Introduction:
The Kingdom of Saudi Arabia (KSA) is one of the high-income economies in the Arab region, with a projected population of 35.01 million in 2020 [1]. With the discovery of oil resources in the 1930s, the KSA has experienced rapid economic growth similar to other developed nations. The Kingdom was heavily dependent on oil resources, and the oil sector contributed to nearly 65% of Gross Domestic Product (GDP) in 1991 [2]. However, during the early 1990s and 2000s, the fall in oil prices led to a reduction in GDP. It currently accounts for about 40.7% of GDP [3]. As a result, per capita GDP declined from US$ 25213 in 2013 to US$ 19936 in 2020 [4]. Despite the decrease in the revenues from oil resources, the economy's annual budget has increased from SR380 billion in 2007 to SR990 billion in 2021 [3]. In tune with the national budget, the health budget increased from SR22.8 billion in 2007 to SR79.84 billion in 2021 [1]. However, an increase in government spending on development activities led to budget deficits in a few years. During the period between 1980 and 2017, there were 22 budget deficit years with the range of 2% and 25% respectively, although there were 13 budget surplus years ranging 1% and 32% during this period [5]. In order to achieve a stable economy with a balanced budget, the government introduced radical reforms like reducing the subsidies given to various sectors, reduction in government spending, fiscal correction, and mobilizing non-oil resources into a balanced budget [6].
Since the first economic development plan in 1970, KSA has given priority to the health sector. As per the Saudi constitution, the responsibilities for financing, delivering, and managing healthcare services are vest with the government. The Ministry of Health (MOH) is the primary source of healthcare services delivery through a comprehensive system of 287 government hospitals (45180 hospital beds) and 2257 primary healthcare centers [1]. Other ministries such as the Defense and Aviation, Human Resources and Social Development, Interior, and organizations such as the National Guard and ARAMCO are responsible for financing and delivery of healthcare services to their employees and family members. Currently, other government agencies have 50 hospitals (13989 beds) in the Kingdom. The private health sector runs 267 hospitals (with 19427 beds), 3005 medical complexes, 49 single doctor clinics, and 174 laboratories across the Kingdom [1].
The last two decades experienced a substantial increase in the budget allocation to the MOH, from 2.8% (1970) to 7.82% (2021) [1, 7]. However, the health system is increasingly under pressure due to various external challenges, particularly the fall in oil prices at international markets. These are compounded by other internal challenges such as population growth, ageing population, lifestyle changes, increasing costs, changing pattern of diseases, high expectations, and improving quality consciousness by the population. These factors together steered to a continuous surge in overall spending on healthcare as a percent of GDP from 4.2% (2000), 6% (2015), to 6.4% (2020) [8]. This situation has further led to concerns about the sustainability and viability of the present healthcare financing system in the Kingdom.
Healthcare financing system is influenced by its socio-economic demographic challenges. In most countries, Out-of-pocket (OOP) spending by individuals is the primary source of financing healthcare, while in a few countries, government revenues are used to finance and deliver healthcare, and in some countries, health insurance contributions are used as financing sources. [9-11]. Like other countries in the Gulf Cooperation Council (GCC), the healthcare financing system in KSA is also influenced by the demographic characteristics, with a high share of expatriate population, which differentiate them from other countries in the world [12]. In 2020, the expatriate population in KSA was estimated at 38.7% of the total population [1], and a majority of this population is covered under the Compulsory Employment-Based Health Insurance (CEBHI).
The introduction of the CEBHI for the private sector workers has profoundly influenced the healthcare financing strategies in the Kingdom [13]. The establishment of private health insurance in accordance with the Labour Law (in 1999) permitted the entry of the private sector in the health services market [14]. The Vision-2030 focuses on institutionalizing the Saudi healthcare system and strengthening the healthcare financing and delivery system to provide universal health coverage [15]. In tune with the vision, the MOH has implemented new initiatives through the National Transformation Program (NTP)-2020 [16].
Saudi vision- 2030 emphasizes expanding the private sector's role through privatization, public-private partnerships (PPPs), and encouraging foreign direct investments [15,16]. The aim of the vision is to increase the private sector’s contribution in the healthcare sector from 25% (in 2016) to 35% in 2020 and seeks to provide access to quality healthcare free of cost to the population. The past few years have witnessed the increasing popularity of the private healthcare sector, which resulted in a marginal increase in the share of private health expenditure to overall health spending recorded. MOH data reveals that there has been a consistent increase in the share of in-patients and out-patients in the private sector, which could be attributed to an increasing number of insured workers from the private sector, rising preference for voluntary health insurance among high-income groups, and increasing popularity of private health sector in the KSA. Despite introducing various reforms, government revenue remains the primary source of healthcare financing in the Kingdom.
The overall aim of this article is to provide an overview of the present healthcare financing system in the KSA and identify various critical issues and challenges that need to be addressed in achieving health financing goals envisioned under Vision-2030. The implications based on the findings of this paper will be a valuable step towards planning the future healthcare financing system and reducing the government burden in financing healthcare in Saudi Arabia.
Methodology
In order to analyze the healthcare financing system in KSA, the authors employed a descriptive framework, compared and analyzed available secondary data from health expenditure database for different years published by the World Health Organization (WHO), and annual reports of the MOH, KSA. Besides, the authors carried out a literature review of relevant documents and reports, including relevant unpublished material related to health financing trends in the Kingdom. The framework developed by Joseph Kutzin [17] in determining the health financing policy option was applied to conceptualize various constituents of healthcare financing sources. Kutzin’s framework mainly consists of sources of revenue, pooling of revenues, purchasing of health care, and the delivery of services. Healthcare financing data on KSA were summarized and presented using descriptive statistics.
A review of literature comprising of articles, reports of government and non-government agencies on healthcare financing in KSA was conducted using electronic searches. The review included a range of published sources, including articles collected from the database such as Science Direct, PubMed, Scopus, JSTOR, Web of Science, official websites of WHO, World Bank, Ministry of Health, and Council for Cooperative Health Insurance (CCHI) in KSA. While conducting the literature search the key words used were: healthcare financing in Saudi Arabia, Saudi health insurance, financing of healthcare in Saudi Arabia, Saudi Vision 2030. Other keywords like Saudi healthcare system, healthcare access in Saudi Arabia, utilization of healthcare in Saudi Arabia, healthcare quality in Saudi Arabia, equity, and efficiency of healthcare in Saudi Arabia.
Results
Sources of Financing Healthcare
Regarding the source of finance, revenues from oil are the primary source of finance for healthcare. In accordance with the law, the country is obliged to deliver healthcare services to its citizens free of cost as laid down in the article 31 of the constitution [18]. Accordingly, the budget allocation to the health sector has increased significantly from Saudi Riyal (SR) 22.8 billion in 2007 to SR 79.8 billion in 2021 to meet the increasing demand for healthcare services in the Kingdom [19]. However, its share of aggregate healthcare spending has declined slowly due to the increasing share of health insurance contributions. WHO categorizes the source of financing in KSA into four heads: government transfers, out-of-pocket payment, voluntary health insurance, and others (including employer's contribution towards health insurance). In 2000, transfers from the government contributed to 72% of total healthcare spending, which has gradually decreased to 62.44% in 2018, while the share of contributions from health insurance has increased sharply from 9.49% in 2000, 19.13% in 2010 to 23.19% in 2018 (Table 1).
In the 2000's, about 90% of the annual government budget was derived from the oil revenue, with minimal contributions from other sectors [20]. Unlike other countries, non-oil revenues were not considered significant in financing healthcare services in KSA.
However, with the implementation of radical reforms, the non-oil economy continued to signal sharp expansion over the past few years. In 2018, KSA implemented value-added tax (VAT) as a significant step towards the country's diversification of revenue sources from its oil reserves. Currently, revenue from VAT remains a significant component of non-oil revenue, and it contributed about 44% of non-oil revenue in 2020, up from 14% in 2019.
