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Egypt: Parliament approves proposal for new health insurance law

Health and Benefits
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January 23, 2018

Egypt’s proposed health insurance system will be implemented by region from 2018 through 2032 and should cover the entire population.

Employer Action Code: Monitor

The national health insurance system will be reformed once a draft law approved by parliament on December 18 is signed by the president and published in the Official Gazette. The new system will be implemented by region from 2018 through 2032 and should cover the entire population by contracting with private and public service providers for services. Funding sources for the new system will continue to include employer and employee payroll contributions.

The current system covers around two-thirds of the population but is chronically underfunded and entirely based on over-burdened public service providers and hospitals. According to the World Health Organization, Egypt’s total expenditure on health currently equals approximately 5.6% of GDP, roughly half of which is private, out-of-pocket spending.

Key Details

The key points of the bill include:

  • All residents and households will be required to participate.
  • Although contribution provisions are still under discussion, under the draft law employers and employees will generally be subject to a combined contribution of 5% of pay, divided between a 4% employer contribution rate and 1% employee rate. These contribution rates are comparable to those under current law; however, the draft law would require higher employee contributions in the case of a non-working spouse or dependent children. Other funding sources will include various consumer taxes (e.g., tobacco products) and licensing fees (e.g., cars). Funding for low-income households and children will be provided by the state.
  • The system will contract for services with any providers (private or public) that meet certain quality control and certification standards. Pricing of services and products will be set by the central government.
  • Implementation of the system is to begin in July 2018. According to the phase-in schedule, it will be implemented in the following five governorates over the period from 2018 to 2021: Port Said, Ismailia, Suez, and North and South Sinai. Its last implementation is set for the Cairo, Giza and Qalyubia Governorates in 2031.

When enacted, the bill has the potential to significantly increase the overall level of funding for health care services. Under the Egyptian Constitution, the government is supposed to spend at least 3% of GDP on public health care, but actual spending for the tax year 2016/2017 equaled only 1.6% of GDP.

Employer Implications

Employers should prepare to comply with any new payroll contribution rates. In the future, depending on the new system’s success in improving health care delivery, employers may wish to consider changes to any private health insurance benefits they provide their employees.

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