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A new role for medical schemes

25 June 2012 Gareth Stokes
Gareth Stokes, FAnews Online Editor

Gareth Stokes, FAnews Online Editor

The role of private medical schemes under government’s proposed National Health Insurance (NHI) scheme has been widely debated. In most forums the conclusion has been that medical schemes will continue in their current form alongside the NHI. But during a

Meeting challenges in South African healthcare

Government and the Department of Health have numerous obstacles to overcome as they set off on a 14-year journey to a comprehensive NHI implementation. They will have to create a system that addresses South Africa’s burden of disease, tackles shortcomings in quality of care at public institutions, allocate both financial and human resources equitably between the public and private healthcare sectors and reengineer the existing hospital-centric approach to healthcare provisioning.

Poor healthcare outcomes remain a major concern too. South Africa is going backwards on many measures, including child mortality, despite spending more on health than our economic peers. Life expectancy at the southern tip of Africa has also slipped to just 54 years versus almost 70-years in other BRIC economies. “If we are putting enough money into the health system, why are we still performing so badly?” asked Dr Pillay. He singled out the inequitable allocation of funds to public and private sector healthcare provisioning as a contributing factor... But there are other factors at play too.

“We cannot deliver an NHI in an environment where we have a public health system that has poor health quality,” said Pillay. A prerequisite for NHI would therefore be a functioning public health service where aspects such as cleanliness, security and safety of both staff and patients, long waiting times, poor staff attitudes, infection control and drugs stop-outs were all acknowledged and addressed. “We need to improve the quality of care in the public healthcare sector,” he said. To this end an independent Office of Health Standards Compliance will be legislated to be responsible for the inspection and certification of NHI facilities. The question is: what happens to private medical schemes as we draw nearer a comprehensive NHI?

A place for medical schemes

South Africa has developed a two-tier healthcare system, with two distinct risk pools. On the one hand the country’s poor partake in the public health system, just described. On the other – those who can afford to – become members of private medical schemes. There has been significant consolidation in the private medical scheme space over the past decade as schemes struggle to meet inflation-plus increases in healthcare provisioning. “Over the past two years medical schemes have run at higher deficits,” noted Pillay. “The amount they have collected in premiums is insufficient to payout suppliers with the result they are whittling away at their reserves…” A future healthcare environment could therefore exist with medical schemes as “top up” for services not readily available on NHI.

“NHI is not a new concept – it has been under discussion for many years,” observed Dr Pillay. He said Government and the Department of Health had an opportunity to build NHI with a responsible financing model. Current proposals would be funded out of National Treasury with small contributions from employers and employees. And although the quantum of the payroll-based collection is not yet known, it should not be more than currently contributed by medical schemes members.

Both the cost of healthcare and funding for the NHI system are contentious issues. Dr Pillay admitted it would be virtually impossible to compare benefits and services offered under NHI and through existing private medical schemes. “The difficulty in comparing the models is that medical schemes are based on an insurance model, where you have defined benefits related to out of hospital benefit with a rand value, while the NHI model is based on public healthcare,’ he said. “NHI focuses on those that have the greatest clinical needs – it is not possible to compare these benefit options in they way you want to!”

Shifting from cure to prevention

Over the next 14-years the NHI implementation will strive to reengineer our healthcare provisioning from a curative to a preventative system. You can expect the focus over this period to move from tertiary to primary care!

Editor’s thoughts: The 2012 Annual Financial Planning Institute (FPI) Convention invited four speakers to discuss the future of Employee Benefits in a changing healthcare environment… Although the subject was extensively debated it was not clear how the medical schemes environment would look a decade from today… How do you think Employee Benefits practitioners should adapt their practices for NHI and other social security reforms? Add your comment below, or send it to gareth@fanews.co.za

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