Medical aids fear throttling regulation

Anice Kruger waits as her child, Pippie, 3, is wheeled out of theatre after skin surgery at Netcare Garden City Hospital in Johannesburg. Medical schemes say the current National Health Insurance proposals will not improve health-care provision. Photo: Bongiwe Mchunu.

Anice Kruger waits as her child, Pippie, 3, is wheeled out of theatre after skin surgery at Netcare Garden City Hospital in Johannesburg. Medical schemes say the current National Health Insurance proposals will not improve health-care provision. Photo: Bongiwe Mchunu.

Published Jul 4, 2012

Share

The pending Medical Schemes Amendment Bill would bring a further regulatory burden to bear on medical schemes, while the introduction of the National Health Insurance (NHI) system would intensify competition, a PwC survey predicted yesterday.

The introduction of the NHI, the demarcation between health insurance and medical scheme cover and new regulations from the medical schemes regulator, the Council for Medical Schemes (CMS), made medical schemes feel that the operating environment had become more complex and was unpredictable.

Already 75 percent of the schemes said their solvency margins would decrease if personal member medical savings accounts were removed from the financial statements of the scheme, as recently proposed by the council.

“New member growth prospects and the sustainability of existing membership continue to be impeded by reduced consumer discretionary income and an increase in medical costs,” said Ilse French, PwC’s medical schemes leader for southern Africa.

Releasing the first edition of its Strategic and Emerging Issues in the Medical Scheme Industry survey for 2012, PwC said the findings showed the constantly evolving regulatory environment indicated worse days ahead for the industry.

Principal officers of 20 South African schemes and one in Namibia were surveyed and they covered 53 percent of the industry in South Africa, based on principal members in December 2010.

The main aim of the survey was to raise awareness among medical schemes to emerging trends and issues in the industry and to provide insight into how the industry might evolve over the next three years.

French said there was an expectation that the CMS would continue to monitor and impose new requirements across different parts of the medical schemes’ operations.

About 70 percent of schemes expected the intensity of regulation of medical schemes to increase substantially over the next three years.

Medical schemes had also become nervous about the maintenance of membership of younger and healthier members, the affordability of cover provided to members, cost structures and consolidation among medical schemes after the introduction of NHI.

Although the majority of them believed that NHI would increase access to health care for previously disadvantaged people, they did not foresee it reducing the cost and complexity of compliance, or resulting in the better use of funds allocated to health care.

More than half (55 percent) of schemes did not think the NHI would change the state of health care in South Africa if implemented as currently envisaged. The schemes argued that the government’s provision of health care was not at the standard required and that this was a managerial problem.

French said medical aids felt that the “NHI alone is not the solution, as working conditions need to be improved, primary care has to be revived, pharmaceutical distribution for state-owned facilities should be decentralised and a booking system should be introduced”.

All participating schemes said the provision of local health care was deteriorating. Only a quarter of the participants agreed that the introduction of the NHI system would change the current state of health care if implemented in accordance with the focus contained in the NHI Green Paper.

Sixty-five percent of schemes believed that the medical insurance needs of members would differ by 2015 and some were of the view that members would move away from comprehensive cover to more essential hospital and specialist cover.

The majority of schemes advocated an investigation by the Competition Commission into health-care costs, saying it could be useful in keeping health costs minimal. They said their contribution rate increases of between 5 percent and 10 percent in 2012 were largely driven by hospital and specialist costs.

Related Topics: