Laura du Preez: Business Report,
THE survival of the multi-billion-rand private medical scheme industry is under severe threat in its current form as the government looks for a way to resuscitate both an ailing public healthcare system and an increasingly unaffordable private healthcare system.
There are few details of the government's final intentions but the indications are clear that your healthcare cover is unlikely to continue in its current form.
Manto Tshabalala-Msimang, the Minister of Health, announced at a medical scheme conference on Monday that there is an urgent need for "momentous changes in healthcare financing" in South Africa.
Tshabalala-Msimang said she would present proposals for a national health insurance system to the cabinet this week.
But consumers, medical schemes, hospitals, doctors and other healthcare providers are all in the dark when it comes to how such a health insurance system might operate, despite much discussion of the matter at this week's annual Board of Healthcare Funders (BHF) conference in Durban.
Typically, national health insurance involves either the government or multiple entities purchasing or providing basic healthcare cover for the entire population.
The minister's office said proposals would be presented to a cabinet committee this week and would be presented to the full cabinet only next week. Details of the proposals would only be made public thereafter. However, it appears from presentations at the conference that many fundamental issues concerning a national health insurance system have yet to be debated, researched and resolved, and that no timelines have been set.
The Health Minister told journalists at the conference that the costs of implementing national health insurance have yet to be calculated.
The renewed urgency with which the issue is being addressed and the shift in focus from social, or mandatory, health insurance through medical schemes for all those who can afford it to national health insurance follows a resolution adopted by the ANC at its Polokwane conference in December last year.
Until now the focus has been on making medical scheme membership affordable and ensuring that schemes offer you the essential cover you need, with a view to in future effectively forcing you to belong to a scheme by making contributions for a certain level of basic cover compulsory. This system was referred to as social, or mandatory, health insurance.
Future of medical schemes
But at this week's conference a shadow of doubt was thrown even over the future of medical schemes. Moremi Nkosi, the director of health insurance at the Department of Health, said one of the issues that will be considered when the national health insurance system is formulated is whether medical schemes should continue to collect funds and pay healthcare providers on your behalf or whether the government should take over this role.
Although Nkosi said there is probably a need to "capsize" the existing system, he gave no indication of the current thinking regarding the future of medical schemes nor did he explain the government's current focus on medical scheme regulation in the form of two bills before Parliament: the Medical Schemes Amendment Bill and the National Health Amendment Bill.
The National Health Amendment Bill proposes a bargaining chamber for tariffs that schemes will pay for certain benefits.
But Zweli Mkhize, the chairman of the health and education sub-committee of the national executive committee of the ANC and the MEC for finance and economic development in KwaZulu-Natal, told the conference he envisaged the private sector working in partnership with the government to improve healthcare cover for everyone.
Mkhize, who was invited to the conference to give delegates an indication of the future direction of the country's health policy following the change in the leadership of the ANC, said the ANC does not want to abolish private healthcare in South Africa. Rather it wants to preserve that which is currently working well and draw on existing expertise to overcome the challenges.
Mkhize said national health insurance may not be introduced tomorrow, but that a time horizon should be set for its implementation.
Representatives of hospital and doctor organisations appeared to be encouraged by Mkhize's comments.
What is national health insurance?
No two national health insurance systems around the world are the same, and South Africa needs to develop its own system that suits its needs, Di McIntyre, a professor of health economics at the University of Cape Town, told the Board of Healthcare Funders conference.
McIntyre says South Africa could learn from other systems but would be unable simply to import an existing one from another country and adopt it here.
Canada, Denmark, Norway and Sweden have a state-administered health insurance system, with most doctors in private practice, Reg Magennis, the chief executive officer of Elixir Business Consulting, said in a paper distributed at the conference.
In the United Kingdom and Spain, the government is responsible for managing the financing and delivery of healthcare, salaried medical practitioners predominate, and hospitals are mostly publicly owned and operated, Magennis says.
A third model of national health insurance is used in Germany, France and Japan. In these countries, there are multiple, highly regulated entities that provide universal health insurance. In Germany, these are non-profit "sickness funds" and France has "mutuales", Magennis says. These funds pay medical practitioners and hospitals uniform rates that are negotiated annually.
Benefits, contributions may change dramatically
The national health insurance debate may take some time to play out, but, if enacted, proposals contained in the Medical Schemes Amendment Bill could have a significant and more immediate impact on your medical scheme cover.
If the Bill is adopted, your scheme will have to decide on a set of common benefits - including the prescribed minimum benefits (PMBs) - that it will have to offer all the scheme's members at the same contribution rate.
Schemes will no longer be able to offer different options with different levels of hospital cover.
Currently, a scheme can offer an option that provides in-hospital cover and for specialists to treat you at the tariffs set in the National Health Reference Price List (NHRPL), and another option that offers in-hospital cover and for specialists to treat you at three times the tariffs set in the NHRPL. The second option gives you a greater choice of specialists without incurring a bill that is not covered by your scheme.
If the Medical Schemes Amendment Bill is adopted in its current form, medical schemes will have to choose a level of hospital cover for the common benefit package offered to all members. This could have a significant impact on the cover you currently enjoy and the contributions you pay.
If the proposals are adopted, medical schemes will be able to include some out-of-hospital benefits - for example, those covering basic dentistry and optometry - in the common benefit package. Schemes will be able to offer different levels of out-of-hospital cover in their supplementary benefit packages.
Dr Anban Pillay, the Department of Health's cluster manager for health economics, suggested at the Board of Healthcare Funders conference that you may pay for these supplementary benefits based on your age.
One of the main aims of the Medical Schemes Amendment Bill is to introduce a risk equalisation fund (REF) for medical schemes.
The REF is intended to equalise the cost of providing the PMBs that schemes must provide to all members. Currently, it costs schemes with a large number of older, less healthy members more to provide these benefits, and this means members of these schemes pay higher contributions. The aim of the REF is to make medical scheme membership more affordable.
If the REF is introduced, it could have a significant impact on the contributions you pay to your scheme, with some members paying more and others less.
Another speaker at the conference, Willem Claasen, a senior actuary with Medscheme, warned that if the common benefit package is introduced before the REF is fully implemented, it could have an unintended consequence of exacerbating the problems facing schemes with many older, sicker members.
Claasen said the REF is likely to be phased in from 2011.