Inexpensive health insurance products that offer GP visits to lower-income members have received another two-year reprieve in a widely expected extension by the medical aid regulator letting them go on operating.
Some saw the insurance products, which cost a few hundred rand and usually subsidise private doctor visits, as undermining medical aids. They were to be scrapped, but were given a two-year exemption from 2017 to 2019.
Due to delays in developing a legislative framework for low-cost medical aids that would serve the same market, the cheaper insurance products were given a new extension until March 2021 and then again due to Covid-19 delays, extended until March 2022.
On Monday, the Council for Medical Schemes — working with the National Treasury, the Financial Sector Conduct Authority, and the Prudential Authority — announced an extension for the products until March 2024.
Alexander Forbes regional executive Sandy van Dijl said while the extension was “largely expected” the industry did not want to assume that it would be extended.
While the extension was welcomed by the health insurance industry and widely expected it said that policy certainty regarding medical insurance products is needed.
In limbo
The continuing extensions suggest these products should be accommodated in law, instead of given exemptions endlessly.
Mike Settas, CEO of insurance seller Cinagi, said the insurance products largely aimed at lower-income people and providing for GP visits had been in “limbo for five years”.
“It will be good for the industry to know where this is going. It is an issue of policy certainty, which is lacking.”
Settas said employers are more likely to provide such products for workers who cannot afford medical aid if there is policy certainty. Employers do not want to create an expectation and provide something that may be taken away.
The continual extensions highlight the slow pace of legislative reform in the health sector.
Medical aids are legislated under the Council for Medical Schemes and have to provide certain benefits to members known as prescribed minimum benefits, which means a medical aid costs at least R1,000 or more a month.
Affecting cross-subsidisation
Medical aids also cannot charge riskier and sicker people higher premiums, and are designed so that the young and healthy cross-subside the sick.
Health insurance products do not have to provide specific benefits and can charge healthy people less. It attracts the young and healthy from medical schemes, affecting the cross-subsidisation and sustainability of medical aids
This is why health insurance products were to be scrapped.
The extension has been continuing as legislation to allow low-cost medical aids with fewer benefits for lower-income people has been delayed, the Council for Medical Schemes said.
Richard Blackman, CEO of medical insurance company Day1, welcomed the extension saying it “was certainly expected, as now there is no viable alternative to attaining universal health care”.
The products do not compete with medical aids, he said.
“Day1 Health has always maintained that there is a space for these types of products within the insurance sector, there being no conflict with medical schemes as we are catering for two distinctly different markets.”
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