I chanced upon an article online on January 24, 2023 from cedidollar.com and same repeated on myjoyonline.com captioned, ‘Private Health Insurance players unhappy with GAB activities’ – in which the report purports that there is simmering tension in the Private Health Insurance Industry over unfair business practice by a Private Health Insurance Scheme (GAB Health Insurance Company (GHIC), wholly-owned by the Ghana Association of Banks (GAB).
The publication whet my appetite to read further and add to my wealth of knowledge, especially about the private health insurance industry – which not much is known about compared to other industries, and to help me with appreciation of its dynamics.
In my untamed curiosity, I looked out for the basis of the supposed simmering tension and disquietedness. Why the purported simmering tension within the industry? Why is the GAB involved in matters of Private Health Insurance and subsequent incorporation of a private health insurance company? Is GAB Health Insurance engaging in unfair trade activities? Is GAB coercing its members to join the GAB Health Insurance Scheme? Is GAB Health Insurance ‘flouting’ a pre-requisite undertaking prior to obtaining operating licence from the Regulator (NHIA)? What is unique about GAB Health Insurance from the perspectives of employers, employees and health service providers to be causing ‘simmering tension and disquietedness’ in the Private Health Insurance Industry?
GHIC’s entry
The GAB Health Insurance Company Limited (GHIC) was founded in April 2018 by the GAB and licenced by the National Health Insurance Authority (NHIA) in October 2020. Its objective is to address employee-health benefit programmes for banking and non-banking clients. Although its shareholder is GAB, it operates in the open market like any other private commercial health insurance company in Ghana.
Allegations of coercion
In the publication, a member of the Private Health Insurance Oversight Committee of the National Health Insurance Authority (NHIA) and spokesperson of the Private Health Insurance Association, Ghana (PHIA-G) purports that GAB is coercing member-banks to stop doing business with existing companies to join the GHIC scheme.
Interestingly, evidence on the ground does not support this; thereby making the assertion inaccurate and without merit.
For the record, GHIC has been in operations for a little over two years. However, within the period only 30 percent of GAB-member banks have joined the GHIC scheme.
It is also noteworthy that the clientele mix of GHIC is made up of 69 percent for non-banking clients and 31 percent for the banks.
So, where is the evidence of GHIC monopolising and coercing all banks in Ghana to join its scheme?
If this assertion were true, all 24 member-banks of the GAB would have joined the GHIC scheme over the two-year period. But that is not the case.
Also, prior to the operationalisation of GHIC, about 50 percent of its current clients had no formal health insurance. For some of its banking clients that were with other private health insurance providers, GHIC had to competitively bid for the business.
There are several banks which GHIC participated in their open competitive bid but did not win. For others, GHIC decided not to bid for various reasons.
Critical questions
Thus, among the important questions to ask in the face of alleged GAB members’ coercion to join the GHIC scheme and the mischief as intended by members of the PHIA-G are as follows:
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Is PHIA-G implying that all the management members, officers and board of directors of banks which have signed onto the GHIC scheme and/or those intending to do so were or are being coerced by GAB Health Insurance?
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Does it mean that officials of the non-bank clientele on the GHIC scheme, who constitute 69 percent of the scheme’s clientele base, are being coerced?
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One may further ask that in the face of the current economic challenges wherein cost-cutting, value creation and addition are at the heart of organisational buying, and especially considering the calibre of corporate clients at the centre of PHIA-G’s allegations, how could the allegations of coercion be tenable?
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Again, where lies the relevance of Adam Smith’s celebrated ‘Rational Choice Theory’ – which assumes that individuals will carefully evaluate all decisions, weighing the costs and benefits of each potential path, and then choose what they believe will maximise the benefit to themselves?
If this theory is anything to go by, then are the allegations of coercion not even insulting to the logic and intelligence of the bank’s officials involved in the decision to join the GHIC scheme, as PHIA-G has been unable to adduce evidence to buttress their allegations? Besides, where lies the right of consumers to make choices of purchase?
Claim of ‘prerequisite’ condition
The story also alleged that there was a prerequisite verbal agreement with GHIC not to go after banks already doing business with existing schemes, hence GHIC has flouted this agreement. While the evidence on the ground disproves this, one wonders how this could be entertained in a free and competitive market.
At no point in time in the annals of private health insurance licencing in Ghana has there been a prerequisite condition among a licence applicant, the Regulator and an existing player to the effect that the applicant should not go after existing clients.
In the wider insurance industry of Ghana, including health, clients switch from one provider to another depending on their customer experience, among others.
There is a plethora of evidence within the private health insurance industry, even before the existence of GHIC, where clients moved from one health insurance provider to another – mostly based on customer satisfaction and experience.
Why is this an issue now? We should avoid the risk of creating an industry wherein someone can compel a client who is dissatisfied with a service provider not to move to a better alternative.
Unfair trade activities?
The allegation of “unfair trade activities”, in my opinion, is a serious issue with far-reaching consequences – including fines and imprisonment when culpability is established.
In an open market like Ghana, one wonders how allegations of “unfair trade activities” can stand the test of reality in an active industry like the private health insurance sector.