Healthcare Expenditures in KSA
Healthcare continues to be a top priority sector in the KSA ever since economic development plans were initiated in 1970.
| Table 1: Source of financing health care in the KSA (figures in percentages) |
| Year |
2000 |
2005 |
2010 |
2015 |
2016 |
2017 |
2018 |
Government transfers |
72.05 |
72.50 |
61.93 |
68.47 |
66.71 |
64.24 |
62.44 |
Out-of-pocket payment |
18.46 |
16.49 |
18.95 |
14.38 |
15.71 |
12.81 |
14.37 |
Voluntary health insurance |
2.95 |
3.26 |
12.03 |
12.90 |
13.20 |
10.58 |
10.72 |
Others (including employers’ contributions) |
6.54 |
7.75 |
7.10 |
4.25 |
4.38 |
12.37 |
12.47 |
Total healthcare expenditure |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
| Source: WHO. Global Health Expenditure Database-Health expenditure profile Saudi Arabia |
A significant amount of financial resources was allocated to the health sector, which enhanced the provision of comprehensive healthcare services across the Kingdom. As a result, the aggregate expenditure on healthcare as a percentage of GDP has increased from 4.4% in 2001 to 6.4% in 2018, although there were ups and downs (Table 2). As a result, health resources such as hospitals, hospital beds, diagnostic facilities, and health workforce have increased. With the introduction of healthcare reforms, the contribution of government in total healthcare expenditure has slowly declined from 75.2% (2001) to 62.4% (2018). While, the share of private healthcare spending increased from 27.5% (2001) to 37.6% (2018).
According to the recent national health accounts estimate, the KSA's healthcare expenditure was SAR 161.7 billion and SAR 169.55 billion in 2017 and 2018, respectively [21]. Currently, MOH is the major healthcare services provider in the KSA, which manages 287 hospitals (57% of all hospitals) and 45180 hospital beds (57.5% of all hospital beds), while other ministries and government agencies deliver healthcare services through 50 hospitals and 13989 hospital beds (Table 3). The private healthcare sector has 167 hospitals (33.1%) and 19427 hospital beds (24.7%). The MOH employs 50065 physicians (52.5% in the Kingdom), other government agencies have 20234 (21.2%), and the private healthcare sector employs 25037 (26.3%) physicians, respectively (MOH, 2021). While the ministries receive funds annually from the government budget, other government agencies are allocated budgets by their respective ministries. KSA always spends a higher proportion of GDP on health care (Figure 1). In Kuwait (88.6%) and Oman (87.6%), the government share is higher, whereas, in Bahrain and the UAE, the governments contributed 51.6% and 58.8% of total healthcare expenditure, respectively, in 2018.
| Table 2: Total health expenditures and its share of government, private and out-of-pocket expenditures in the KSA |
| Category |
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
CHE as % of GDP |
4.4 |
4.2 |
3.9 |
3.5 |
3.4 |
3.6 |
3.5 |
2.8 |
4.3 |
3.6 |
3.7 |
4.0 |
4.4 |
5.2 |
5.9 |
5.8 |
7.0 |
6.4 |
GHE as % of CHE |
72.5 |
72.3 |
72.4 |
71.5 |
72.5 |
72.9 |
70.4 |
63.6 |
65.0 |
61.9 |
67.1 |
68.3 |
69.6 |
71.4 |
68.5 |
66.7 |
64.2 |
62.4 |
PHE as % of CHE |
27.5 |
27.7 |
27.6 |
28.5 |
27.5 |
27.1 |
29.6 |
36.4 |
35.0 |
38.1 |
32.9 |
31.7 |
30.4 |
28.6 |
31.5 |
33.3 |
35.8 |
37.6 |
OOPE as % of CHE |
18.0 |
18.4 |
17.9 |
18.2 |
16.5 |
15.4 |
16.7 |
19.4 |
18.4 |
18.9 |
15.6 |
15.2 |
14.4 |
13.1 |
14.4 |
15.7 |
12.8 |
14.4 |
CHE per capita (in US$) |
378.5 |
369.5 |
382.4 |
400.9 |
471.1 |
556.1 |
588.0 |
596.5 |
691.3 |
702.7 |
881.4 |
1014.7 |
1109.5 |
1278.9 |
1237.3 |
1160.1 |
1457.0 |
1484.6 |
GHE per capita (in US$) |
281.1 |
267.2 |
276.8 |
286.5 |
341.5 |
405.8 |
413.8 |
379.4 |
449.3 |
435.2 |
591.1 |
692.8 |
772.1 |
912.8 |
847.3 |
773.8 |
936.0 |
926.9 |
Source: World Bank Data-Saudi Arabia; World Health Organization. Global lth Observatory.
