Brokers spectate as LCBO war heats up

Moments after putting the finishing touches to today’s newsletter, your writer tripped over a breaking news alert on Fin24.com that could reframe the LCBO and the future of healthcare brokers discussions. 

The news agency ran a story claiming that the ANC and other GNU partners were closer to resolving two critical issues affecting the NHI Act implementation. 

Based solely on an interview with the Minister in the Presidency for Planning, Monitoring and Evaluation, they reported that the ANC and DA had reached “an informal agreement” to drop sections of the Act that threatened to collapse medical schemes. This could be good news for medical schemes brokers, or it could be an ANC ruse to get the DA to backtrack on its threats to pull support for the National Budget vote pending concessions on the NHI Act. 

Per the article, the Minister wants a ministerial advisory council to be set up to drive the ongoing NHI implementation, but only after her Medium-Term Development Programme is adopted. PS, the tone of the Minister’s comments, and the fact the article contained no input from the DA, is cause for concern. It is also worth noting that advisory committees are typically ‘staffed’ to ensure the dominant party’s view prevails. Keep an eye out for a formal DA response, which will hopefully give a clearer indication of the way forward. 

With that last minute update taken care of, let’s get to the meat of today’s newsletter…

As you and your medical schemes clients try to make sense of the National Health Insurance (NHI) ‘fictions’ being peddled by the National Department of Health (NDOH), associations like the Board of Healthcare Funders (BHF) are firing the final salvos in a battle they appear destined to lose. Their recent court challenge around the implementation of so-called Low-Cost Benefit Options (LCBO) solutions is unlikely to yield fruit; nor will it help the country’s struggling healthcare brokers to stay in business.

Distortions, falsehoods, and outright lies

The BHF has been vocal on both LCBO and NHI. In an article run on Business Tech under the headline, ‘NHI built on lies’, they warned that the NHI Act signed into law on 15 May 2024 “will ultimately decimate private medical funding in South Africa.” According to their research, “national government has been dishing out unsubstantiated falsehoods, distortions and outright lies when making statements about private healthcare, medical aid, and the reasons why South Africa needs NHI.” 

We will revisit the case against NHI in the final paragraphs; first, the low-cost benefits matter. In an article linked from their media release page, titled ‘BHF proposes affordable healthcare solutions for SA’, the BHF makes a strong case for improved access to (and affordability of) private health insurance coverage through a combination of LCBOs and collective tariff negotiations. “These measures,” the BHF argues, “could be implemented immediately to benefit millions of South Africans.” 

Basic healthcare cover for millions

Your writer cannot think of any healthcare initiative more worthy of a rapid implementation than LCBO. He has reported on the Council for Medical Schemes’ (CMS) LCBO stance over the years and can only conclude that the solution is being blocked for being contrary to government’s NHI vision; a low-cost private sector solution renders the NHI moot. 

The BHF “supports universal healthcare but questions the NHI Act as the sole solution.” According to the association’s MD, Katlego Mothudi, the NHI in its current form will not meet the urgent healthcare needs of South Africans. The association argues that LCBOs and collective tariff negotiations could make a real difference today, offering sustainable relief to the public healthcare system by tapping into existing private healthcare capacity. 

They further accuse the CMS of standing in the way of a basic level of health insurance that could be extended to around 10 million South Africans with the ‘stroke of a pen’. They are so tired of the decade-long ‘fiddling’ around the issue, that they went to the courts in 2022 to compel the CMS to implement the exemptions needed to allow for LCBO. Bravo, and about time! Alas, the court processes in South Africa work in the favour of bungling bureaucrats who can spend other people’s money to tie up common sense matters for years. 

Your commonsense views won’t fly here

It took three months for the CMS to respond to the BHF’s plea for government and other healthcare stakeholders to prioritise innovative, cost-saving LCBO solutions for South Africa. In a public response addressed to all editors and healthcare journalists, CEO and Registrar of the CMS, Dr M Gumede, declined to engage in a war of words with the BHF, deferring to the courts for certainty. 

