The continued role of medical schemes under NHI

01 November 2011 Professor Manie de Klerk, Metropolitan Health

As South Africa progresses towards a National Health Insurance (NHI) solution, industry stakeholders have raised a number of concerns. One of the unknowns is the role of medical schemes in the eventual healthcare solution...

The jury is divided. On the one hand, you have the prophets of doom who view the Green Paper on NHI as a death knell for medical schemes. On the other hand, you have those who see NHI as an opportunity for public / private cooperation. The latter believe that private healthcare will play an ongoing role in the provision of healthcare for all.

New healthcare service models

Government has demonstrated its willingness to work with the industry to ensure that existing methods and procedures are built upon rather than reinvented. In turn, the industry has demonstrated its commitment to the future by accepting and adjusting to new healthcare service models. They will, for example, consider a solution built around community health workers, professional nurse practitioners and primary care service providers coordinated by a more accountable general practitioner.

It seems likely between 30% and 50% of current medical scheme members will require some form of top up cover once the NHI is implemented. And people who belong to the higher end medical scheme options will certainly be willing and able to pay for an enhanced level of service and benefits. This means there will still be a vital role for medical schemes well into the future. One possibility is that employers will offer medical scheme membership as a value-add and top up for NHI to their employees.

Integrating wellness programmes

The structure of these solutions will only become clear as NHI is rolled out. The way in which issues like quality and access are addressed may not be as effortless in an NHI environment as it is presently in the private sector. It will also be interesting to see how wellness initiatives are incorporated within the NHI and integrated with existing workplace medical programmes. Once again, medical schemes have a clear role to play.

Medical schemes brokers will have to reinvent the services they offer too. Brokers will have to offer a lower cost per enrollee offering and shift their focus to the provision of real advice on issues of service delivery and access. Current targets will change from one-on-one to larger communities and larger workplace groups. Brokers may also need to upgrade their skills so that they are equipped to become purveyors of information rather than marketers of product.

No easy targets

The steadily increasing cost of healthcare has been in the spotlight over the past few years, with the administration function singled out for unfair attention. In reality most of the cost increases can be attributed to medicines, medical specialists and private hospital care. However, looking at any cost in isolation can be dangerous. Healthcare costs are driven by many dynamics, including normal cost increases related to consumer price inflation (CPI) and technological advances, amongst others.

Medical schemes can play their part by reducing the costs associated with administered care. They should focus on cost-effective administration and managed care, as well as cutting down on overpriced and unnecessary services and tests. With the advent of NHI we should experience more sensible pricing due to the introduction of risk-based models such as capitation or outcomes-based fee models that are based on diagnosis rather than volume of service.

The volumes of work that the NHI will bring will create economics of scale that will in turn increase the demand for the offerings of medical service providers, including medical schemes.

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