GDP- Gross Domestic Product; CHE – Current Health Expenditure; GHE- Government Health Expenditure; PHE-Private Health Expenditure; OOPE-out-of-pocket Expenditure; |
| Table 3: Health services providers, hospitals, hospital beds, doctors and population served (2020) |
| Health services providers |
No. of hospitals |
No. of hospital beds |
No. of
doctors |
Population served |
1. Public health sector |
|
|
|
|
Ministry of Health (MOH) |
287
(56.9%) |
45180 (57.48%) |
50065
(52.5%) |
All Saudi nationals and expatriates working in government services |
Other Government Sectors |
50
(9.9%) |
13989
(17.79%) |
20234
(21.2%) |
|
Armed forces medical services |
5689 |
8242 |
Employees and their families |
National guard services |
2669 |
4751 |
Employees and their families |
Ministry of Interior |
855 |
1100 |
Employees and their families |
King Faisal specialist hospital & research centre |
1817 |
1859 |
Referred Saudi nationals |
Royal commission hospitals |
455 |
498 |
RCJY’s employees |
ARAMCO hospitals |
424 |
760 |
ARAMCO Employees |
Ministry of human resources and social development |
2080 |
147 |
University students and employees |
2. Private health sector |
167
(33.1%) |
19427
(24.71%) |
25037
(26.3%) |
Saudi nationals and expatriates |
Total hospitals and beds |
504
(100%) |
78596
(100%) |
95336
(100%) |
|
| Source: Ministry of Health. Annual Statistical Report 2021. The Kingdom of Saudi Arabia |
 |
Figure 1: Share of GDP on health care in GCC countries |
 |
Figure 2: Per capita total, government and private n healthcare spending in KSA (current prices in US$) 2001 -2018 |
Over the last two decades, the per capita health expenditure in KSA has increased consistently. In 2018, the per capita healthcare expenditure was US$1484.59, out of which governments' share accounted for 62.43% (US$926.95). Since the establishment of CEBHI, there has been a marginal increase in the per capita private healthcare expenditure; however, the increase has been more evident after the launch of vision-2030 (Figure 2).
Out-of-Pocket Payments
Prior to the introduction of health insurance, OOP spending and insurance contributions from the employers of larger companies were the main source of financing private healthcare services. Saudi nationals who afford OOP payment availed treatment from the private hospitals, whereas most expatriates working in larger establishments were offered voluntary health insurance from their employers. Besides, private health insurance companies also provided different packages of services on a voluntary basis [22]. In 1995, about 30% of total healthcare expenditure in the KSA was funded through OOP payment. During this period, government spending was low, and OOP payments further increased up to 48% in 1998 [23]. However, a major health sector reform introduced by the Kingdom through the establishment of CEBHI during the early 2000's, has gradually transformed the healthcare financing scenario. Existing data suggest that the implementation of CEBHI led to some positive impact on healthcare payment methods, and as a result, there has been a decline in OOP payments by the households and an increase in private health insurance contributions [24]. Initial data from WHO revealed that between the years 2006 and 2008, there was a sharp increase in the private health insurance contributions as a share of private healthcare spending and a decrease in OOP payments [25,26]. However, the share of private health spending to total health spending in the KSA increased marginally from 18% in 2006 to 22% in 2008 [27].
