It is more certain than ever that government will push ahead with its National Health Insurance (NHI) plan. The Department of Health (DoH) and National Treasury have turned a deaf ear to concerns voiced by private sector healthcare institutions and taken
As far back as 2009 the private sector identified four critical issues that had to be addressed pre-NHI. These included what benefit package was affordable on NHI, the level of additional tax revenue required to make the system work, whether the country possessed the resources (particularly doctors and nurses) required for a successful implementation and what role the private sector would play in the eventual solution. The Green Paper makes some attempts at answering the benefits and financing dilemmas, but fails to address the role of the private sector and staffing constraints. As things stand South African private medical scheme members have no basis to compare NHI cover against their existing private sector benefits, taxpayers remain in the dark as to how much of their monthly salary NHI will gobble up, and private sector doctors could be forcefully roped in to provide services in government facilities.
Medical scheme memberships curtailed by affordability
Average Joe’s concerns about NHI are echoed by medical schemes. A recent survey conducted by PwC suggests that the country’s medical schemes believe the provision of healthcare in the country is deteriorating and that the introduction of the NHI system will not necessarily resolve the poor state of health services. “This is just one of several findings surrounding the medical aid industry contained in the first edition of our 2012 Strategic and Emerging Issues in the Medical Scheme Industry survey,” observed Tom Winterboer, PwC Financial Services Leader for Southern Africa and Africa. The survey was carried out among principal officers of 20 schemes registered in South Africa, covering 53% of the South African industry (based on 2010 average principal members).
Government has not revealed the specifics of its NHI funding model, but there is little doubt taxpayers will have to contribute to the system by way of a payroll tax. This additional financial burden will impact significantly on medical schemes. “New member growth prospects and the sustainability of existing membership continue to be impeded by reduced consumer discretionary income and an increase in medical costs,” said Ilse French, PwC Medical Schemes Leader for Southern Africa. “The medical scheme industry in South Africa faces unique challenges and it is important that it evaluates and adapt to the needs of the emerging market.” The survey identified these challenges as the introduction of NHI, the demarcation between health insurance and medical scheme cover, and the constantly evolving regulatory environment, among others.
Tackle infrastructure and management issues first
Participants in the survey believed that NHI would not address South Africa’s healthcare problems. And only a quarter of the participants agreed that the introduction of the NHI system would change the current state of healthcare if it were implemented in accordance with the focus contained in the Green Paper. Infrastructure, working conditions at clinics and hospitals and the basic resources required for a functioning public healthcare sector should be prioritised before the new system is implemented. “The Introduction of the NHI system is intended to strengthen the public healthcare system,” said French. “It will require meaningful collaboration on many issues between the government and private sector.”
Medical schemes believe that NHI, if successfully implemented, should achieve the following:
· Increase access to healthcare;
· Improve service delivery to the previously disadvantaged; and
· Improve medical risk cover for the entire population.
On the flipside they said that the system would result in an increase in both the cost and complexity of compliance. NHI would not improve financial integrity across the industry, nor would it lead to a better use of funds allocated to healthcare.
Scheme-specific challenges
Medical schemes will face additional challenges as NHI gets off the ground. PwC pointed out that schemes would struggle to attract and retain younger and healthier members. It is also argued that fewer people will be able to afford medical scheme contributions in a dual NHI / private medical scheme setup. Other challenges include the affordability of cover provided to members, the sustainability of current funding levels and cost structures, and the consolidation of medical schemes.
Rising healthcare costs remain a huge issue. Government, the DoH and the Council for Medical Schemes (CMS) have repeatedly singled out private healthcare providers and medical schemes for driving healthcare inflation. The reality is much of the cost pressure in recent years stems from the cost of compliance and of specific regulatory interventions. Schemes (95%) said that Prescribed Minimum Benefits (PMBs) “paid in full” result in excessive benefits being paid by medical schemes to the detriment of members!
PwC said that half of the schemes surveyed spend between 1% and 5% of their annual gross contributions on compliance. And as many as 70% of schemes believe the intensity of regulation will increase substantially over the next three years, due to the pending Medical Schemes Amendment Bill and increasing scrutiny of schemes by the CMS. Most medical schemes (71%) have restricted their 2012 contribution increases to between 5% and 12%, despite big price increases from hospitals and specialists. The good news is that the majority of schemes participating in the survey would welcome a Competition Commission investigation into healthcare costs.
Editor’s thoughts: The National Health Insurance (NHI) system is the latest in a long line of “you will get it – like it or not” proposals. The intentions behind the proposal cannot be faulted, but government’s failure to acknowledge and address the proposal’s shortcomings can. The test of a government-run healthcare system will be whether citizens are confident in the care they receive. Would you be prepared to forego medical scheme membership when the NHI is up and running? Add your comment below, or send it to gareth@fanews.co.za
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Added by Gavin, 09 Jul 2012