Nompumelelo Magwaza

The national treasury’s draft demarcation regulations could shut the door on thousands of people who are unable to afford medical scheme coverage, according to industry players.

The second draft of the regulations, which seek to separate health insurance products from medical schemes, are open for public comment until July 31.

The second draft took into account comments received about the first daft, the Treasury said. The first draft of regulations was published in 2012, but was not received well by the public, mainly because of the prohibition on gap cover and hospital cash plans.

The second draft seeks to clearly define the role of the health insurance industry, with the objective of addressing concerns that certain long-term and short-term health insurance policies may undermine the sustainability of medical schemes by luring younger and generally healthier members to exit medical schemes.

In addition, the Treasury said there were health insurance policies that were misleadingly marketed as alternatives to medical scheme cover, while the cover they offered for health events was not equivalent to that of medical schemes.

“The proposed conditions on health insurance products therefore seek to ensure that the sale of health insurance policies complements medical schemes and does not undermine the social solidarity principles, while at the same time serving the needs of those who require additional protection against health-related risk,” the National Treasury said.

Such insurance products emerged in the early 2000s, when annual increases in medical scheme contributions began to outstrip inflation.

However, Steph Bester, the chief executive of The Unlimited, a direct marketing company that offers health insurance and other financial services products, said should the draft regulations be passed, thousands of people would be without any health care.

As with some medical scheme products, its Easimed offers unlimited doctor’s visits and up to R10 000 medication benefits.

Day1 Health, founded in 2003, is underwritten by Sanlam and uses the 1Doctor Health network of doctors. Its chief executive, Richard Blackman, has been quoted as saying: “We recognise that low-income people can’t afford medical scheme cover. We give people something rather than nothing.”

Bester said that with about 16 percent of the population able to afford medical aid, there were millions of people who were left out of the private health-care system.

Many of those people had the option to buy a health insurance product, allowing them to see a doctor and get medication, without having to sit for five or six hours at a clinic. Some of the premiums were as low as R50 a month; medical aid premiums were much higher, he said.

If the draft demarcation regulations were passed in this form, Bester said, then many health insurance products would fall away.

“This will also impact on people’s choice of health-care products. If they cannot afford medical aid, what would they be left with?”

The Board of Healthcare Funders (BHF) said medical schemes were the correct vehicle for funding health care, because they were based on social solidarity principles. This meant that all members were treated equally regardless of their age and health status.

BHF spokeswoman Heidi Kruger said the fundamental difference between a medical scheme and health insurance was that health insurance premiums were based on risk.

Health insurance was also risk based, which automatically made it unequal, she added. “However, medical schemes have to accept everybody, regardless of their age or health status, because of the principle they are governed under.”

Medical schemes were the correct channel for funding health care, Kruger said, but she admitted that the medical scheme environment should undergo several reforms so that it would be able to offer low-income products, allowing more people to access the private health-care sector.

“These reforms should include a restructuring of the prescribed minimum benefits and should be able to address the issue of a regulated tariff in the medical scheme, which makes it hard for medical schemes to bring in low-cost medical products in order to extend their reach.”

These reforms were important, Kruger said, to make medical schemes the only vehicle of funding health care. However, until that happened, “we cannot disallow people from protecting themselves from unfunded liabilities”.

Until those reforms were achieved, it would be difficult to outlaw some of the products offered by health insurers.