Health-care Demarcation

All South African citizens want affordable healthcare as well as access to healthcare facilities. However, the various funders of such facilities and funding mechanisms appear to differ widely on these issues.

The consumer has two choices regarding access to healthcare facilities – private and government facilities. In the private sector there are three categories of healthcare funders – medical aid schemes, short-term insurance companies and life assurance companies.

Government protection or control?

In principle, the government is supposed to monitor medical aid schemes to ensure that such schemes are managed in the best interest of the member or consumer. These medical aid schemes are supposed to be owned and managed by the members. They have, however, been so restricted and legislated by government that one is beginning to wonder what role the member or consumer plays in the control or management.

This so called principle is now also being strongly applied to both short-term insurers and long-term assurers, where pressure is being applied for them to (almost) withdraw from funding any type of healthcare benefits.

Target cost?

Although one of the government's principles is to ensure all citizens have access to healthcare, there appears to be a "target" cost for such access to private healthcare. It seems that if a consumer wants to purchase private healthcare, then such a purchase must be via a medical aid scheme, which, due to other government enforced minimum requirements, should be costed at a minimum monthly cost of about R300.

Both the life assurers and short-term insurers are able to offer healthcare products – although not fully comprehensive – for less than R300 per month per insured. If a consumer cannot afford R300 for private healthcare, they should be able to elect lesser levels of healthcare funding from the private sector – however this is where the government appears to differ.

State controlled healthcare

The focus appears to be to force all consumers into a state-controlled healthcare funding mechanism, rather than allow the consumer "freedom of choice".

This difference has been apparent with the continuous press releases illustrating the differences between the Council for Medical Schemes, the LOA and SAIA.

Dangerous legislative amendments

In the latest legislative development, it is proposed to amend the definition of "an accident and health policy" by way of ILAB (Insurance Laws Amendment Bill), from the existing definition to include the definition that "shall exclude any contract that provides for the conduct of the business of a medical scheme referred to in section 1 (1) of the Medical Schemes Act".

In effect, this indicates that the Short-term Insurance Act may change if the Medical Schemes Act is amended. This is an extremely dangerous clause to have enacted in any Act, as it affects financial advisors who operate under different FSP Licences.

It also indicates that if the Council for Medical Schemes wish to "close down a section of business of a short-term insurer", they may do so by amending the Medical Scheme Act.

This same clause is to be altered in the Long-term Insurance Act – thereby allowing the same power to the Council for Medical Schemes. Therefore, both the custodians of the Long-term and Short-term industries will need to be aware of any amendments to the Medical Schemes Act – which industry is running which industry?

Objections from industry

The short-term industry has strongly objected to this alteration. Initial responses from Treasury, as well as the FSB, were that these issues have been clarified. The short-term industry does not agree and have entered into further discussions with the FSB in order to clarify further the definition of an "accident and health policy".

The life insurance industry has entered into a "Demarcation" agreement; however the short-term insurance industry has declined to enter into such an agreement, believing that the Short-term Insurance Act clearly defines the "accident and health policy". However, the new proposed amendment does not clarify matters, as it now refers to Medical Schemes Act for the definition of such a policy.

It appears that Treasury would like to see this Bill passed before the first parliamentary sitting of 2009, which is giving the various affected parties the impression that it is being "rushed" through the process of consultation with the industry players. If this amendment is allowed to be enacted, it will cause uncertainty in the Short-term and Long-term industries.