The government says proposed low-cost benefit options (LCBOs) will only enrich medical aid schemes, and do not adequately cover low-income South Africans – unlike the National Health Insurance (NHI) Fund.
This as the multiyear fight by the Board of Healthcare Funders (BHF) to force the Council for Medical Schemes (CMS) to introduce LCBOs heats up after the Pretoria High Court, on Tuesday, ruled against it in its efforts to introduce the benefits.
In its opposition to the legal challenge brought by BHF, the government highlighted the centrality of NHI to health policy, arguing that LCBOs will provide “something less than the prescribed minimum benefits”, and that “after exhaustion of a limited package of healthcare services, the LCBO will fall back into the public health system”.
The BHF said it would appeal the decision of the High Court, which ruled, among other things, that it is not in the public interest, reports BusinessLIVE.
The network of healthcare funders said LCBOs represent an immediate, practical and sustainable solution to expand private healthcare access to an additional 10m South Africans who can’t afford full medical scheme cover, but are paying out of pocket expenses for private healthcare providers.
The BHF’s legal challenge is based on the argument that the CMS is unlawfully exempting health insurance providers from compliance with the Medical Schemes Act by imposing a moratorium on medical schemes offering LCBOs.
The medical schemes regulator last week announced a two-year extension to the demarcation exemption renewal framework under which a limited group of 11 licensed health insurers may continue selling these policies.
The BHF responded by challenging the CMS in court, urging it to make a final call on the future LCBOs and to declare the extension of the demarcation regulations unlawful.
The CMS welcomed the judgment, with Registrar Musa Gumede saying the decision “reaffirms the CMS support to collaborating with the …industry to address policy dimensions concerning primary healthcare in the sector”.
The court agreed that BHF had not proved it was “genuinely acting in the public interest of identified medical schemes and their subscribers”, the regulator said.
“The CMS does not necessarily claim or see this as a victorious moment. We have extended a hand to BHF on several occasions to resolve their displeasures with our policy and regulatory decisions as highlighted by the court,” Gumede said.
Extension
The two-year breather by the medical schemes regulator – pending the Health Minister’s final determination on the future of LCBOs – was met with mixed reactions from industry role-players.
Originally due to expire on 31 March and now extended to 31 March 2027, the framework was supposed to be a transitional measure when the demarcation regulations were brought into effect in 2017.
Health insurance products that were deemed to be doing the business of a medical scheme were to be migrated from the regulatory ambit of the Financial Sector Conduct Authority to that of the CMS, but only after it had devised a new regulatory framework for LCBOs.
The CMS began developing a regulatory framework for these products in 2015, but only submitted its final report to then-Health Minister Joe Phaahla in November 2023.
Discovery Health CEO Ron Whelan said the lack of regulatory certainty about the introduction of LCBOs was concerning since “multiple constructive inputs” had been provided since the framework was implemented in 2017. These products could protect millions of low-income workers from out-of-pocket expenditure on private healthcare, he said.
“Based on Discovery Health research and analysis, the health insurance market currently comprises about 1.2m lives and has the potential to grow to 4m to 6m by 2035,” he said.
Discovery’s Flexicare health insurance product covers more than 120 000 lives.
Momentum Health Solutions marketing executive Damian McHugh welcomed the extension, saying it was clear more time was needed to determine the future of health insurance products and LCBOs. Momentum provides health insurance to more than 237 000 beneficiaries and estimates the market size at about 2m.
BHF head of research Charlton Murove said consumers were losing out because they were not afforded the protection provided by the Medical Schemes Act. For example, medical schemes had to accept anyone who can afford their premiums and cannot charge higher rates to people who are deemed to be a higher risk due to age or illness.
See more from MedicalBrief archives:
Minister rejects LCBO report, but punts policy shift
After protests, CMS agrees to stakeholder engagement on low cost benefit options
Medical aids turn to court in long-running battle for low cost options