Up to 6-million low-income workers could afford basic private healthcare services and reduce pressure on the public sector if medical schemes could offer low-cost options, says medical scheme administrator Momentum Health Solutions.
The Medical Schemes Act requires medical schemes to cover an extensive set of conditions known as the prescribed minimum benefits (PMBs), which make membership unaffordable for millions of low-income workers. Since 2015, industry regulator the Council for Medical Schemes (CMS) has been working on a regulatory framework to exempt schemes from these provisions and allow them to offer cheap, pared-down benefit options, but it has yet to be finalised.
“If we can get the benefit set and pricing applicable to lower income individuals who are formally employed, we will alleviate the burden on the state,” Momentum Health Solutions chief marketing officer Damian McHugh said on Monday.
“This is not in conflict with NHI (National Health Insurance) — it will enable NHI to happen even faster.” There was clear demand for such products from low-income workers and employers, he said, citing steady growth in the health insurance market. Momentum Health Solutions’ health insurance product Health4Me had seen 14% membership growth in the year to June 30, to reach 184,168 lives, he said. About 1-million low-income workers are now covered by health insurance products, offered by 12 licensed providers operating in the open market along with schemes restricted to people working in the road freight and security industries, he said.
Growth in the health insurance market stands in sharp contrast to the medical scheme industry, which has seen the number of beneficiaries stagnate to just shy of 9-million beneficiaries, said McHugh. The CMS faces a legal challenge from one of SA’s key medical scheme industry associations, the Board of Healthcare Funders, for its slow pace in crafting a regulatory framework for low-cost benefit options.
The industry’s frustration has been heightened by the market for health insurance products being closed to new entrants since the government brought the demarcation regulations into effect in April 2017, shielding a handful of players from competition. The demarcation regulations defined the difference between medical schemes and health insurance products, overseen by different regulators — the former by the CMS and the latter by the Financial Sector Conduct Authority — and subject to different rules.
For example, health insurers can restrict membership to specific age groups, reject people with costly health conditions, and charge higher rates for older people, while medical schemes are prohibited from risk-rating their premiums and are obliged to accept anyone who can afford their premiums.
When the demarcation regulations came into effect, the government granted health insurance product providers a two-year exemption to the provision requiring them to be scrutinised by the CMS, pending finalisation of the low-cost benefit options framework. The exemption period has been extended repeatedly. The latest period expires on March 31 2024.
The status quo means medical schemes cannot launch their own low-cost benefit options, while the providers of indemnity products granted exemption when the demarcation regulations came into force have been protected from new competitors for the past six years.
The Board of Healthcare Funders launched legal action against the CMS in 2022, asking the court to review and set aside the latest extension granted to health insurers; its moratorium on medical schemes offering low-cost benefit options; and its refusal to consider exemption applications from schemes wishing to do so, pending the finalisation of the low cost benefit option framework. The matter has yet to be finalised.
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