There are many reasons attributed to the marginal increase in private healthcare spending. Firstly, with the launch of CEBHI, the country expected a higher growth in the private health sector, but the sector did not record a rapid growth due to unclear vision of the private healthcare sector including the health workforce challenges [18]. The law for establishing hospitals stipulates that at least one of the business entity owners should be a physician, which discourages many businessmen from investing in the medical sector [28]. The increase in the number of health services providers was insufficient to meet the increasing need for private health care [29, 30]. Secondly, CEBHI links the renewal of residency permits of expatriates to the provision of the health insurance policy. During the initial year of implementation, there could be many expatriates whose residency permits were not due for renewal, which affected issuing of health insurance policy [31]. Thirdly, prior to enacting the cooperative insurance law in 2003, the health insurance market was unregulated and underdeveloped. Due to opposition from the Islamic scholars who alleged that for-profit insurance should not be permitted in the Kingdom, the enactment of this law was delayed. Although cooperative or not-for-profit insurance are acceptable under Islam, the scheme like CEBHI does not satisfy the criteria of cooperative insurance as funds collected in the scheme go back to private insurance companies [32]. The recent experiences suggest that CEBHI has encouraged the utilization of private healthcare services and reduced expatriates' access to government healthcare services. MOH data indicates that the share of hospital visits in the private sector has increased marginally from 35.9% (2014) to 39.3% (2018), and during the same period, the share of MOH hospital visits decreased from 47.2% in 2014 to 42.9% in 2018 [1].
Pooling of Health Funds
CEBHI has certain characteristics of social health insurance with contributions from employers in the private sector. With its implementation, health insurance coverage has seen a phenomenal increase over the past years. The enrolment of members in the scheme has increased from nearly 4.80 million (2008) to 12.01 million (2017). However, the speedy implementation of 'Saudization policy' in the private sector led to in a decline in the share of expatriate insured workers. Although the number of insured Saudi nationals in the private sector has increased from 0.45 million in 2008 to 3.44 million in 2020, the total number of insured members decreased to 10.05 million by 2020 [33]. Further, a substantial number of expatriate workers in the private sector also lost jobs during the Covid-19 pandemic.
With regard to the pooling of funds for healthcare, the resources in the private health sector are fragmented. Most of the insurance companies follow risk-based pooling under which insurers charge differential premiums for various risk groups and companies with large number of workers. Premium amount in small establishments is more critical to the successful implementation of CEBHI. For instance, in 2008, about 50% of expatriate workers were employed in small establishments [34]. With regards to purchasing health services, CEBHI forms part of a healthcare market system, where health insurance companies have the competitive advantage of choosing the providers. This phenomenon is similar to countries like the USA, where strong competition occurs among the providers of healthcare and insurance companies. Competition among healthcare purchasers leads to differential costs for treating similar health problems [35]. In KSA, the role of voluntary health insurance has increased gradually, and its contribution to total health spending has increased from 2.9% in 2004 to 10.7% in 2018, growing at an average growth rate of 11.43% per annum [36]. Both compulsory and voluntary health insurances continue to dominate the insurance market in KSA (Figure 3). Gross Written Premium (GWP) of health insurance has increased from SR9.7 billion (2011) to SR.22.83 billion (2020), and it accounted for 58.9% of the total GWP in 2020.
 |
Figure 3. Gross Written Premium of Health Insurance Sector (in SR Billion)
|
Health Services Provision
The MOH has been the major healthcare provider which delivers a comprehensive health service through a network of primary, secondary, and tertiary facilities throughout the KSA. Other ministries and public agencies also deliver healthcare services to their employees and family members. CEBHI scheme provides a predetermined health package to the insured as determined by the CCHI [27]. Under the scheme, all employers should contribute the total premium of all workers employed by them. If an employer failed to pay an insurance contribution or did not subscribe to an insurance plan, they would be liable to pay the entire premium, including a fine; otherwise, they will not have the permission to hire expatriate workers. CEBHI provides coverage to all expenses like surgeries, physician visits, diagnostic and treatment, drugs, day-care surgeries, pregnancy and delivery, and dental care. Health insurance companies offer different plans with different benefit packages (from primary to tertiary healthcare), ranging from a basic to an elite plan with equivalent caps on medical expenditure. While every insured person can avail healthcare from the affiliated hospitals and clinics, access and quality of healthcare services in different plans are unlikely to be the same with different categories of insurance coverage.
