The medical schemes industry has for years been pushing the Council for Medical Schemes (CMS) to develop a regulatory framework for low-cost benefit options which it says would open up the medical scheme market to low-income workers who can’t afford more expensive medical scheme memberships. These products would also have the added benefit of alleviating pressure on the overburdened public health-care system.
The relationship between the CMS, the body regulating medical schemes in South Africa, and the medical scheme industry has become increasingly fractious in recent years.
Earlier this year, the Board of Healthcare Funders (BHF), an industry association representing medical schemes and medical scheme administrators, accused the CMS of abusing its power, wasting money on unnecessary litigation, and failing to conduct reviews of prescribed minimum benefits (PMBs). The Medical Schemes Act requires that PMBs — a basic level of care for 27 chronic conditions and 270 diseases that all schemes have to offer their members — be reviewed every two years.
The CMS has since 2015 been developing a low-cost benefit option framework that will allow medical schemes to offer consumers more affordable primary health-care cover. The framework will require that schemes be exempted from covering PMBs for low-cost health-care insurance products.
It was only in November 2023 that the CMS submitted its report on these low-cost options to the health minister. However, it declined to make the report public.
The BHF went to court to compel the CMS to hand over its records on developing a low-cost, low-benefit option. The litigation, it said, was an attempt to have the court declare the CMS’s failure to develop and implement low-cost benefit option guidelines “irrational, unreasonable and unlawful”. It also applied to the Competition Commission for an exemption to enable the BHF to negotiate pricing, address affordability, and increase access to medical scheme cover in line with the health market inquiry report published in 2019.
The BHF, which has long supported universal health coverage, has previously pointed out that NHI is not universal health coverage, but rather a funding mechanism, and that a number of interventions need to be considered to support progress towards universal health coverage, including strengthening the health system and improving its quality standards, governance and management capacity.
Momentum Health Solutions is one of the insurers offering more affordable health-care cover insurance products and has seen notable growth in this segment. While numbers in this market are not public, it’s estimated there are about 1.5-million people now covered by these solutions.
Damian McHugh, chief marketing officer at Momentum Health Solutions, says, “Growth annually exceeds medical schemes’ growth by some margin. Granted, this growth is off a lower base, but it shows the importance that companies and their employees are attributing to these low-cost options.”
It’s not only insurers that are offering these low-cost options, but also hospital groups. Netcare has introduced a range of products aimed at providing consumers with more affordable health care, ranging from prepaid vouchers to insurance products providing for emergency care. In 2023, Discovery Health partnered with Clicks and Auto & General Insurance to bring a lost-cost health insurance product to the market.
The industry argues that, given their more affordable premiums, low-cost health insurance products are a viable option for many South Africans who have not previously had access to health-care cover, providing them with access to some private care, such as general practitioner and dentist visits.
“Health care is a fundamental right for everybody,” says McHugh. “Currently only about 15% of the population is covered by private health-care schemes. Covering more of the uncovered population who are employed would alleviate some of the pressure on a highly constrained public health-care system. Low-cost options therefore play a critical role in providing more affordable cover and, in doing so, assist government in its pursuit of universal health care.”
McHugh stresses, however, that the mere introduction of health insurance products cannot alone adequately address South Africa’s pressing health-care crisis. “Health insurance products are not a substitute for medical scheme membership, as they don’t offer the same level of coverage and protection that medical schemes do. Medical schemes are governed by national regulations that require them to offer a basic level of care contained in prescribed minimum benefits that include an extensive list of chronic conditions and diseases. Health insurance, on the other hand, is structured around more specific offerings and does not provide the same level of protection for consumers.”
However, this does not mean health insurance products are not valuable in their own right, he says.
The rising cost of living and salary increases that are not keeping pace with inflation have put many households under financial pressure. For medical schemes, the risk is that even those who can afford medical scheme membership will opt for more affordable health insurance instead, placing an additional burden on the public health-care system.
Despite this risk, McHugh says affordable health insurance covering day-to-day needs is an important first step towards providing a more comprehensive solution that will benefit all South Africans in the long term.
“If health-insurance products are properly regulated and designed to complement the existing health-care system, they can play an important role in improving access to health care. However, this will require a collaborative approach between health-care providers, insurers and regulators to ensure health-insurance products are affordable and transparent, and provide adequate coverage for the most pressing health-care needs.”
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