Changes in Health Planning
Changes in Health Planning
“Bang”…and the cosmic elements were flung apart, and some joined together to form new structures. These structures and elements figured themselves out over time, conformed to rules so as to exist together and eventually settled into the universe we now know. Some structures initially created survived in the new universe, and some were lost along the way. In South Africa, the “Bang” occurred in late June 2017 with the acceptance of the National Health Insurance (NHI). The Government, through the NHI, is envisaged to be the single provider of health services in South Africa, demanding that all citizens participate in it and be members thereof. This is whether citizens are actively providing for their own medical expenses or not. With this “Bang”, there will be a new medical funding landscape, but as yet, it is still forming.
Over the decades, globally, the cost of healthcare has been steadily rising. The annual increase in the costs of healthcare has been in excess of inflation and this has been the main concern for everyone. Medical aid schemes have tried in many ways to curb medical cost inflation but mostly these have been passed on to members via the premiums due. In an attempt to make things more affordable and curb the overuse of benefits, the move to ‘new generation’ medical schemes was introduced. The ‘new generation’ medical aid scheme includes a personal savings account where expenditure on minor or regular medical expenses is taken from the savings account, and not from the insured benefit. However, over time the average medical aid scheme premium has still become very expensive, and has led to the further exclusion of the lower income groups and the poor.
Until a few years ago, in terms of health planning for the funding of medical expenses, medical schemes were the most popular formal way of providing funding for healthcare in South Africa. If not medical schemes, then self-funding was required. Alternatively, free or subsidised public healthcare provided by the State was still available. There were a few health insurance policies that existed at that time. Mostly, a claimant received an amount per day for every day spent in hospital, or paid a lump sum on an occurrence of a specific event – similar to, but not limited to severe illness benefits. But since NHI was still a mere figment of the Government’s imagination, certain insurers began creating insurance policies to take advantage of the growing dissatisfaction with medical aid schemes, the limitations in the benefit levels, and the increasing costs. More and more insurance policies are providing benefits, which have the look and feel of a medical aid scheme but are clearly not a medical aid scheme. These policies are being made more available by more insurers, and thus they are becoming competitive and cost-efficient. Some offer general benefits and others something quite specific or even specialised. Their place in the world is still being defined and moulded.
The Medical Schemes Act dictates the nature of the benefits that a medical aid scheme should provide as a minimum. The difference between the business of a medical aid scheme and that of an insurance policy is laid out in a document known as the Demarcation Guide. Essentially, the Demarcation Guide dictates what a policy should not do in terms of providing benefits. However, if the NHI is fully implemented, and all citizens are to join and contribute to it, then it is presumed that membership of medical aid schemes will become unnecessary and all benefits of being a member of a medical aid scheme will be null and void. Accordingly, the Medical Schemes Act will disappear, and thus the Demarcation Guide too. Consequently, the cheaper, developing policies may be most attractive as they can still easily change to fit the new gaps (if any) in the medical funding market. But NHI is not fully implemented and thus the market has not yet fully changed. This allows medical aid schemes time to continue changing and improving. Currently there are legislative changes planned to streamline and simplify medical scheme benefit options, the amalgamation of medical aid schemes and the creation of new ones. So this is not yet a dying industry.
As the medical funding world continues to change, so will medical aid schemes and medical policies come up against each other so as to claim their place in the world. Already there have been some court cases to help define their differences. Some of these players may continue to exist, others may be expected not to. The only expectation is that it will eventually settle, and become the medical expense funding environment of South Africa. Until perhaps the next “Bang”.
Written by: Tyrone Ford, Milpark Education
23 Jul 2018