About a third of South Africa's population is missing out on basic private healthcare services due to delays by the Council of Medical Schemes (CMS) in developing a framework for low-cost benefit options (LCBOs).
This framework would support the effective delivery of healthcare in a severely compromised public healthcare system. The delays are depriving this segment of the population of access to affordable and quality healthcare coverage. The Board of Healthcare Funders (BHF) has flagged these concerns since 2016. The only change is that alternatives to LCBO products are now being offered by insurance companies with no framework to regulate them, while medical schemes are prohibited from offering the same.
The BHF is the biggest representative body of the healthcare funding industry, representing medical schemes, administrators, and managed care organisations throughout the Southern African region.
The Council for Medical Schemes (CMS), an autonomous statutory body created by Parliament to regulate medical schemes in South Africa, has the task of developing a framework for low-cost benefit options (LCBOs). The government regulations to provide for LCBOs (demarcation regulations) came into effect in April 2017. The proposed LCBO framework will allow medical schemes to offer options without providing prescribed minimum benefits. The framework will also set a minimum benefit that would apply to all entities offering low-cost benefits and will determine the price of that benefit to make sure that medical schemes compete on the basis of the services they offer.
However, it has been more than five years since the government's demarcation regulations were released in April 2017. The delays have deepened the crisis in an already overburdened public healthcare sector, while low-income earners who can afford some private healthcare cover continue to suffer.
According to the Board of Healthcare Funders, research shows that there are currently up to 20 million people who need low-cost benefit options but are unfortunately missing out due to the CMS dragging its feet on finalising the proposed framework or at least provide exemptions to medical schemes while the framework is finalised.
Dr Katlego Mothudi, managing director of the Board of Healthcare Funders (BHF), explains, “At the moment, this population is only covered by insurance companies. Medical schemes are not allowed to offer LCBOs.”
According to Dr Mothudi, a major challenge with this arrangement is that the environment in which this population covered by insurance companies, is not well regulated; insurance companies provide different benefits. Furthermore, since insurers unlike medical schemes are for profit entities, they can set LCBO premiums based on their business models, and operational requirement only. They can also increase contributions or cut benefits at any time. In addition, health citizens who choose to purchase a primary healthcare product from an insurance company do not receive a medical tax credit benefit.
If medical schemes had to offer the LCBOs, they would do so in a regulated environment, where benefit options are standardised, and pricing is similar. Moreover, medical schemes cannot simply raise prices or cut benefits at will, as they operate under strict regulation.
Another challenge is that there is currently no monitoring or evaluation of the impact of the primary healthcare products offered in the insurance environment since there is currently no regulatory oversight on these products in the insurance industry.
Many gaps exist in the benefits offering; there are differences between the varied products offered by different insurance companies since there is no standardisation – and this affects health citizens.
While on the one hand, medical schemes must report on all their offerings and products; they must also offer comparable products across the board. The health citizen therefore has access to standardised benefits, medical tax credits, and cross-subsidies, all via the medical scheme environment. However, on the other hand, despite all these recognized benefits for the health citizen, the CMS refuses to exempt schemes from providing the same product in a better-regulated environment for the benefit of health citizens.
“In addition, as medical schemes are not-for-profit entities, these products would also be much more affordable under medical aid schemes. As medical schemes are geared toward providing health care, they can provide richer benefits as well,” says Dr Mothudi.
Dr Rajesh Patel, Head of Health System Strengthening at the BHF, says, “At this critical point in the country's healthcare landscape, it has become imperative for the CMS to finalise this framework. The urgency of the situation cannot be overstated. The Registrar cannot exclude such a large population of the country from accessing affordable, quality healthcare. This is contrary to the very fundamental principles of Universal Health Coverage (UHC). These delays are depriving the health citizen of access to affordable healthcare – and affecting the performance of the entire healthcare ecosystem.
"LCBOs would benefit the entire healthcare ecosystem, as they would provide an affordable option for primary healthcare coverage for the health citizen. In turn, this will ease the load on an overburdened public healthcare sector. It would further result in stability in terms of the erosion of the demographic profile in the medical schemes,” says Dr Patel.
“This isn't a process that should take five years, at the very least, it should have taken six months because the foundations for setting the LCBO framework already exist. It is incomprehensible why the CMS won't finalise the framework to allow medical schemes to offer LCBOs," concludes Dr Patel.
Some quick facts on the difference between medical aid and Insurance products
Healthcare cover under insurance companies |
Healthcare cover under medical aid schemes |
Insurance products are structured on the premise that everyone contributes equally to the risk they bring, therefore:
|
Medical schemes are structured with social protection in mind thus:
|
Healthcare insurance cover is designed for specified healthcare conditions. |
Medical aid cover is designed for a wide range of healthcare conditions, including a list of over 270 Prescribed Minimum Benefits (PMBs) conditions. |
The primary healthcare insurance environment is not adequately regulated. |
The medical aid scheme environment is regulated by the Council for Medical Schemes (CMS).
|
Healthcare products are not standardised, insurance companies can charge premiums based on competitive rates. |
Healthcare products are standardised and medical aid schemes have to adhere to pricing guidelines provided on different benefit options |
Healthcare products do not have a tax credit benefit for consumers |
Consumers get a tax credit benefit for all healthcare options. |
There is no cross-subsidy benefit in insurance. |
Members benefit from cross-subsidies. |