By Heidi Kruger: BHF Head of Corporate Communications & PCNS
The medical schemes industry in South Africa has experienced no real growth in coverage in the last 2 decades with membership stagnating at approximately 7 million lives. But the spend within the private healthcare sector has increased significantly, sitting at approximately R60 billion for 2006 resulting in a private healthcare sector which is unaffordable to the majority of the population.
In contrast, with a spend of roughly R59 billion, the public health sector provides healthcare for the remaining 84% of the population. It is no wonder then that medical schemes are working continuously to address allocative and other inefficiencies in the financing and provision of healthcare to enable more South Africans the benefit of private healthcare, and no wonder that Government is at pains to pursue its goal of a Social Health Insurance which, through income cross subsidisation, risk cross subsidisation, mandatory cover and the development of low income schemes will cover up to 15 million lives through the current private healthcare sector.
The newly released Medical Schemes Amendment Bill, which amongst other things, gives effect to the establishment of a Risk Equalisation Fund, proposes tighter governance measures within schemes and which allows for the establishment of schemes for lower income beneficiaries is considered a significant step towards the achievement of SHI.
This Bill intends to provide the legal framework necessary to enable the establishment of a Risk Equalisation Fund (REF). “The purpose of the REF is to equalise risk amongst medical schemes and force competition on the basis of efficiency and not the risk profiles of members,” stated Heidi Kruger, head of corporate communications at the Board of Healthcare Funders. The process has been running for two “shadow” years and is expected to be implemented fully within the next few years.
A further requisite for SHI in South Africa is the provision of a basic set of healthcare benefits, and this Bill also covers issues relating to an essential healthcare package, which will have significant impact on the lower income medical schemes, a further provision under the proposed regulations. In addition, under the proposed amendments, the Minister of Health will be empowered to prescribe variations to regulations pertaining to medical scheme products which cater specifically for low income persons. This is expected to encourage membership growth - vital if the industry is to grow.
Suffice it to say that much needs to be done in the next few years to increase access to private healthcare funding to more South Africans and to attract new entrants into the system. This will not only ensure that the sector grows, but that the medical schemes industry as a whole remains viable as well
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