An 11th hour reprieve has been granted by the Council for Medical Schemes (CMS) to insurers offering cheap primary healthcare cover, giving them another year to continue selling their products after their exemption from the requirements of the Medical Schemes Act expired on 31 March.
Around 1.5m South Africans are members of these products that cover basic private services such as GP consultations. Most are low-income workers, unable to afford the premiums charged by medical schemes offering more extensive cover.
A small group of insurers, who have partnered with the likes of Kaelo, Momentum and Discovery, were granted exemptions to the Act in line with the demarcation regulations introduced in 2017. These draw a clear distinction between medical schemes and insurance products, which are overseen by different regulators and subject to different rules.
At the time, reports Business Day, companies selling health insurance products were given a two-year exemption to the provision requiring their products be scrutinised by the CMS, pending the development of a low-cost benefit options framework to govern such offerings.
This exemption has been repeatedly extended, the last one announced by the CMS on 28 March – but unlike previous extensions, the latest one has been granted for just one year, not two.
Momentum Health Solutions chief marketing officer Damian McHugh said the one-year extension without clear guidance on the next steps was a sign of the challenges posed by trying to incorporate insurance products into low-cost benefit options within the medical schemes environment.
“One of the biggest challenges is the medical scheme tax credit, which will immediately place a burden on the state of up to R6bn, assuming 1.5m insured members. To mitigate this, there needs to be new legislation dovetailing with the new basket of prescribed minimum benefits for low-cost benefit options,” he said.
Momentum is the biggest provider of health insurance products on the open market, with 206 000 beneficiaries, according to McHugh.
Kaelo CEO John Jutzen said corporates, organised labour and consumers were relieved that the exemption framework had been extended, and that the one-year grace period “is welcome”.
“It is sensible, because we do think it needs to be formally regulated and a two-year extension perpetuates the ambiguity,” he said. “The question now is how they regulate it, as a low-cost benefit option (will be) very difficult to achieve.”
Kaelo, which has partnered with Centriq Insurance, has 128 000 lives under cover.
Business Day PressReader article – Low-cost health insurers granted another reprieve (Open access)
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