In early December, the Council for Medical Schemes (CMS) published a circular prohibiting South African medical aids from offering Low-Cost Benefit Options to low-income market segments.
The CMS explained: ‘These households cannot afford medical scheme premiums as coverage and benefit richness is generally correlated to income, therefore the higher the premium, the richer the benefits.’
However, the CMS said that it had noted that products targeted at lower-income earners presented an opportunity for inferior benefits.
The CMS said its decision was intended to align such products ‘with the broader health-policy discussion that seeks to ensure adequate access to care, irrespective of the economic status of the population’.
The decision is effective immediately and all such schemes must be terminated by the end of March 2021. To their chagrin, Treasury officials were not advised of the CMS’s circular.
It is an extraordinary instruction in many respects. The CMS has assumed the decision-making of individual South Africans as to what medical aid options they can choose, and has removed them on the grounds that such options are inferior to more expensive ones.
It is a decision seemingly so dictatorial – and without apparent foundation, until you see what the CMS goes on to say.
Of course Low-Cost Options will provide fewer benefits than High-Cost Benefit Options (HCBOs), but people understand this. So what? If the beneficiaries decide that Low-Cost Options are what they can afford and are better than no protection at all, surely they’re entitled to get what they pay for? Surely the CMS should confine its involvement in this decision to ensuring that the benefits promised are received?
‘Mainly, such products potentially use the State as a Designated Service Provider (DSP) without entering into the necessary agreements with the State and lack prescribed minimum benefits (PMB),’ it said.
‘The South African economy is currently under a lot of strain, with high levels of unemployment further suggesting that a LCBO for low-income earners could be difficult to realise.’
Prescribed Minimum Benefits (PMB) are a set of benefits the CMS defines to ensure that all medical scheme members have access to certain minimum health services, regardless of the benefit option they have selected.
Two concerns arise from what the CMS says; is it not the council’s function to deal with offending medical aids specifically? It cannot possibly be administratively fair to order the withdrawal of all such schemes.
Second, is the CMS arguing that, as the economy is under strain, the Low-Cost Scheme benefits might (not will) be ‘difficult to realise’? The question is, what business is it of the CMS to dictate for how long individual scheme members will benefit?
The CMS’s attitude is unbelievably patronising. The description for this attitude falls into the category of the ‘soft racism of low expectations’.
Then we start to see what the CMS is really doing: it’s anticipating the choice limitation of the government’s health policy as contained in the National Health Insurance (NHI) Bill.
The CMS said it had previously outlined two possible alternative models – both with more of an emphasis on primary healthcare (PHC) services than the current PMB package. It has also developed a new PMB package (still to be costed) with a ‘strong focus on primary healthcare’.
The regulator said that it considered this new package ‘as a basis for the discussions that will lead to the development of an affordable and quality healthcare financing package [for] citizens of South Africa’.
Presumably this means that to the extent that the NHI will allow for some medical aid cover, which won’t be much, this will be the package the CMS will allow once NHI comes into being.
The prohibition of low-cost products could leave hundreds of thousands of families without access to private healthcare. Many of these services are subsidised by employers and cost substantially less than full medical-scheme cover.
The Circular refers to Section 7 (b) of the Medical Schemes Act (ACT) which confers on the CMS the duty to, amongst others, ‘control and co-ordinate the functioning of medical schemes in a manner that is complementary with the national health policy’.
Then it states the perverse reason for requiring these schemes to be closed down by 31 March 2021: ‘The CMS provides influential strategic advice and support for the development and implementation of strategic health policy, including support to the National Health Insurance (NHI) development process. The NHI is a key priority in the national health policy objective and its bill was introduced to Parliament on 8 August 2019.’
In other words, the CMS is pre-empting the implementation of the NHI notwithstanding that no one knows when it will come into effect, if at all; that the government has not costed it; and that protracted contestation is likely over this very controversial piece of legislation.
The CMS will allow no exemption for any medical aid.
Dr Anthea Jeffery, Head of Policy Research at the Institute of Race Relations, points out that although the government claims the NHI will be effective in cutting costs and enhancing quality, the huge bureaucracy needed to implement the NHI will be costly.
In addition, Jeffery states that pervasive regulation will also stifle innovation, reduce efficiency and promote corruption.
Finally, she reminds us that there is still no clarity on what NHI will cost (at least R450 billion a year, based on current state and private healthcare spending, and possibly R1 trillion), how the supply of healthcare services will be increased to match demand, how the enormous administrative burden will be met, and how South Africa will deal with the risk of rampant corruption.
‘It is time to say no to the uncosted and unsustainable NHI proposal and find far better ways to improve universal health coverage,’ she argues.
While controlling all aspects of our medical care may align with African National Congress (ANC) ideology, for the CMS to ban a legitimate method of health service provision in anticipation of a system that is nowhere near implementation, if it ever is implemented, confirms that it serves the ANC, not the members of medical aids.
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