NHI and your medical scheme: as clear as mud

Cape Town - Like death and taxes, there will be no opting out clause for national health insurance (NHI). But Minister of Health Aaron Motsoaledi's presentation of the revised White Paper on the NHI leaves many questions about the future of medical schemes unanswered.

The NHI's avowed purpose has always been to lay the foundation for universal health coverage for all South Africans, regardless of their ability to pay for medical services. Funding for the NHI should be based on a system of social solidarity, its proponents have been quoted as saying several times.

It is to be a single-payer and single-purchaser fund, in which funds will be pooled and personal health services purchased on behalf of the entire population.

So where would this pooling of funds leave the average medical scheme member, with regards to getting medical cover?

Motsoaledi has constantly pointed out the gross inequality of access to healthcare that exists in South Africa, with half of the doctors in the country serving the roughly 16% of the population who are medical scheme members, or who can afford to pay for medical services themselves.

As far as specialist healthcare goes, 80% of specialists are to be found in the private sector and only 20% in the public sector.

While nobody can defend these inequalities of access, there have been major issues of concern among economists and healthcare professionals with regards to the following:

• The quality of service currently provided by the state hospitals;

• The high, profit-driven costs of private hospitals and private doctors,

• High, ever-increasing costs of medical scheme membership;

• The funding of the NHI in an already embattled economy; and

• The future of medical schemes and the private health system under the NHI.

Many of these issues have been addressed in the White Paper, such as including suggestions of a payroll tax and a 2% surcharge on taxable income to fund the NHI.

But many questions about the future of medical schemes remain unanswered, and details of the exact role and format of medical schemes under the NHI are yet to be negotiated and decided. The information we currently have is, at best, an indication of future possibilities for the schemes.

While many scheme members express reservations about using state services, increasing member contributions and high co-payments for private medical care are concerns shared by the majority of medical scheme members and Motsoaledi.

But will medical scheme members have to pay twice?

Increasingly, medical scheme members are starting to wonder whether they will have to pay twice – once for the NHI and once for their private medical schemes.

A quick roundup of the facts:

 All South African citizens will have to belong to the NHI – there will no choice to opt out.

• The aim is to provide the same healthcare for everyone, irrespective of their ability to pay for it.

• Funding for the NHI will be through payroll taxes (1% to 2 %), a surcharge on taxable income (1.5% to 4%) and a possible increase in VAT (1% to 1.5%), although the VAT hike seems unlikely.

• The targeted date for implementation of the NHI is 2025.

• Negotiations will be started to reduce the number of options available on medical schemes.

• Governmental medical schemes will all be consolidated into the Government Employees’ Medical Scheme (GEMS).

• Tax rebates on medical expenses and medical scheme contributions for individuals will be minimised and the funds redirected for immediate healthcare programmes, such as prenatal care programmes and school healthcare.

Exactly what do these things in the White Paper mean?

Here’s more detail on about what the White Paper says about the future of medical schemes and private healthcare services, and what these extracts could possibly mean for medical schemes, medical scheme members, and private healthcare providers.

There will be mandatory prepayments

This means that everyone will have to contribute to the NHI fund, whether you choose to use the NHI healthcare services or not.  If you choose to remain on your medical scheme, the NHI contribution will be over and above what you contribute to the medical scheme. You cannot opt out of this.

There needs to be reconfiguration and transformation of institutions for the pooling of funds

Exactly what this would mean in practice is uncertain, but the minister of health has on several occasions included private medical scheme contributions (not just state medical schemes such as GEMS) in the total sum of money spent on healthcare in South Africa.

This has caused confusion, as the government does not have control over these funds which individuals pay to medical schemes. The idea is ultimately to achieve income and risk cross-subsidation to fund healthcare costs, but just how this will be achieved remains uncertain.

Trustees run medical schemes and legally the funds, including the reserves, belong to the members, and not to government.

Optimising the utilisation of available resources, both human and financial

This presumably means spreading healthcare resources - such as funding for equipment and medicines and the availability of doctors - more evenly, so that more people have access to them.

While the sentiment is very noble, it has to be remembered that private doctors and private hospitals are just that: private.

While they too are subject to the laws of the country, there is nothing that stops them from shutting up shop and taking their skills or services elsewhere if working conditions or regulations become unfavourable.

But many medical scheme members buckling under co-payments to private doctors and hospitals will fully understand where Motsoaledi is coming from on this issue.

The putting into place of mechanisms to streamline healthcare service

No details are available on this, but it would presumably refer to the capping of costs charged by private healthcare providers, or to a new legal requirement obliging doctors to work in certain areas, or to give a portion of their time to public healthcare services.

Medical scheme contribution subsidies and tax credits will be consolidated into the NHI funding arrangemen

Many state employees currently receive an employer subsidy for their medical scheme contribution. This will come to an end, as will tax credits for all medical scheme members (currently R286 per month per member, and for the first dependant). 

Most private companies have moved to a total-cost-to-company pay structure, and not many employees receive medical scheme subsidies, since these became a taxable benefit of every employee.

Medical schemes will offer complementary cover to fill gaps in the service coverage offered by the NHI

This would certainly imply a rewriting of the Medical Schemes Act of 1998, as currently, state services and medical schemes are bound to provide the same Prescribed Minimum Benefits.

In other words, if the state will not provide a particular service, the medical scheme cannot be forced to do so. An example of this would be elective cosmetic surgery.

Sources : Alexander Forbes Health, The Council for Medical Schemes, The Government White Paper on National Health Insurance (2017), The National Health Insurance FAQ Booklet

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