‘We believe that market forces should be left to regulate medical schemes in South Africa’, says Graham Anderson (pictured right), Principal Officer of Profmed.
He was commenting on the proposed amendments to the National Health Act, which propose that prices of medical services should be negotiated through a tribunal, and ultimately the Minister of Health. The proposed legislation also proposes a price cap for the treatment of certain conditions and is intended to regulate all service providers in the health care industry, including general practitioners, hospital procedures, specialist services and ambulance services.
‘At Profmed, we are most concerned that the proposed regulations will have an adverse effect on the future availability of doctors, nurses and especially specialists, who are already in short supply. Investment into the private hospital sector would also dry up’, said Anderson.
‘In addition, regulation is expensive and ultimately consumers bear the costs. For example, in 2000 the expenditure of the Council for Medical Schemes was R8.9 million, and the 2008/9 budget is R52.1 million. A large proportion of this extra expenditure is as a direct result of the increase in regulation introduced by the Medical Schemes Act,’ he warned.
‘It is ironic that the Registrar of the Council for Medical Schemes, who has constantly urged medical schemes not to increase costs by more than inflation, increased the levy to be paid to the Council by medical schemes from R12.60 per member in 2007 to R13.90 per member in February this year, an increase of over CPIX at the time,’ he said.
‘We believe that consumer education can play a large role in the control of medical costs. The Department of Health argues that there is ‘information asymmetry’ when purchasing health care, but the truth is that this statement has never been tested as medical costs have always been opaque.
‘On the other hand, it is no surprise that medical costs have increased dramatically’, he said.
‘The Medical Schemes Act obliges medical schemes to pay ‘in full’ for a wide range of procedures, consultations and certain chronic medication. The legislation gives medical schemes no protection against high charges for these medical services. This situation is clearly not sustainable for medical schemes,’ he said.
‘One alternative to price regulation would be to modify the Medical Schemes Act, whereby co-payments from medical scheme members for minimum benefits are permitted. Even the French healthcare system, rated number one in the world a few years ago by the World Health Organisation, requires co-payments from its citizens.
‘An additional option would be to ensure that membership of a medical scheme was mandatory, which would ensure that there was a larger money risk pool available to medical schemes.
‘In the absence of these interventions we appreciate that price regulation for certain procedures might offer a solution. But only as a last resort,’ said Anderson.
‘Compulsory introduction of loosely defined 270 hospital treatments, 25 chronic illnesses and all emergency conditions raised the bar in terms of entry level medical scheme options. Further factors include the mandatory 25% solvency cover, and the compulsory cover of old and sick members at the same price as young and healthy members.
‘The current crisis of affordability has therefore been created by the compulsory cover of certain diseases and treatments, without a counter veiling regulation of service providers. Something has to give way,’ he said.
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