Two cabinet ministers have announced in quick succession that they are moving to implement the Health Market Inquiry’s (HMI’s) blueprint for reforming the private healthcare sector.
Trade, industry & competition minister Parks Tau proposed exempting medical schemes and private healthcare providers from the Competition Act’s prohibition on collective bargaining and setting up a multilateral tariff negotiating forum overseen by the health department.
Then, health minister Aaron Motsoaledi called for comment on the Council for Medical Schemes’ long-awaited report on low-cost benefit options (LCBOs), rejected these products as offering no real value and instead proposed amending the Medical Schemes Act to establish a basic benefit package.
The council has for the past decade been prevaricating over the development of a regulatory framework for LCBO’s, which would enable schemes to offer cheap, pared-down packages by exempting them from the act’s requirement to cover a much broader range of services, known as prescribed minimum benefits.
The need for this regulatory framework stems from an agreement previously reached by the ministers of health and finance to migrate health insurance products deemed to be doing the business of a medical scheme into the council’s regulatory net. In a long-awaited report released by the minister on Monday the council now said it is against LCBOs and recommended phasing out existing health insurance products.
Tau and Motsoaledi have positioned their plans as being in line with the HMI’s final recommendations, but this is far from the full picture.
While it is certainly true that the HMI proposed a tariff negotiating forum, as well as a single, comprehensive basic benefits package to be provided by all medical schemes, these are just two of the measures it recommended and they were never intended to be implemented piecemeal. The HMI was clear that interventions on tariffs had to be accompanied by measures to manage demand, with routine reporting of the quality of the care provided to patients. And it emphasised that the institutions charged with regulating suppliers, measuring outcomes and negotiating tariffs had to be independent of the health department to shield them from political interference.
It is also somewhat disingenuous for Motsoaledi to say he cannot see why low-income workers would pay for LCBO products when the services they cover are available for free or at a nominal amount in the public healthcare system.
If the public healthcare sector was not in such a parlous state, neither employers nor workers would be forking out for health insurance or medical scheme products to fund private healthcare. Nor would people who cannot afford medical scheme cover be paying for private healthcare out of pocket: despite only about 15% of the population belonging to medical schemes, Stats SA’s 2023 general household survey shows more than a quarter of South Africans turn first to the private healthcare sector when they are ill.
There is no question that reform is needed. But piecemeal interventions, shutting down health insurance products, and snuffing out the prospect of LCBOs without a viable alternative on the table is neither logical nor ethical.
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