Will NHI be the end of medical schemes?

Before global credit ratings agencies grabbed the headlines in South Africa, healthcare was a hot topic as government announced that it would be moving towards the next stage of finalising the National Health Insurance (NHI).

For many, the NHI has been a hot topic of debate. The majority of its detractors question whether South Africa can actually implement the programme while others ask how it will be funded.

However, we are not alone in our scepticism over a publicly run healthcare system; recent reports out of the US and the UK show that they too are facing their own problems.

An issue of funding

The debate over public healthcare in the US was so fierce that it became one of the many battlegrounds between the Democratic Party nominee Hilary Clinton and eventual winner President Donald Trump in last year’s presidential election. Trump was outspoken in his disdain for Obama Care and the apparent wasteful expenditure that the programme had.

A recent report on commondreams.org (which describes itself as a news website for the progressive community) says that Washington health reform proposals, including the Affordable Care Act, are built around the most costly, inefficient model which is multiple commercial insurances (medical schemes) that drive wasteful complexity and high administrative costs.

The report adds that the private health insurance and pharmaceutical industries together siphon off tens of billions of public dollars annually, to boost their profits (sic).

This is very unfair towards medical schemes and paints them as money grabbers who add little value to policyholder. While we know this to be untrue, we need to bear in mind that it is presented as one side of the debate.

A boost for the economy

The other side of the debate is a singular funding model.

The article adds that dozens of studies over the past 30 years have demonstrated that a single national insurance provides the most sustainable, comprehensive, universal health coverage. By covering everyone in one large risk pool, single-payer insurance can best leverage economies of scale to cut costs by negotiation of global budgets and bulk medicine rates.

The article adds that, single-payer insurance provides direct coverage, eliminating co-payments and deductibles while reducing administrative costs, saving up to $500 billion annually. It is believed that this would be enough to cover the uninsured in a fairly large market.  

But how would this look in South Africa? To answer this, we need to address the elephant in the room. It is all very well to have this debate in the US where public healthcare may be stretched, but not to the extent that it is in South Africa.

The simple reality is that while there may be some concerns about how medical schemes are funded, the value that they provide policyholders, when sick or in need of medical care, is undeniably valuable in a country where public healthcare is very stretched.

As much as we would love to debate this in the highest corners of government, the role of private medical schemes is vital in the South African context. So where does this leave the NHI? Until a proper funding model is released by government, where the role of medical schemes will be clarified, we will not know. Government has also not given any indication on when it will finalise the NHI funding model.

NHI update

It seems as if government is finally getting serious about establishing the NHI. On 16 March, Health Minister Aaron Motsoaledi presented the NHI White Paper to parliament.

In an interview with Business Day before the presentation, Motsoaledi shared his thoughts on the future of the programme. “A key aspect that will be scrutinised is the future role of SA’s medical schemes and administrators,” Motsoaledi told the Business Day.

He added that the paper proposes mandatory membership of NHI and a reduced role for medical schemes to providing only complementary services. He did not divulge what these services would be.

Motsoaledi then changed his tune saying medical schemes would continue to exist in the transition to NHI. After saying this, he added that “Eventually they will be gone, but it will be a process that takes years and in the transition, there will be consolidation,” he said.

“Under this changed view, not only should the number of medical schemes be reduced, but those that continue should have fewer options so that all members receive the same benefits regardless of their socioeconomic status,” said Motsoaledi.

Editor’s Thoughts:
While universal healthcare may be something that the United Nations hopes countries work towards, the medical industry will be vastly different with medical schemes that have a reduced role. What impact will this have? No matter what, medical schemes do far more good than bad. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.