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Medical schemes are in for a bumpy ride

21 August 2019 Jonathan Faurie

On 8 August, the Department of Health released the National Health Insurance (NHI) Bill which is a major step towards realising the United Nation’s ideal of the provision of universal health coverage. When the Department released the Bill, it was met with a lot of support from certain sectors of society who stated that a healthy nation is an economically prosperous nation.

However, will the NHI do more harm than good? According to a Policy Paper by the Institute of Race Relations – titled: What’s Wrong with the Golden Promise of the NHI – 24 developing countries which have promised universal health coverage have failed to deliver it. 

Putting an end to medical schemes

When the Department of Health, under the guidance of former Minister of Health Dr Aaron Motsoaledi, spoke about the NHI, they were very critical of the medical scheme industry and were adamant that medical schemes will cease to exist and would fall under one fund, the NHI. 

This stance has changed and under the guidance of current Health Minister, Dr Zweli Mkhize, medical schemes will now be allowed to offer complementary coverage to the NHI for services not covered by it. 

Is this new stance a reprieve for medical schemes? Dr Anthea Jeffery, Head of Policy Research at the IRR, believes it is not. 

“Government plans to use the NHI to put an end to almost all medical schemes. According to the NHI White Paper, individuals will not be allowed to opt out of making mandatory pre-payments towards the NHI. This financial obligation in itself could bring about the demise of many medical schemes as most people will battle to afford both their medical aid contributions and the additional taxes required to fund the NHI,” says Jeffery. 

She adds that medical schemes will also, as the NHI Bill states, be confined to offering complementary cover, so as to fill in any gaps in the benefits provided by the NHI. 

“Restricting medical schemes in this way is likely to sound their death knell. For example, a scheme could still cover rare diseases if they were excluded from the NHI coverage. But the pool of potential members wanting cover of this kind would be very small. Monthly contributions to specifically see specialists would thus have to be set so high that only the very rich could afford them. Few medical schemes will survive this,” says Jeffery. 

Is the system broken?

There is no doubt that when one looks at the current healthcare system in South Africa, there are a lot of challenges that need to be overcome in both private and public healthcare. 

But is the system really broken and is the NHI the answer to the industry’s challenges? 

Two major points are argued when discussing the NHI debate: 

  • The legacy that was left behind by apartheid needs to be dismantled; and
  • The dominance of private healthcare needs to be addressed. 

Those who support the NHI say that healthcare in general is very expensive and that private healthcare – along with medical schemes – is too expensive for the public to belong to. Therefore, according to these supporters, access to quality healthcare is beyond the financial means of the majority of South Africans. 

This may be a fair comment. But is reducing the role of medical schemes under the NHI – or doing away with them altogether as the previous NHI Bill proposed – a solution to the problem? 

What progress has been made in the reintroduction of medical tariffs that effectively stopped the ad hoc pricing that we see at the moment? Surely this will address a major part of the cost issue. 

What happened to government’s thoughts on forcing medical schemes to offer low cost options and forcing compulsory medical scheme membership on employed South Africans? Surely these are solutions that can be implemented a lot quicker than the NHI and at a fraction of the cost? 

More solutions

According to Jeffery, universal health coverage is already available, mostly for no charge, through the country’s public clinics and hospitals. 

“To function better, public healthcare facilities need to have merit-based appointments, strict accountability for poor performance, and effective action against corruption and wasteful spending. Public-private partnerships would also help improve their operation,” says Jeffery. 

She adds that the burden on the public system should also be reduced by increasing access to private healthcare. Low-cost medical schemes and primary health insurance policies should be allowed, while poor households should be helped to join these schemes or buy these policies through tax-funded health vouchers. 

“To help spread risks, medical scheme membership and/or health insurance cover should be mandatory for all employees, with premiums for lower-paid employees partially funded by employer contributions for which businesses would garner tax credits. Medical schemes and health insurers would then have to compete for the custom of South Africans, which would encourage innovation and help to hold down costs,” says Jeffery. 

Editor’s Thoughts:
There are innovative solutions to offering universal health coverage. However, government is adamant that the NHI is the answer. One then must ask what their real motivation behind the implementation of a high cost system is. Will it prove to be another corruption fund disguised as a good intention fund? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.

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QUESTION

In its current format, what will the future of medical schemes be in an industry run by the NHI?

ANSWER

I just can’t see it (NHI) happening
There is a real risk of our already fragile healthcare system being placed under even further pressure leading to a total collapse
Medical schemes will struggle to remain in existence if NHI does happen; there isn’t enough money in the system
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