Discussion
Like many developed economies, KSA has been undergoing a rapid rise in healthcare spending for a long period. In terms of GDP, total expenditure on healthcare has increased from 4.2% in 2000 to 6.36% in 2018 [8]. Apart from providing free healthcare services to citizens, there are many factors responsible for the increase in health expenditure, including increasing population, growing health awareness of the population, increasing demand for specialty care, and improved technology. With the continuous fall in revenues from oil resources, the KSA is determined to diversify its non-oil revenue base, including increasing taxes on goods and services. As a significant step towards diversifying revenue sources from its oil reserves, KSA implemented the value-added tax (VAT) in 2018. Currently, taxes on goods and services account for 44.4% of non-oil revenues and remaining through other sources [37].
The KSA has a predominantly public-funded, owned, and managed healthcare system. Currently, the MOH is the key provider of healthcare services through 287 hospitals (56.9% of all hospitals) with 45180 hospital beds (57.5% of all hospital beds) across the Kingdom. Other government sectors together manage 50 hospitals (10% of all hospitals), and 13989 hospital beds (18% of all hospital beds) deliver comprehensive health services to their employees and family members [27, 38]. There are concerns about multiple government agencies providing healthcare services since funding for healthcare is divided amongst several agencies, and each of them delivers healthcare services to a designated population. In this context, the per capita allocation of public expenditure on healthcare is likely to be unequal across different segments of the population.
Although the total expenditure on healthcare has increased manifold times, the increase is much lower compared to other high-income countries. World Bank data indicates that per capita current healthcare expenditure in KSA was US$ 1485 in 2018, which is much lower in comparison to countries like the United States (US$ 10623), Germany (5472), Canada (US$ 4995), and Japan (US$ 4267). Among GCC countries, KSA also stands behind the United Arab Emirates (US$1817) and Qatar (US$1746) in terms of per capita spending on healthcare [8]. KSA's healthcare indicators are lesser than many high-income countries. For instance, according to the WHO report, 2021 [39], the density of physicians of 26.1 per 10000 people (2011-2019) in Saudi Arabia is still lower than that of high-income countries like the United Kingdom (58.2), Germany (43) and Australia (37.6). Likewise, the density of nurses and midwives of 58.2 per 10000 population (2011-2019) is much lower than the United States (156.9), Germany (134.9), and Australia (132.4). The density of hospital beds per 10000 population in the KSA of 22.4 (in 2017) is lower than that of Japan (129.8), Russian Federation (71.2), and China (43.1). This suggests that enormous investment is required to expand the availability of healthcare resources, including the health workforce. Further, the KSA's population is estimated at 35.01 million in 2020, with an increasing old age population and a rise in lifestyle diseases, including related co-morbidities, which is likely to lead to an increasing demand for specialists’ services. To keep pace with these changes, KSA would require an additional 20,000 beds by 2035. However, based on the average bed density in the world, KSA will have a gap of 40,000 beds by 2035 [40]. Moreover, the number of old age population above 80 years is likely to reach 1.60 million or about 4% of the KSA population by 2030, which would increase health expenditure manifold times [41, 42]. This increase is likely to have an adversative impact on the KSA’s health insurance market.
