Public Attitude Toward the Cooperative Health Insurance System

Topic: Administration
Words: 2824 Pages: 10


Saudi Arabia is currently focused on diversifying its economy and attracting private capital. In accordance with the country’s development plans for the coming years, a large-scale reform of the health care system is also needed. As part of it, it is necessary to expand the number of private medical institutions, leaving the regulatory and supervising functions to the government. The purpose of this study is to assess the current state of the insurance system in Saudi Arabia and consider the prospects for its development.


Healthcare System in Saudi Arabia

The Kingdom of Saudi Arabia has been developing rapidly in recent years, which also affects the quality of services provided in the social sector. In particular, the country currently has a system of free healthcare provision for all citizens (Al-Hanawi 78). The Ministry of Health (MOH) is the main provider of health services to the population in the country and operates 60% of all health centers and hospitals in Saudi Arabia (Al-Hanawi et al., “Healthcare Finance” 56). MOH now operates approximately 224 hospitals in all regions of the country with 33,277 beds, as well as “2037 primary health care (PHC) centers” (Algara 96). Rahman notes that “the public sector provided free health services to the Saudi population without any need for supplementary financial support due to oil revenues” (1). Oil exports currently account for about 75% of government revenue, allowing free public healthcare funding (Al-Hanawi et al., “Healthcare Finance” 56). Nevertheless, global changes in the structure of the market, as well as internal transformations in the habits and behavior of the population, led to concerns about the sustainability of this model.

This trend is typical for the countries of the Gulf Cooperative Council (GCC), which are oil-rich and rely on the income from the export of this resource. In these states, including Saudi Arabia, public healthcare is constitutionally considered a basic citizen’s right (Rahman and Salam 2). However, in such an environment, government spending on the health sector depends on oil prices, which, together with other factors, leads to an annual increase in costs. From 2005 to 2019, government spending on the country’s social development increased from 9.2% to 15.4% (Al-Ruthia et al. 1521). Additionally, Saudi Arabia’s MOH budget has grown by almost 300% over the past 13 years (Al-Ruthia et al. 1521). Thus, spending on public health care is growing faster than the country’s economy, which is particularly affected by the decline in oil prices.

Until recently, decisions about financing and managing the healthcare system were based solely on the needs of the population. Currently, “there is a mix of related and inter-related social, economic, political, and cultural problems, so the risk is a defining feature of health care policy economic management” (Al-Hanawi and Qattan 1). Among the factors influencing the growth of spending in this sector, one can single out the increasing life expectancy, changes in the patterns of behavior of the population, and an increase in the average age of citizens.

Vision 2030

The Vision 2030 program assumes the transformation of the country’s economy, which also affects the public sector. First, this initiative aims to diversify the economy, allowing the country to rely less on oil exports and build a sustainable system (“Kingdom of Saudi Arabia” 6). In particular, this strategy is related to the healthcare sector since the main source of its funding is revenue directly from oil exports. The implementation of the Vision also implies a large-scale program to restructure the health care system. The Health Sector transformation program “depends on the principle of value-based care, which ensures transparency and financial sustainability by promoting public health and preventing diseases” (“Health Sector Transformation Program,” para. 1). This direction requires the government to also make changes in the structure of financing the healthcare system.

The main shift that is in line with the new plan of the Saudi Arabian government is the transition from a predominantly publicly-driven economy to a more private-driven one. In this case, in the transformation of the health care system, the emphasis is also on diversifying the economy, creating more jobs, as well as encouraging private sector development (Rahman and Al-sharqi 114). This direction should help in the equal distribution of medical care between regions and in improving the efficiency and quality of care provided. However, Almutairi and Al-Shamsi state that with the privatization of the healthcare sector, “healthcare and administrative costs will rise, and care provided will be no more effective than the current public healthcare system” (119). Such prisoners have been obtained in the study of the experience of Australia, which may indicate that privatization is related to increased risks.

Rahman and Qattan underline that at the core of transformation lie “sustainable development and collaboration among public, private, and non-profit stakeholders” (8). In particular, the new development plan corresponding to the Vision assumes an increase in the share of the private sector in the healthcare system from 25% to 35% (Alharbi, 85). Currently, there are about 125 private hospitals in the country, which have “11833 beds and 2218 dispensaries” (Alraga 96). However, there are also difficulties in the country with collaboration between different healthcare institutions and efficient allocation of resources. Alharbi also notes that the country is currently facing a number of attendant traditions that can impede transformation (“An Analysis” 86). Nevertheless, the problem of financing the healthcare system is a priority for reforming this sector.

