Council for Medical Schemes Wants Low Cost Options for the Masses
The South African Council for Medical Schemes (CMS) has announced that it wants to introduce low cost options for medical aid. These options will benefit millions of people who would otherwise not be able to afford medical scheme membership.
According to the acting chef executive and registrar of CMS, Daniel Lehutjo, the approach to low cost options from medical schemes is “in keeping” with the Schemes’ statutory mandate to ensure that the medical schemes industry is properly regulated, and its members are protected. Furthermore, it is its mandate to ensure that everybody receives fair, equal access to medical care in South Africa.
Lehutjo quotes the Stats SA Labour Force Survey for Q1 2012. The survey states about 6-million formally employed people are not on any type of medical scheme. Taking children and partners into account, this, he says means that about 15-million South Africans do not have cover.
It is so that several medical schemes have so-called “low cost” options. But Lehutjo says that these don’t in fact bridge the gap effectively. Much of this has to do with simple affordability (or lack thereof) of current “minimum benefit” packages. He points out that while the Medical Schemes Act has exemptions that can be called into play when certain provisions can’t be complied with, most people cannot provide proof of the “exceptional circumstances” required for the exemptions to be granted.
Lehutjo says that CMS has been trying for years to find a mechanism that will cater both for market needs and affordability. Ultimately, he says that the CMS has been considering introducing a low cost benefit option (LCBO) that schemes could introduce. But that would need exemption from certain provisions of the legislation.
The CMS is considering is the protection of risk pools and that there should not be any fragmentation. There would be a network of so-called “preferred providers” that was fully exempt from the legislated Primary Minimum Benefits (PMBs).
There might also be hospitalisation with cost-effectiveness as a basis. This would cater for people who fall into specified income brackets. Even when members fall outside of the prescribed network or “existing solvency requirements” they would have cover. Further, low contributions and non-health costs would not compromise healthcare.
According to Lehutjo, income levels would be a critical factor in terms of low cost options membership, and people who “dropped off” because of affordability would still be considered. Lehutjo said he wants to eliminate late joiner penalties.
Lehutjo wants to see guidelines for new low cost benefit options very soon. He hopes for finalisation this year (2015). He says that there is great urgency for the medical aid scheme industry to increase its “net of coverage”. The industry must cater for a much larger group of people – those who cannot currently afford monthly premiums.
New “demarcation regulations” will specify the types of “health insurance policies” that will be permissible under both the long-term and short-term Insurance Acts, he said. These would not fall under the existing Medical Schemes Act. That is in spite of the fact that “health insurance policies” meet the current definition allowed in the “business of a medical scheme”.
New Framework for Low Cost Options
According to the head of the CMS Benefits Management Unit, Paresh Prema, the new proposed low cost options framework will ensure that the new medical scheme options fall under the existing Medical Schemes Act. While there might be a possible exemption from “open enrolment” the new options will introduce “affordable benefit options” to a currently vulnerable market.
Prema states that in this model, there will be some defined underwriting and guaranteed renewal of cover. Furthermore it would lead to expansion of employer participation and the opportunity of “buy-up” by LCBO members, he said.
The big boys can’t ignore what is happening. So at a recent CBS indaba, the principal officer of Discovery Health’s Medical Scheme, Milton Streak said, “If we don’t do it, other insurers will”.
He was also quick to state that it was important to collaborate actively with the CMS to facilitate industry growth. Prema said risks and possible regulatory “barriers” should ensure cover was more affordable. He did though say that legislation should protect members. And he warned that the CMS should not allow the regulatory barriers be “deal breakers” when developing new LCBOs.
Streak said Discovery Health would support the introduction of LCBOs if they were “in the best interest” of the medical scheme and its members. He went on to predict that monthly premiums could be as low as R250-R350 per member.