Vision 2030 brings out fundamental changes in the way healthcare is financed and delivered [15]. The vision focuses on privatization of healthcare, public-private partnerships, and foreign investment in healthcare, which are expected to significantly influence the financing and delivery of healthcare services. The emphasis of the public sector should be on the preventive care, control of infectious diseases, and strengthening primary care. It also visualized that increased participation of the private sector would increase demand for private health services in the Kingdom, which is expected to yield additional revenues to the government, a more efficient health system, and transfer of facilities to the private providers. However, the analysis of expenditure data shows that the percentage of private healthcare spending in total healthcare spending increased only marginally from 36.4 in 2010 to 37.6% in 2018. However, OOPE as a percent of aggregate healthcare spending has decreased from 19.4% in 2008 to 14.4% in 2018 [8]. This decrease in OOPE is due to a shift in healthcare payment methods to employers' contributions towards CEBHI and an increasing share of voluntary health insurance, which is likely to increase with additional employment in the private sector as envisaged under the vision-2030. However, health care costs are likely to increase considerably, given the malpractice predominant in the private health system and without adequate control and regulations by the government. Similarly, mandatory employer-based and voluntary health insurances are also likely to contribute to increasing demand for health care and skilled health workforce, technology, and know-how in the private sector.
Like in most countries, Covid-19 created a severe impediment on economic activities, including loss of jobs to many in the Kingdom, which has implications on health insurance coverage. The country has undertaken several measures to contain the private sector's financial and economic repercussions and allocated SR17.3 billion to enable them to grow during the post-pandemic period [43]. The Council for Cooperative Health Insurance shows that the number of insured workers in the private sector fell from 12.01 million in 2017 to 10.15 million in 2020. Between 2019 and 2020, the number of insured Saudi nationals decreased by 49,700 and non-Saudis by 1.05 million [33]. Regarding employment in the private sector, it is likely that new employments generated in the private sector may not be attractive to Saudi nationals due to low salaries compared to the government sector.
Moreover, the availability of expatriates at lower remuneration often forces the employers in the private sector to opt-out Saudi workers, who constantly demand an increase in remuneration. Further, there are specific local workforce issues in the labor market, such as social, religious and cultural perceptions related to specific jobs, inadequate educational qualifications, lack of job experiences, legal obligations, and problems in ending tenure [44]. These factors are expected to influence the growth of private health expenditure in the Kingdom. Although the 'Saudization' policy was initiated in 1985, the overall implementation aimed at increasing Saudi nationals' workforce participation has been accelerated under the vision-2030. Data shows that Saudization policy has led to an increase in the employment of Saudi nationals in the private sector from 20.37% in the first quarter of 2020 to 22.75 % in the first quarter of 2021 [45]. With the increasing share of the Saudi workforce in the private sector, private healthcare expenditure is also likely to increase.
Another challenge is the increasing healthcare costs in the KSA. The tendency of insurers to rise the premiums of health insurance to minimize their cost will have a negative impact on the population's health. Further, the introduction of 5% VAT in 2018 and 15% in May 2020 has contributed to a surge in the cost of healthcare in the private sector. As a result of VAT, the costs of care provided by the private sector are likely to go up, which will significantly affect the high-risk expatriate workers. Currently, an effective mechanism is not available to ensure that insurance companies accept high-risk employees in the private sector. At present, health insurance companies adopt risk-rated premiums similar to voluntary or private health insurance; and adopt premiums based on health risks and size of the companies. In this context, premiums of companies employing fewer workers are essential to the success of the CEBHI scheme. In 2007, about 51.6% of all expatriate workers were employed in private entities with less than five employees in the Kingdom [34]. With the introduction of VAT, it is expected that premiums on health insurance would go up due to the increasing cost of health care, as most providers add VAT in medical goods being supplied to hospitals.
The KSA's health care expenditure is expected to rise considerably given the increased contribution of the private sector and raising government expenditure on health care. However, a major challenge is to assure equal access to good quality health care to everyone. The CCHI ensures that the employer-based health insurance operates efficiently, and it achieves the objective of cost-shifting and improving access to good quality healthcare services to the insured [5]. Currently, CEBHI has been successful in providing healthcare to 10.05 million workers and their dependents (6.61 million expatriate workers and 3.44 million Saudi nationals) in the private sector, whose contributions are paid by the employers. However, equity and access are less likely to be maintained under this system since there are unequal premiums for various salaried groups for health insurance coverage. While highly paid workers will have more access to high-quality care, lower-paid workers have limited access.
