. You have the insurance commissioner and his team of experts. All of this serves to promote the checks and balances in conducting the insurance business. For example, if a customer is dissatisfied with the service provided by an insurance company, they address their complaint to the company. If he is dissatisfied, he sends the complaints to Tira and then to the Ombudsman and finally to the Supreme Court. This was established in an effort to protect people’s interests and for the sustainability of the market. As part of the preparations for our role under the UHI, we are now establishing a special department within Tira that will regulate UHI. Your task will be to check health insurance companies and hospitals, among other things. We have enough experts here. The fourth aspect that makes me hope for a smooth ride is that we already have systems like the Tira MIS [a portal that manages motor insurance stickers and their respective cover notes]. We have a risk-based monitoring system that allows us to see the risks in each insurance company and trigger an alert. We have the right people who are well trained and qualified.

What is the best practice elsewhere?
When we say that there is no reason to consider creating a new body to regulate UHI, we say so with the understanding that insurance, social security and actuarial science are actually related majors around the world. In fact, experts in these fields study similar programs in the early days of their studies to such a point that they choose to specialize. For this reason, in Namibia, all financial institutions that do not fall directly under the Central Bank’s regulatory mechanism are governed by a single body known as the Namibia Financial Institutions Supervisory Authority (Namfisa). In Zambia, both insurance companies and pension funds are regulated by a regulatory body known as the Pensions and Insurance Authority (PIA), while in Botswana they have something similar to Namibia. In short, social security and insurance are one thing, and thus separating them only serves to increase operational costs for no apparent reason. The principles are universal and therefore Tira is a member of regional regulators for insurance and non-bank financial services in Africa, the East African Community and the Southern Africa Development Community. Tira regulates a number of multinational companies such as Jubilee and Sanlam, among others, and this gives us the opportunity to share experiences with our colleagues where the companies also operate.

It is said that the NHIF is too big for Tira to regulate?
Such views are based on a lack of understanding of what insurance entails. Regulation would give NHIF the ability to purchase reinsurance. Reinsurance is a contract between a reinsurer and an insurer in which the insurance company transfers the risk to the reinsurance company and the latter assumes all or part of one or more insurance policies issued. In this case, no company can be so big that there is no way to insure it.