Making sense of primary healthcare demarcation regulations
John Cranke, Principal of Midlands Employee Benefits at PSG Wealth.
There has been some confusion around primary healthcare products and the possibility of them being discontinued. “In terms of the Draft Demarcation Regulations recently gazetted, these products have been thrown a lifeline by virtue of a 2-year exemption,” says John Cranke, Principal: Midlands Employee Benefits at PSG Wealth. “This allows for the Council for Medical Schemes to implement guidelines for Low Cost Benefit Options, and lightens concerns some employers may have about offering these products to lower income earners.”
What changes have happened?
The Demarcation Regulations create a line of demarcation between medical schemes and permissible health insurance products because there were concerns the health insurance products were prejudicing the long-term viability of medical schemes by attracting the young and healthy away from medical schemes.
“The Demarcation Regulations therefore initially proposed the withdrawal or outlawing of many health insurance products, including gap cover, hospital plans and primary healthcare plans,” Cranke says. Fortunately, this view has changed (taking into account the comments received from industry stakeholders) and now accommodates these arrangements, although the exact scope of the exemption still needs to be defined.
Why is this a good thing?
In the initial version of the Demarcation Regulations, many people who can’t afford medical scheme cover would also have lost the ability to cover themselves via health insurance policies. The concessions subsequently made, and particularly with regards to primary healthcare products, enable employer groups able to extend some type of healthcare cover to all of their employees as this cover comes at a much lower cost.
What benefits do primary healthcare products offer?
As the product category definition would suggest, they are aimed at offering out of hospital benefits only – so they include GP consultations, prescribed medication, chronic medication for specified chronic conditions, basic radiology, pathology, dentistry and optometry. Benefits are offered via provider networks, and for hospitalisation, members of these products would still have rely on state hospitals.
Well isn’t this benefit package too limited – especially the lack of hospital cover?
“One has to balance the benefit richness with cost in an extremely price sensitive environment,” Cranke adds. Research into the requirements of this market segment actually showed that the pressing need here is in respect of access to quality day-to-day care in the private sector (which would circumvent the out-patient queues prevalent in the public sector).
In addition, the Minister of Health has repeatedly stated that he wants to “convert” the South African healthcare system from its current curative and hospi-centric approach, to a preventative one. “Primary healthcare products help achieve both of those goals,” Cranke concludes.