It is planned to make the public-private sector partnership the main instrument for improving the quality and efficiency of the healthcare system in Saudi Arabia. Thus, the government expects that by 2030, 295 hospitals and 2,259 PHC centers will be fully privatized (Rahman and Al-Sharqi 116). In this case, the government will supervise, plan, and regulate the sector, while all other responsibilities will depend on private institutions. In line with the development plan, the emphasis is on direct investment by private actors in the economy, both local and foreign. An increase in the share of private investment is expected to have “progressive outcomes in accessing to health care, efficiency, effectiveness, quality of care, minimize cost, an adaptation of new technology, and utilization of health care services” (Rahman and Al-Sharqi 116). Various programs to stimulate the development of the private healthcare sector have already led to an increase in the number of enterprises from 18 in 1971 to 145 in 2015 (Rahman and Al-Sharqi 116). Thus, the healthcare system is moving towards large-scale privatization, which leads to the need for an effective health insurance structure.

Insurance in Saudi Arabia Healthcare System

The recognition of the government’s existing model of full financing of the health sector as ineffective and unsustainable led to partial changes in the provision structure. Thus, in 1999, Saudi Arabia introduced a “cooperative health insurance (CHI) system designed to provide healthcare for private-sector workers and their families” (Alharbi, “National Health Insurance” 1). There were several reasons for the establishment of a new sector funding model. First of all, the costs of public healthcare grew rapidly, which posed a significant threat to the country’s economy. Additionally, 80% of employees in private enterprises in the country were expatriates, “accounting for 56% of the gross Saudi workforce, providing a further strain on the healthcare resource envelope” (Al-Hanawi et al., “The Effect” 597). Compulsory insurance paid by private employers for their employees was aimed at increasing the level of use of private healthcare facilities.

This initiative has been implemented in three phases since 2005 and has significantly changed the basis for financing the sector. CHI was initially applied to Saudi and non-Saudi private-sector workers while their employers were obligated to finance it (Albejaidi 2). At the second stage, it is planned that the insurance will be expanded to employees of the public and government sectors, and the state will pay for the insurance premium (Albejaidi 2). In the third stage, it is proposed that the CHI will be offered to visitors from all over the world in Saudi Arabia (Albejaidi 2). Currently, only the first of the three stages has been implemented in the country, which relates only to employees of private enterprises. Nine million people in Saudi Arabia have CHI out of a population of 30 million, one-third of which are non-Saudi (Alonazi 2). The healthcare insurance market occupies 51% of the entire insurance market in the country, which makes it a significant part of the economy (Alonazi 2). CHI is already shaping the privatization and more efficient financing of the healthcare sector to a large extent.

The insurance covers all medical expenses for the insured population receiving care from government-accredited healthcare organizations. To obtain accreditation, each institution must meet the quality requirements which are established by MOH and the Saudi Commission for Health Specialties (SCHS) (Albejaidi 2). Additionally, each provider commits to submit a report every three years to monitor the quality of care. If the requirements are not met, the accreditation of the organization will be canceled. Thus, CHI contributes not only to the development of the private sector but also to an increase in the quality of care through government supervision and regulation. Rahman and Al-Borie also note that broader insurance provisions “may improve the use of available resources” (6). This factor, in turn, will lead to improved equipment and skills of private organizations and the development of competition with the public sector. Thus, CHI is one of the main instruments for further privatization of the health sector, as it allows for an increase in the amount of investment to increase the quality and availability of care.

The Purpose of the Research

The purpose of this study is to evaluate the existing healthcare insurance system in Saudi Arabia, as well as to assess the prospects of its development. To study the current condition of the insurance system in the country, the paper explores beneficiaries’ satisfaction with the cooperative health insurance system in Saudi Arabia. Additionally, an assessment is made of the public and non-beneficiaries attitudes toward the cooperative health insurance system in Saudi Arabia. The study is based on the acquisition and analysis of data in Jeddah City. The paper also examines the effectiveness and sustainability of expanding the cooperative health insurance system in Saudi Arabia via government subsidy.

Additionally, the paper explores the possibilities of expanding current insurance plans to universal healthcare coverage (UHC), which would remove some of the financial burdens from the government of the country. In recent decades, there has been a rapid growth in the development of this insurance system among the countries of the world, which is part of the Sustainable Development Goals (SDGs) (Wagstaff and Neelsen 39). UHC implies that all citizens of the country receive the necessary medical care without incurring excessive financial hardship (Verrecchia et al. 10). The system is thus “built on the foundations of human rights and equity, with health services allocated according to people’s needs and funded according to their ability to pay” (Verrecchia et al. 10). These goals align with Vision 2030, which “aims to improve access to health services through optimal coverage and a comprehensive and equitable geographical distribution” (“Health Sector Transformation Program,” para. 1). The research methodology includes the study of several indicators that can identify the effectiveness and capabilities of the existing system.


