The recent criticism about the Council for Medical Schemes' (CMS) delays in developing lower-cost medical scheme options that could introduce millions more members to the private health sector, is nothing new as political meddling in the saga goes back several years.
So writes Michael Settas, who heads a health insurance company and chairs the Free Market Foundation’s health policy unit, in a Business Day analysis.
Settas was referring to the presentation recently at the Board of Healthcare Funders’ annual conference by Christoff Raath, joint CEO of Insight Actuaries, saying the latter's comments should garner wide support from the private healthcare industry.
Settas said Raath lamented the snail’s pace by the CMS in developing lower-cost medical scheme options.
Settas writes:
"Medical schemes registrar Sipho Kabane rebuked Raath in a media release, threatening punitive action against him. It appears what especially irked him was Raath’s mention of speculation in the industry that Kabane is under ANC instruction to prevent the introduction of these new products, called low-cost benefit options, to ensure broader support for the party’s contentious National Health Insurance (NHI) proposal.
This is nothing new. There is much evidence of political interference in this saga. Even before Kabane’s watch, the low-cost benefit options framework was approved by the Council for Medical Schemes in September 2015, only to be withdrawn the next month, apparently on instruction from then Health Minister Aaron Motsoaledi.
It was just two months before Motsoaledi released the 2015 NHI white paper.
Apparently, having the private sector deliver a viable low-cost product at the same time as trying to sell the unworkable NHI was politically untenable.
Anyway, hundreds of thousands of members were already covered by similar low-cost health insurance products, created by the insurance industry many years earlier. This was complicated in April 2017 by new insurance rules (commonly termed demarcation regulations), which restricted and defined the health services that could be covered by insurance companies.
Five categories were permitted: gap cover, hospital cash plans and travel insurance among them, but not the low-cost health insurance products.
The CMS and the National Treasury jointly agreed not to include the low-cost products as an additional sixth product type, but rather for the council to include them in the low-cost benefit options framework. This would then require implementation of low-cost benefit options, followed by a migration of the members on the low-cost insurance products into low-cost benefit option equivalents and closure of the low-cost insurance products.
This was an odd decision, since the essence of the regulations was to “demarcate” allowable health insurance products from medical schemes. Why not just create the sixth product category? Equally questionable was that the CMS now had to rehash the whole low-cost benefit options process, after it had been completed and approved by it in 2015.
Yet, from April 2017 these low-cost health insurance products were technically illegal and the CMS had to issue a temporary two-year exemption, under what was termed the exemption framework. Once the existing products were exempted, the council declared no new insurers could apply for exemption, thereby closing the market to new entrants.
In 2019, the council extended the exemption until March 2021 and issued the 'Discussion document – Development of low-cost benefit options within the medical schemes industry'. This covered numerous technical aspects of delivering low-cost benefit options products and invited stakeholders to submit comment. There seemed to be at least some progress towards implementation.
However, in December 2019, a bombshell – the infamous Council for Medical Schemes Circular 80. In a turnaround, Kabane decreed that by 31 March 2021, the exemption framework would cease: all existing low-cost health insurance products would need to be wound up.
In Circular 80, Kabane wrote: 'The (Council for Medical Schemes) provides influential strategic advice and support for the development and implementation of strategic health policy, including support to the NHI development process. The NHI is a key priority … and its Bill was introduced to Parliament on 8 August 2019.'
Due to this ruling, all low-cost health products were gone – the existing insurance types and the future low-cost benefit options medical scheme versions. However, as it is known that the council is aligning itself with the government’s NHI proposals, not only recently but even earlier in 2015, Kabane’s reaction to Raath’s recent comments seems misplaced. Raath has not raised anything new or even contentious by questioning why low-cost benefit options are not happening.
What may be different now is that unlike in 2015 when low-cost benefit options were canned, an industry storm erupted over Circular 80, Kabane faced heavy criticism, and during an open session held by the council in January 2020 several stakeholders did not mince their words in voicing their displeasure. Many stakeholders submitted appeals to the CMS Appeal Board.
Though industry sentiment resulted in a reversal by the council, with the establishment of two committees in February 2020 to redevelop low-cost benefit options, Circular 80 has still not officially been withdrawn and no certainty has been provided by the council about an implementation date.
The reality is the existing low-cost insurance products could easily have been included as a sixth allowable product type under the demarcation regulations as far back as April 2017. This would have provided vital regulatory certainty for the past five years, resulting in providers and insurers committing capital to grow the sector.
In fact, there is no reason not to have low-cost benefit options within medical schemes and allow insurers to compete in this sector. The demarcation regulations copied the ground rules from the Medical Schemes Act, so health insurers and medical schemes operate under the same regulation. However, neither sector will commit capital or resources to this market unless there is regulatory certainty.
The reality is the government wants neither sector to implement solutions because its overtly ideological – and wholly unworkable – NHI proposal overrides them.
This has prevented the private sector from expanding and lower income-citizens from having access healthcare services and is surely be a failure by the government to uphold the imperatives contained in Section 27 of the Constitution."
See more from MedicalBrief archives:
CMS anger over claim it’s depriving South Africans of basic private healthcare
Medical scheme membership becomes unaffordable to many
Industry players warn on consolidation of small medical schemes plan