South Africa

Government accused of stopping cheaper medical aid in South Africa

Two South African healthcare industry bodies are engaged in a legal dispute about whether cheaper medical aid options – with offerings as low as R300 per person – should be allowed.

The Board of Healthcare Funders (BHF), representing medical aid schemes in South Africa, wants to offer low-cost medical plans covering basic healthcare services. 

Their side argues that this would make private healthcare affordable for millions of South Africans who cannot afford full medical aid.

Therefore, it requested that the Council for Medical Schemes (CMS) exempt low-cost benefit options from strict medical aid regulations, particularly from having to fully cover Prescribed Minimum Benefits (PMBs).

On the other side, the CMS, South Africa’s healthcare regulator, has not approved exemptions for these low-cost plans despite agreeing to a framework for them in 2015. 

The CMS claims these plans do not provide enough financial protection and that legislative changes are needed before they can be introduced.

Webber Wentzel partner Martin Versfeld told The Money Show that the dispute centres around the issue of PMBs in South African medical schemes and how they impact costs and accessibility.

Versfeld said that medical schemes in South Africa are currently required by law to fully cover certain medical conditions – for good reason.

This includes around 270 conditions and 26 chronic illnesses and ensures that members aren’t denied essential treatments, no matter their plan. 

This requirement exists to protect medical aid members from being left without necessary care.

The cost of covering these PMBs is unlimited, meaning medical aids must pay for these treatments no matter how expensive they get. 

This makes medical schemes costly to run and drives up premiums, making them unaffordable for many people. Therefore, some medical schemes want a cap on how much they have to pay for PMBs. 

Versfeld explained that if this cap is introduced, it could lower costs and allow schemes to offer cheaper plans, increasing access to private healthcare.

Therefore, the BHF’s legal challenge is essentially about this issue: Should medical schemes be allowed to introduce lower-cost options by limiting PMB costs? 

However, this dispute comes as the government is planning to roll out National Health Insurance (NHI).

Therefore, the BHF has alleged that the CMS’ reluctance to make these options available is politically motivated.

The BHF has now taken the matter to the High Court, arguing that CMS’ refusal is unfair and unlawful and deprives people of affordable healthcare.

Profmed CEO Craig Comrie

Versfeld said that, regarding many local regulators, there’s a general reluctance to engage in alternative options that can ensure that a greater percentage of South Africans can be assisted by the private sector. 

The BHF’s alternative could provide low-cost options for as many as 10 million additional beneficiaries – more than the total number of beneficiaries currently covered by medical aid.

“I think there’s a good reason for parties to start to suspect that finding alternative solutions would, in fact, be politically inconvenient and would stand potentially in the way of NHI,” he said.

He explained that if BHF’s plan provided coverage for 10 million more people, that would be an additional 10 million people with an incentive not to adopt the government’s NHI.

“So, I certainly associate myself with the potential political inconvenience,” he said. 

“In my experience when dealing with regulators, there is this ongoing suggestion that NHI is in the wings, and they don’t want to do anything that might disrupt the prospect of that becoming a reality.”

Chairperson at The Health Funders Association (HFA) and Profmed CEO Craig Comrie told The Money Show that the industry has waited an immense amount of time to see regulations relating to the possible introduction of low-cost benefit options for medical schemes. 

“And in the interim, we have seen a perpetuation of exempt health insurance options, which are for-profit options offered by many of the insurers,” he said.

“It’s interesting to know that PMB legislation keeps schemes from actually competing in that access space.”

He explained that the CMS has the opportunity to exempt medical schemes. 

“They have all the power to do it, but the very fact that they’re consulting with the Minister of Health gives you an idea that they don’t want to be in conflict with the NHI agenda,” he said.

“You can understand exactly where the BHF court case is heading – to say you need to equalize the playing fields.”

“Plus, would you not prefer a for-profit business not to be doing medical schemes and rather the non-profit business actually covering these types of things?”

“Certainly, it will become more affordable if you don’t have to pay shareholders.”

Newsletter

Top JSE indices

1D
1M
6M
1Y
5Y
MAX
 
 
 
 
 
 
 
 
 
 
 
 

Comments