First of all, it is necessary to outline the range of research questions on which the research will be based. Research questions:

  1. How satisfied are the beneficiaries of the Cooperative Health Insurance System in Saudi Arabia?
  2. What is the public, nonbeneficiaries’ attitude toward the Cooperative Health Insurance System in Saudi Arabia?
  3. Is it possible to expand the Cooperative Health Insurance system in Saudi Arabia via government subsidy?

Thus, the objective of the study includes studying the background of the existing system, collecting data to answer research questions, and assessing the prospects for the development of the system based on the analysis of the data obtained.

The research methodology includes the analysis of data obtained through surveys conducted in Jeddah City. The first step is to explore the beneficiaries’ satisfaction with the cooperative health insurance system in Saudi Arabia. This indicator is of key importance for assessing the quality of medical care provided within healthcare insurance. Sarker et al. underline that “the higher patients’ satisfaction is directly linked with the commitment of healthcare which often leads the better health outcome” (10). This assumption is consistent with findings by Alharbi, who notes that there is a positive correlation between the quality of care provided and the reporting of client satisfaction (“An Empirical Analysis” 241). Therefore, the study will include a survey of private-sector workers who use health services under the CHI. The research includes the collection of quantitative and qualitative data and their interpretation.

For a comprehensive study of this topic, it is also necessary to the assessment of public and non-beneficiaries attitudes toward the cooperative health insurance system in Saudi Arabia. The study by Alkodaymi et al. indicates a rather low level of public awareness of the available insurance systems for the population (7). At the same time, a generally positive attitude of citizens towards initiatives aimed at expanding accessibility options was identified (Alkodayami 7). The study of this indicator is important for the process of assessing the existing system since the spread of insurance calls “for close interaction and discussion between the government and the private sector” (Al-Hanawi et al. 10 “Barriers to the Implementation of Public-Private Partnerships). Insufficient awareness of the population about programs and development prospects can lead to a misallocation of healthcare insurance and a barrier to the rapid development of the system. The study of this aspect also involves the collection and analysis of both quantitative and qualitative data through surveys.

A key part of the study is considering government-subsidized insurance as a valid and sustainable option. The most prominent example of subsidized insurance coverage is in the United States, where Medicaid and Medicare are actively promoted. Glied and Jackson state that government subsidies protect program members from higher healthcare costs and allow them to choose the lowest-cost plans (539). At the same time, subsidizing insurance is associated with significant government investments, and their cut leads to a sharp imitation of the program for beneficiaries (Kennedy et al. 9). Thus, given the desire of Saudi Arabia to significantly reduce the cost of the healthcare system, this initiative appears to be controversial. However, this system is also the most promising path for the development of UHC.

In this regard, it is important to consider the experience of other countries which successfully or unsuccessfully tried to adapt the insurance system. In China, before the economic reform, 90% of population coverage was achieved by Cooperative Medical System and by Government Insurance Scheme (Li et al. 2). Li and Fu report that while an increase in coverage of subsidized healthcare insurance in China has cut out-of-pocket spending by half, government spending has also doubled (243). However, the proliferation of insurance plans has also significantly increased the quality of care and its availability (Li and Fu 243). However, this path involves increased government costs, which is suitable for more developed countries.

Research Rationale

The transition to UHC is more difficult for developing countries with more limited resources. The mandatory CHI in Rwanda has allowed access to healthcare for all citizens of the country, as well as reduced existing barriers in the healthcare sector (Chemouni 96). The example of Vietnam can demonstrate the effect of bad decisions on the development of UHC, as coverage was focused on the country’s poorer population, which created inequalities in access to healthcare (Mao et al. 7). This conclusion is also confirmed by Zaman and Hossain, who emphasizes that “maintaining the quality, equity, and efficiency of healthcare under different schemes/premiums of UHC could pose a challenge” (18). Thus, research is necessary in order to assess the prospects for expanding the cooperative health insurance system in Saudi Arabia with government subsidies for achieving UHC.

This aspect is important for exploring options that the government can adopt in order to achieve the fastest and most efficient privatization of the sector. The methodology of this section involves collecting data on the economic consequences of the implementation of the system for the economies of different countries. Based on the information found, it will be possible to analyze how effective and promising UHC is.

Conclusion and Implications

Saudi Arabia is currently seeking to reduce government spending on the healthcare system due to lower oil prices and higher medical costs. In accordance with Vision 2030, the most effective instrument is the privatization of the sector through the provision of universal insurance and achieving maximum coverage for the entire population. Currently, only employees of private organizations use the services of private medical institutions for insurance. This study aims to assess the current state of the insurance system in Saudi Arabia and consider the prospects for its development. The findings of this study can form the basis for political and economic planning, as well as for choosing the most appropriate insurance system.

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