Your medical scheme will be permitted to provide only complementary or top-up cover once the National Health Insurance (NHI) system is fully implemented, the government’s White Paper on NHI, which was released last week, proposes.

If the proposals are adopted in their current form, medical schemes will not, as many people had hoped, provide members with services that fall under NHI.

Schemes collect R140 billion a year in contributions and provide benefits to 8.81 million people (members and beneficiaries).

If the latest NHI proposals are implemented, all South Africans will obtain essential healthcare services from state and private healthcare providers contracted to NHI. Medical schemes will not be allowed to duplicate NHI services; they will be allowed to provide only complementary or top-up cover for services and medicines that NHI excludes or does not cover in full.

The White Paper, which broadly outlines how NHI will be implemented over 14 years, distinguishes between complementary care and supplementary care, which schemes will not be allowed to provide.

Supplementary care typically covers the same services as statutory health insurance, but it provides you with a wider choice of healthcare providers and a higher level of in-patient amenities – for example, your own room in a hospital.

The paper proposes that the Medical Schemes Act be amended so that schemes will no longer provide the prescribed minimum benefits, removing schemes as primary providers of healthcare funding. The paper suggests that, as a result, the number of schemes will decrease significantly from the current 83.

Mariné Erasmus, the head of the health economics unit at Econex, a firm of consulting economists, says many European countries have a national health service and private-sector complementary cover. This works well only if the national health service is a credible alternative to private cover and provides a high-quality service to the entire population. It is unlikely that the public sector in South Africa will be able to meet these requirements in the short term, Erasmus says.

Christoff Raath, an independent healthcare actuary with Insight, says the details of how schemes will move from funding all of their members’ healthcare needs to providing only top-up cover still need to be worked out.

“Robust engagement on some of the details in the White Paper is sure to follow, after which there may be some more clarity on the contentious issues,” he says.

Humphrey Zokufa, the managing director of the Board of Healthcare Funders (BHF), which represents medical schemes, says the BHF is not ready to comment on the White Paper.

The White Paper does not contain details of the package of benefits that NHI will provide. It states only that all citizens and permanent residents will have access to preventative, curative, rehabilitative and palliative healthcare services.

The decisions about the NHI services you can access will be based on medical necessity and whether this will have a positive impact on health care in general.

The package of services will be determined by the NHI Advisory Committee and set out in treatment guidelines and a list of pharmaceuticals, medical supplies and devices.

The NHI system will contract with private and public healthcare providers, including private pharmacies, radiologists and pathologists, to provide the package of services. Providers will largely be paid on a capitation basis (fee per patient) rather than the current fee-for-service basis.

To access NHI services, you will have to consult primary healthcare providers, such as general practitioners and clinics, which, if necessary, will refer you to higher-level providers. Anyone who goes directly to, for example, a specialist, will pay what the White Paper calls a “bypass fee”.

The paper states that, “irrespective of how comprehensive the NHI entitlements will be, some personal healthcare services will not be covered”. For example, the package of NHI benefits may exclude certain dental services, and these services could form part of the top-up cover provided by medical schemes.

The paper states that the first five years of implementing NHI will concentrate on improving the quality of the public healthcare sector.

The second phase, over the next five years, will involve establishing an NHI Fund that will start to buy primary healthcare services from state clinics and private providers. During this phase, public hospitals and clinics will stop charging fees. The paper notes that, currently, R451 million a year is collected in user fees.

In the latter years of the second five-year phase, the Medical Schemes Act will be amended so that medical schemes will provide only complementary cover once NHI is fully implemented.

The White Paper says that, in the third phase, over the final four years of the 14-year period, the NHI Fund will become fully functional. State and private healthcare facilities will have to obtain accreditation from the NHI Fund, pass quality-control checks by the Office of Health Standards Compliance and contract with the state to provide NHI services. During these four years, the White Paper predicts, taxpayers will start paying contributions to the NHI Fund.

Members of the public have until March 11 to comment on the the White Paper.


Private healthcare and medical schemes will not disappear overnight, and medical tax credits and employer subsidies of medical scheme contributions will be withdrawn only once the National Health Insurance (NHI) system is fully functional, Mariné Erasmus, the head of the health economics unit at Econex, says.

Erasmus was commenting on the recently released White Paper on NHI. The paper, like the Green Paper released in 2011, suggests that NHI should be funded by way of a payroll tax, a surcharge of between one and four percent on taxable income, and an increase in value-added tax.

It also suggests that tax credits for medical scheme contributions and tax deductions for out-of-pocket medical expenses be reduced to augment government funding for NHI.

But Erasmus says slow economic growth will reduce the funds available for NHI and is likely to retard the implementation of NHI. The White Paper’s worst-case scenario for how NHI could be funded is based on an economic growth rate of two percent, whereas the economy is expected to grow at only 1.5 percent this year.

The implementation of the first phase of NHI has not progressed sufficiently to allow the second phase to proceed soon, she says.

Health Minister Dr Aaron Motsoaledi said the third phase will start in 2030, she says.

Many commentators are disappointed that the White Paper does not provide more detail on how NHI will be funded – something National Treasury has worked on – and the benefits that NHI will provide.

Any changes to the Medical Schemes Act will take time to implement, and there will be some opposition and, possibly, some challenges in the Constitutional Court, Erasmus says.

In the meantime, schemes need to remain sustainable and, to this end, she says the Competition Commission’s inquiry into private health care, the revision of the regulation that requires schemes to pay in full for prescribed minimum benefits, changes to schemes’ solvency requirements, and the demarcation of health insurance and medical schemes are important.