Last week the Council for Medical Schemes published Circular 80 of 2019, which bans low cost benefit options.
The circular is not only contradictory and irrational, but is prejudicial to lower income individuals with health insurance products who cannot afford private medical scheme cover and do not wish to be subjected to the vagaries of a dysfunctional public healthcare sector.
The private sector has been working with the Council for Medical Schemes for five years in compiling a low cost benefit option framework.
The process started in earnest when Treasury’s demarcation regulations came into effect in April 2017 which allowed exemption for certain health insurance products – mainly gap cover and hospital plans – even though they were technically doing the business of a medical scheme.
Since the Council for Medical Schemes was intent in keeping low cost benefit option under its own regulatory control, the demarcation regulations did not include exemption for low-cost primary healthcare insurance products.
The Council for Medical Schemes therefore created an interim exemption in April 2017 called the demarcation exemption framework.
The stated intention was that these products would transition into low cost benefit options within medical schemes once the Council for Medical Schemes had finalised the low cost benefit option regulatory framework.
Circular 80 has now unilaterally reversed five years of constructive work that could have seen the development of low cost benefit options to meet the needs of millions of citizens.
It is difficult to understand what the motive behind this move is, given that the Council for Medical Schemes and the private sector have been working together to develop the low cost benefit option for the past five years.
Industry leaders are also none the wiser since absolutely no stakeholder engagement preceded this shock move.
This regressive step will unilaterally cancel the private cover that these lower income families have enjoyed – as well as the valuable subsidies offered by many of their employers.
Given the disastrous condition of public healthcare, this is highly prejudicial to members who will now be forced to receive inferior care from an overstretched public healthcare sector.
The rationale put forward in the circular, that this is an alignment towards implementation of the National Health Insurance, offers no coherent explanation.
How does the existence of publicly funded healthcare take away the right of citizens to enter into voluntary arrangements to purchase private healthcare for themselves?
Other reasonings for the banning are that the demarcation exemption frame products do not align with the principles of community rating and open enrolment and do not include the prescribed minimum benefits (PMB) which form part of the benefits package that all medical schemes are compelled to provide.
The expensive PMBs make traditional medical schemes unaffordable to the potential low cost benefit option target market, so that argument also offers no clarity.
The low cost benefit option framework, by its intended nature, cannot include the expensive PMBs.
Furthermore, demarcation exemption frame products are under the regulatory control of the Council for Medical Schemes and open enrolment and community rating have been required since April 2017, so how can this now be a reason to cancel them?
The Council for Medical Schemes has the authority to ensure that these regulatory provisions are adhered to, as they do with all medical schemes.
The Council for Medical Schemes has reasoned that the low cost benefit option and demarcation exemption frame products should be cancelled since they were an opportunity to offer inferior benefits to lower income citizens.
Since these products are being cancelled, must one conclude that they mean the demarcation exemption frame benefits are inferior to what’s available in the public sector?
It’s like saying that you cannot give your child a better education at a Model C school because even better and more expensive private schools exist.
This banning is premised on these products not being in the best interests of members. Again, there is an obvious question – how is having no cover better than having some cover and who is government to decide what’s best for individuals?
In a final flurry, it was reasoned to cancel these products because the Council for Medical Schemes have created a package of primary health care that will be a “more direct and efficient manner to bring affordable and quality healthcare to citizens”.
There are two palpable problems with this statement. Firstly, the Council for Medical Schemes has not costed its primary health care package – it even declares so in the circular.
So how are they certain that this route is going to be more affordable when they have no idea what it’s going to cost in comparison to the existing products under the demarcation exemption frame (of which the prices are known)?
Secondly, in contradiction to the declaration above of having compiled a private health care package that will be more suitable to citizens, the circular states that any products under the demarcation exemption frame that cannot comply fully with the Medical Schemes Act – i.e. they must include the expensive PMB – must be wound down by March 2021.
Circular 80 has created far more questions than it has provided answers, targeting the more vulnerable citizens in our society who, but for a brief time, have had an opportunity to better their lives with access to affordable, quality private healthcare.
Again, we are faced with health policy decisions that are undertaken without any consultative engagement process, are incoherent, lacking in reason and represent an unconstitutional denial of the right of individuals to choose their own healthcare service providers.
Michael Settas is a member of the Free Market Foundation Healthcare Policy Unit