The number of small medical aid schemes is expected to dwindle as the high cost of living forces consumers to look for cheaper options, and if the contentious National Health Insurance (NHI) scheme succeeds, it could squeeze the industry further.
There are 71 medical aid schemes — 16 of which are open, such as Discovery, Medshield and Bonitas; and about 55 closed or restricted schemes, mostly employer-based, such as the Government Employees Medical Scheme. There are 9.1-million medical aid members, with about half belonging to open schemes.
Thoneshan Naidoo, CEO of the Health Funders Association (HFA), said there were more than 100 medical schemes about 15 years ago but many have had to close down and the association expects this trend to continue.
“We do foresee, irrespective of the NHI, further consolidation of schemes in the next few years” because of existing pressures, including a lack of mandatory membership and an increasing disease burden, he said.
Medical schemes have been lobbying to be allowed to offer lower-cost options in line with a policy decision taken about 10 years ago by the Council for Medical Schemes. The matter is now before the courts.
Consumers are also switching to schemes that offer lifestyle value-added products.
The private healthcare industry, including medical schemes, healthcare providers and hospitals has expressed concerns about certain clauses of the National Health Insurance Act, which they fear will dismantle the industry.
In its submissions to the government on the NHI, the HFA has put forward alternative ways of attaining a more equitable healthcare system and the realisation of universal health coverage more quickly and more efficiently than the process envisioned in the NHI Act, said Naidoo.
There are concerns that doctors and nurses working in the private sector may leave the country due to the NHI-recommended payment model.
“We believe that the private healthcare sector should play an integral role in an NHI system and that any overhaul of the system should be built on the knowledge, resources and infrastructure that has already been built and is working well in the private healthcare sector.”
There are concerns that doctors and nurses working in the private sector may leave the country due to the NHI-recommended payment model.
Naidoo said the first prize would be working together with the government on improving the healthcare system but his organisation was also considering legal action to challenge sections of the NHI Act.
“We’ve utilised the services of policy, legal and financial analysts and researchers to assist us in formulating a substantive argument, to really understand what the impact would be. We need to be able, when and if we do make a legal case, to be able to stand up to judicial scrutiny. So, we’ve taken time to make sure our analysis is correct, is a proper reflection, and is complete.”
The other key issue is around funding for NHI, which Naidoo says may cost substantially more than current spending on healthcare. The government spends about R250bn annually on public healthcare, which is funded through taxes, while the private sector spends about R280bn, which is funded by members. He said taxes may be increased to fund NHI.
“Money from the private sector may be channelled to the NHI ... but there is no other way for consumers’ discretionary income that is spent on private medical schemes to be channelled to the NHI fund other than through taxes, right? So, to incorporate the R280bn into the NHI fund means that there’s massive tax increases that may be introduced across all income levels.”
President Cyril Ramaphosa said during the state of the nation address that the government would proceed with the preparatory work for the establishment of NHI. “This includes developing the first phase of a single electronic health record, preparatory work to establish ministerial advisory committees on health technologies and health care benefits, and an accreditation framework for health service providers.”
Ramaphosa said the NHI would reduce inequalities in healthcare by ensuring everyone received fair treatment.
Naidoo reiterated that while the industry was in favour of universal health coverage, it supported an NHI model where both private and public coverage co-exist.
He said the private sector could reduce the pressure on the public healthcare system through the introduction of low-cost benefit options.
“By introducing low-cost benefit options, we could increase the medical scheme coverage by about 6-million people, to approximately 15-million. So, 6-million more people could get access to private healthcare through this.
“We believe that this is an important reform so that the private sector is able to alleviate the burden of the public healthcare sector.”
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