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 medical aid options that 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, this approach is “in keeping” with the Schemes’ statutory mandate to ensure that the medical schemes industry is properly regulated, and its members are protected. Further it is part of its mandate to ensure that everybody receives fair, equal access to medical and health care in South Africa.
Lehutjo quotes the Stats SA Labour Force Survey for Q1 2012 that states about 6-million people who are formally employed are not on any type of medical scheme. Taking children and partners into account, this, he says means that about 15-million South Africans are not covered.
Even though several medical schemes have so-called “low cost” options, 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, that would need to be exempted from certain provisions of the legislation.
One of the proposals the CMS is considering is the protection of risk pools that should not be in any way fragmented. There would be a network of so-called “preferred providers” that was fully exempt from the legislated Primary Minimum Benefits (PMBs).
Hospitalisation based on cost-effectiveness might also be included. 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 be covered. Further, low contributions and non-health costs would not compromise healthcare.
According to Lehutjo, income levels would be a critical factor in terms of membership, and people who “dropped off” because of affordability would still be considered. Late joiner penalties should be scrapped, he said.
Lehutjo stresses that guidelines for new low cost benefit options need to be developed quickly and he hopes they will be finalised this year (2015). He says that there is increased urgency for the medical aid scheme industry to increase its “net of coverage” for a much larger group of people 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 be excluded from being regulated by the existing Medical Schemes Act 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 framework that has been proposed will ensure that the new low cost 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 market that is currently not covered.
Prema states that in this model, underwriting will be limited but defined, and renewal of cover will be guaranteed. Further 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, and 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. He said risks and possible regulatory “barriers” should be recognised and positively minimised to ensure cover was more affordable. He did though caution that members should be protected by legislation and warned that the CMS should not allow the regulatory barriers that currently exist to act as “deal breakers” when developing new LCBOs.
Streak said Discovery Health would support the introduction of LCBOs as long as 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.