The CMS did, however, offer some additional background information. “The CMS had engaged the Principal Officers and Board of Trustees at 71 medial schemes on the progress and status of LCBOs,” they wrote. Bizarrely, they then said that they viewed the LCBO matter as a priority. What? Perhaps it is time for all stakeholders in the domestic healthcare landscape to put on their ‘Trump’ suits and tackle this nonsense. Here’s you writer’s attempt, you can add yours in the comments: 

“Dear CMS, how can you claim something to be a ‘priority’ if you have been shepherding it towards closure since the early 2010s?” 

The CMS presser reads like a long list of excuses that would get most private sector employees a disciplinary hearing and subsequent dismissal. It is riddled with phrases like “the 2015 LCBO framework did not address other priority areas of the health system” and “the benefits package was lacking” and “did not adequately address the target population’s burden of disease” etc. PS, these summarise the NDOH ‘dissing’ of the 2015 LCBO framework. Or put differently, the 2015 LCBO, devised by the CMS, did not meet the department’s criteria. 

Moving swifty, over a decade…

To then claim, as the CMS does, that they “swiftly moved and conducted wide stakeholder consultations on the LCBO framework” during 2020 to 2022 is disingenuous. They moved swiftly, over two years, to address an issue that was left to percolate for five years… Again: what? After all of this, the industry has returned to the 2015 inflection point, with a new LCBO report being handed to the NDOH, for the NDOH to study and make recommendations. Any guesses what those recommendations are likely to be? 

The truth, IMHO, is that the NDOH does not, and has never, wanted LCBO; how could they, in the world where medical schemes will be abolished in favour of a centralised NHI Fund? Also true, the CMS does not appear too concerned about whether or not the medical schemes it regulates survive the NHI. They are beholden to prevailing government policy, as they admit in their presser: “We would like to remind the public that any implementation of any LCBO must be supported by some form of legislative changes; this function is wholly guarded and implemented by the NDOH.” 

Respect the Courts; expect a challenge

The CMS further indicates that it will be guided by any declaration that is made by the court in respect of LCBO products while supporting other policy developments, such as the current Prescribed Minimum Benefits (PMB) review process and broader health system priority programmes such as NHI. As an aside, surely the PMB review is pointless in a post-NHI world, unless the powers that be intend it as a starting point for the medical benefits and procedures that the NHI Fund will eventually pay for. 

Upon reflection, South African private healthcare brokers and consumers face a difficult decade. The institutions formed to ensure the sustainability of the medical schemes they belong to (or serve), namely the BHF and CMS, are at opposite sides of a fight against a now inevitable NHI world. The BHF is offering affordable private healthcare as a foil against government’s grandiose promise of affordable healthcare for all. The latter wins, regardless of government’s implementation track record. 

The greater concern is that public support for NHI is ill-informed. In the ‘built on lies’ article, Mothudi singled out 11 misconceptions about the NHI, starting with the central idea that healthcare is a ‘public good’ and that all healthcare funding should exclude medical schemes and be government funded. Other myths dispelled by the BHF include that medical schemes are unsustainable; that commercialisation is fatal to health systems; and that money spent on private healthcare is inequitable. 

Kicking and screaming against fait accompli?

The BHF is going down kicking and screaming; but the CMS appears to be going through the motions, perhaps having accepted NHI and the demise of medical schemes as fait accompli. At this point, your writer doubts whether the LCBO option will ever see the light of day. And he fears that NHI will push ahead regardless of the countless common-sense counters to it. 

Writer’s thoughts:
The future for SA’s medical schemes and healthcare brokers seems bleak: NHI is steamrolling ahead, and the LCBO solution has run into a bureaucratic wall. How are you adapting your business to survive in the shifting health insurance landscape? Please comment below, interact with us on X at @fanews_online or email us your thoughts editor@fanews.co.za.