THE sudden announcement by the Council for Medical Schemes suspending the introduction of low-cost benefit options until further notice has left more than a few in the industry confused. It also raises an uncomfortable question about the possibility of political interference in the light of next year’s local government elections. It was only in April that the council announced it was considering formalising an exemption to the Medical Schemes Act that would allow medical aids to provide limited cover to low- income earners at a far lower cost than other options. Just five months later, the council approved a framework and principles, along with guidelines for the medical schemes on the preparation of their business plans, and announced that these options could be effective from January 1 next year.
Much like existing medical schemes, the new low-cost options would be bound by a mandatory minimum package of services that would have to be provided to members regardless of the premium they were paying. But they would be available only to people earning less than the current income tax threshold of R70 700 a year. The basic services focused on primary and preventative care and included five annual consultations with a private general practitioner, access to a pre- and post-natal programme, routine health screenings and the provision of chronic and acute medicines, among others. Most notably, the new options did not include compulsory provision for hospitalisation, and prescribed minimum benefits were limited. In other words, they were a sort-of-hybrid, with members getting limited access to private care, but still having to make use of public health services at times. The introduction of such schemes seemed a great idea. Only about 9-million South Africans out of a population of well over 50-million are covered by a public or private medical scheme. That leaves more than 80 percent of the population reliant on public health services. This would not be a bad thing if state hospitals were not so overburdened and the quality of care was not uneven. The main reason so few people belong to a medical scheme is cost. The statutory minimum benefits required by the Medical Schemes Act include hospital cover and full treatment of a list of chronic conditions. This makes things expensive. Other factors such as above- inflation contribution increases, overservicing, changes to tax law and changes in medical scheme legislation have all contributed to rising membership fees. The result is that access to private medical care is a luxury the overwhelming majority cannot afford.
For example, about 45 percent of local government workers are not covered by a medical scheme despite receiving a 60 percent fee subsidy from the government. They simply cannot afford to pay even 40 percent of the premiums for the most basic medical cover on the market. Low-cost benefit options seemed like a smart solution to the problem of low medical scheme uptake and a pragmatic step in the direction of universal cover, as promised by the government’s promised National Health Insurance (NHI). By transferring some of the burden from the public health sector to private service providers, more resources would be made available to upgrade the public health sector in preparation for NHI. At the same time, the fact that members of low-cost schemes would be able to access preventative health checks such as pap smears and glucose and blood pressure tests, and HIV testing and counselling from a private service provider rather than spend hours or even days waiting for the same service at a public clinic, would have broad economic and health benefits for the nation. And more people joining low-cost medical schemes would extend the benefits of pooled risk and lift the bargaining power that comes with belonging to a scheme. These are all good things, so why did the council suddenly suspend the introduction of low-cost benefit options? In its terse circular, the council said it had received “various submissions” and that “further analysis and consideration” would be needed regarding the benefits structure. This is so vague as to be meaningless. Of course there were details that needed to be worked out, but it seems odd to rush the roll-out of a product only to take it out at the knees just as things are about to get going. The timing of the announcement also raised eyebrows, given that it came just two days after the governing party’s national general council (NGC) this past weekend, when it announced that the implementation of NHI was to be made a priority and the Treasury would need to find the funds to begin the roll-out as soon as possible. This could be mere coincidence, but it makes one think about what the African National Congress (ANC) stands to lose should a medical aid product specifically targeting the emerging middle-class be introduced. Two industry sources mentioned that the council received a call from the Department of Health following the NGC meeting, telling it to withdraw the low-cost benefit options immediately as they were considered a stumbling block on the path to NHI.
When Health Minister Aaron Motsoaledi was asked about possible interference by the ANC, he denied it vehemently. In his words, he felt the low-cost options were “an insult to low-income earners” and that the framework provided by the council did not meet “an acceptable level of care” for members. In response to queries about the push to introduce low-cost options so quickly, he said there was an urgent need to find alternatives to the low-cost products offered by the medical insurance industry that were not subject to the same conditions as medical schemes. These are both credible explanations, and given Motsoaledi’s genuine commitment to improving the public health sector, quite believable. That said, the low-cost benefit options may well have stolen some of the NHI’s thunder, which wouldn’t do if this is to be an ANC trump card before the municipal elections, or the national election that follows three years later. By providing the emerging middle-class with a viable alternative to state healthcare, the governing party could risk losing further support from a group among whom its popularity is already waning.
Bronwyn Nortje: Business Day, 15 October 2015