Further, Saudi nationals working in the private sector can avail healthcare from public healthcare facilities free of costs. Besides the lack of private health facilities in rural and semi-urban areas, regional inequalities are also obvious in the provision of health resources, medical equipment, medical technology, and standards of practice. The private healthcare facilities are mostly concentrated in the cities and urban towns of the Kingdom. For instance, almost 50.3% of private healthcare facilities and 51.5% of private hospital beds in the KSA are concentrated in the cities of Riyadh and Jeddah (MOH, 2020). Similarly, about 53% of the dispensaries and 74% of the clinics in the private sector are located in these two regions [1]. The health workforce distribution, including specialists, medical equipment, and technology, is also skewed amongst the regions.
In many countries, health insurance is considered as one of the options to reduce OOP spending on healthcare among households. Recently, many countries have adopted health insurance as one of the financing strategies for achieving universal health care. However, the effectiveness and efficiency of the health insurance schemes in improving access to healthcare for the population are contingent on the behavior responses and consequences of OOP spending on various segments of the target population. A strong association between OOP spending and health insurance is not well documented in the literature. Few studies have shown that health insurance lessens the OOP spending on hospitalization and medication, enabling individuals to seek better healthcare during the diagnosis and treatment of different health problems [46-48]. In contrast, some studies reveal that insurance against illness not necessarily increase the use of healthcare services [49, 50]. The argument is that as the insured individuals make more hospital visits, they can identify more about their health issues and the set of services essential to preserve their health.
In the KSA, an analysis based on National Family Health Survey [51] revealed that individuals having medical insurance are more likely to visit health facilities for health check-ups, and the tendencies are found to be more among expatriates compared to Saudi nationals. The study also found that individuals who have purchased private health insurance are more likely to visit health facilities for medical check-ups and thus help reduce the future costs of medical care. Another study based on national survey data in the KSA [52] showed that health insurance could reduce OOP spending by 2% and spending on medicine by 2.4%. These findings suggest that by extending health insurance across different regions in the country, health insurance is likely to improve health outcomes and reduce OOP spending.
Healthcare is one of the most significant insurance segments in the KSA, which accounted for about 56.8% of total Gross Written Premium (GWP) in 2018 [36]. The ongoing privatization policy driven by the vision 2030 is expected to ensure continuous growth of the health insurance market. Since its inception, the CCHI has introduced many measures to improve the implementation of the CEBHI, including the electronic system to reduce administrative costs and insurance fraud. All reforms introduced in the healthcare sector aimed at providing access to good quality health care to citizens and expatriates while controlling costs. Although there are many challenges in implementing radical reforms, it is hoped that with the improved efficiency in healthcare provision and emerging role of the private healthcare sector, the average growth rate of public healthcare spending is likely to decrease in the coming years. Thus, as envisaged by vision-2030, the KSA's healthcare sector is likely to shift from the public health system delivery and financing to a market-based approach.
Conclusions
Despite implementation of various healthcare reforms, the healthcare financing system in the KSA has not undergone a significant change, as government revenues remain the primary source of funding healthcare. The healthcare financing system is inequitable due to the fragmentation of healthcare budgets between different government organizations. The per capita expenditure and the benefits offered by different agencies also differ, which calls for a unified system of healthcare provision irrespective of working in different organizations. The goal of Saudi vision-2030 is to bring significant changes in the way healthcare is financed and delivered with a view to expand access to good quality healthcare for all. The NTP-2020 of the MOH has already implemented reforms to increase the contribution of the private healthcare sector through privatization of public hospitals and health insurance. It is expected that along with the employer contributed health insurance, a considerable percentage of Saudi citizens employed in the government sector will also be covered under health insurance, thus creating a large risk pool. With the extensive coverage of the population under health insurance, the private healthcare sector is expected to play a vital role in financing and provision of healthcare in the Kingdom.
Funding: This research has not received any financial support from the government or private agencies
Conflict of Interest:
The authors declare that they have no conflict of interest.
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