Deemed as any business practice or act that is deceptive, fraudulent or causes injury to a consumer or a competitor, “unfair trade activities” include acts that are unlawful: such as those that violate a consumer protection law or level playing field. Some examples of unfair trade methods are the false representation of a good or service; false free gift or prize offers; non-compliance with normative standards; false advertising; undercutting or deceptive pricing.
Indeed, as indicated by the spokesperson of PHIA-G, Ghana’s market is a free and competitive one; hence, the factors of demand and supply must be allowed to play without any strings.
And that is why the GAB has neither issued a fiat to its members nor showed any intention of doing so to member-banks. All member-banks of GAB are independent of the Association’s or GHIC’s operations.
Indeed, GAB has given the strongest indication elsewhere that – as a responsible organisation and a key player in Ghana’s economic development architecture since independence – it has not and will not engage in or promote unfair trade activities of any shape or kind.
Reorientation
While it is obvious that the GHIC’s emergence will toughen up the competition, it should be seen by all key stakeholders in the Ghanaian private health insurance industry as an addition to efforts already put in motion to push boundaries and open-up the industry to see desired growth; which without doubt has eluded the sector since its inception.
A major concern for all and sundry is ultimately rising to the occasion in relation to the clarion call made by Chief Executive of the NHIA, Dr. Bernard Okoe Boye – for “private health insurers to work harder in supporting the NHIA’s agenda to attain Universal Health Coverage (UHC) by 2030”.
In a speech delivered by the CEO of the NHIA during the Ghana Insurance Awards 2022, Dr. Okoe said among others that out of Ghana’s 30 million population, the NHIS has about 15 million active members while about half a million are on private health insurance.
This, he said, means that close to 13.5 million are yet to be registered on private health insurance; for which reason he is throwing the challenge to private health insurance operators to push harder.
Juxtaposing these staggering statistics with the fact that the private health insurance industry has been operating for close to 20 years, one conclusion that could be drawn is the industry has grown at a very decreasing rate – due to which creative and innovative approaches and new ways of doing things are necessary.
One then wonders why the disquietedness of existing players in the industry over GHIC operations in the face of huge growth opportunities.
Again, it is important to emphasise that the reported disquietedness of private health insurance industry players is unnecessary; for the simple reason that GHIC as a new entrant in the private health insurance space may have introduced a new concept, but it is not peculiar to our Ghanaian jurisdiction or other jurisdictions where health insurance has been practiced for more than a century.
GHIC advantage
To all intents and purposes, GHIC is doing a fantastic job judging from its achievements so far. If I were a competitor to them, instead of crying “wolf” when there is none I would have studied their business model and tried to mimic some of their innovative ideas. But here lies the missing link.
Employer experience
For employers, superior health insurance benefit is a differentiator in a highly competitive private health insurance market.
GHIC seems to adequately fulfil this expectation, hence the clamour for them. For employers that have already joined the GHIC scheme, the selling point has been value-for-money, a customer-centric approach, and GHIC’s ability to adequately tailor-make products and services to meet the health needs of their staff.
Further checks revealed that banks that had no formal insurance scheme enjoyed a smooth transition to formal scheme under GHIC. Employers reported that their transition to GHIC was well aided with analytical research of past health experience and budget implications, and tailor-made recommendations that ultimately helped with management decision-making.
Employee experience
Further interactions with GHIC clients (beneficiaries) revealed other advantages and benefits anchored on customer-centrism, medical advisory services, professionalism, technology and innovation that make GHIC stand out in the competition. The common thread of expression that runs through the interaction with some employees of both bank and non-bank institutions registered on the GHIC’s scheme was that – “GAB doesn’t just make your benefits better. They help clients use them wisely”.
Health service provider ecosystem
Further engagement with health service providers – who are critical in the health insurance sector -also reveals excellent satisfaction with GHIC’s partnership. They emphasised GHIC’s professionalism in the prompt payment of claims and timely resolution of operational issues.
Conclusion
In a nutshell, the accusations levelled against GHIC for unfair trade activities by private health insurance players are false. My research concludes that there is no evidence of coercion, such as a collusive agreement or circumstantial evidence of a suspicious push for GAB member-banks to join the GHIC scheme.
Undoubtedly, what the private health insurance players seek to achieve in the article ‘Private Health Insurance players unhappy with GAB activities’, is a clear case of a market division scheme – whereby the competing health insurers allocate specific customers, or types of customers or territories, among themselves.
In this case, they want to establish a market practice whereby one competitor will be allowed to sell to or bid on certain contracts. In return, the player will not sell to or bid on contracts allocated to the other conspirator players.
In other words, the players are merely trying to make sure that each get a ‘fair share’ of the bank’s health insurance market without any competition.
Such market division or allocation schemes or agreements in which competitors divide markets among themselves are against the principle of free market. Ghanaian consumers have the right to expect the benefits of free and open competition – the best goods and services at the lowest possible prices.
Public and private organisations often rely on a competitive bidding process to achieve that end. When competitors collude, prices are inflated and the customer is cheated.
Price-fixing, bid-rigging and other forms of collusion are illegal and subject to criminal prosecution under the laws of Ghana.
Finally, it is clear that the GHIC is a good addition to the private health insurance market and must be applauded for its innovative and customer-centric services – instead of being vilified by other private health insurance players.
