While the proposed amendments to the Medical Schemes Act seek to lower the cost of private healthcare, they may have the unintended consequence of threatening the sustainability of medical schemes.
Lerato Mosiah, CEO of the Health Funders Association
The amendments look at abolishing the practice of copayments on certain benefits, removing waiting periods and prescribed minimum benefits and tapping into the reserves medical schemes are required to hold.
These provisions in isolation could affect the financial stability of medical aids, says Lerato Mosiah, CEO: Health Funders Association (HFA). “Whilst we welcome the dialogue in the sector, it is critical that this takes into consideration the broader picture and context. It is thus important to understand that medical schemes utilise risk management measures in order to ensure that they remain viable.
Tampering with these limited measures in isolation would accelerate the erosion of reserves and leave medical schemes with very few options to maintain sustainability.”
Legislation governing medical schemes, despite its limitations, has been successful in ensuring that members are safeguarded in several ways. These include provisions in the Medical Schemes Act to ensure that members are not discriminated against according to their risk and age profile and that every member is entitled to a specified set of hospital, emergency and chronic benefits.
Notwithstanding, these provisions which protect consumers, should have been counterbalanced in the Act by provisions which keep medical schemes sustainable to ensure ongoing protection of consumers. Enhancements that could have been included are compulsory membership, a risk equalisation mechanism and a framework for healthcare tariffs.
Health Market Inquiry
Another key development in determining what healthcare in South Africa will look like on the future is the Competition Commission’s Health Market Inquiry (HMI) report. The commission was tasked with investigating the drivers of costs in the private healthcare sector, and will, in the next few days, hold a media briefing to announce the much-awaited provisional report on its findings and recommendations.
“We are looking forward to the HMI report which we hope will recommend interventions that will ensure the industry remains viable in support of universal health coverage (UHC). These could include a mechanism for negotiating doctors’ and hospital charges more effectively, and mandatory medical scheme membership for people earning above a certain threshold,” Mosiah says.
“Medical schemes have a bigger and critical role to play in increasing access to quality healthcare for more South Africans. Between medical schemes, doctors and hospitals there is sufficient data to be able to publish information on quality which would enable consumers to make educated choices when it comes to choosing their healthcare provider. It is therefore my hope that the HMI recognises this and makes recommendations to government to enable a sustainable industry that contributes to long-term benefits to consumers of healthcare products and services,” she concludes.