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Staff Writer 4 days ago

The proposed National Health Insurance scheme (NHI) will create significant risk as it limits the cover offered by medical aids, says medical scheme Discovery.

The NHI Bill is currently undergoing a public consultation process, with a number of healthcare, civil society and political groups presenting on why the new system should or should not be introduced.

Section 33 of the Bill states that once the NHI has been fully implemented, medical schemes may only offer complementary cover to services not reimbursable by the NHI Fund.

In a recent presentation to parliament, Discovery said it was broadly supportive of the bill, but warned that limiting the role of medical schemes to complementary cover will:

  • Not solve the misdistribution of health professional resources in the healthcare system as there is a chronic shortage of health professionals, particularly specialists, across public and private sectors.
  • Exacerbate inequality in the healthcare system by driving up out-of-pocket expenditure as we have seen in other middle-income countries. This counteracts the benefits of social solidarity on which medical schemes are currently based.
  • Place an increased financial burden on lower-income households, earning less than R300,000, through removal of medical scheme tax credits and loss of employer subsidies. Without these subsidies, these lower-income households will lose their private medical scheme cover and will have to fund their private care OOP, resulting in catastrophic increased expenditure – an objective the NHI Bill is seeking to avoid.

“We are concerned that there is a raft of proposed amendments to other legislation which can have the effect of removing cover that people currently have before there is any alternative in place. Such amendments transfer large liabilities to taxpayers before the cost of these have been properly quantified and planned for,” said professor Roseanne Harris, head of Discovery Health’s Health Policy Unit.

“This is not a responsible approach, and we suggest that the NHI Bill should be simplified to focus on establishing the entity and not to impact the rights of citizens in accessing healthcare.”

Blended funding model 

As an alternative to the single-funder model which would see the NHI Fund act as the sole beneficiary of funding and buyer of medical services in South Africa, Discovery has proposed a ‘blended funding model’.

Under a blended funding model, the NHI Fund would be supported by tax-derived funding and would also receive a mandatory contribution from citizens who can afford it, said Harris.

“Medical schemes would not be able to opt-out of funding NHI, and would have the opportunity to provide additional cover. Virtual pooling is achieved by having a common service package with regulated costing and pooling of risk on an appropriately managed basis. Those who can afford it could contribute to medical schemes for seamless coverage.”

A blended funding model would ultimately leave consumers with some choice and improved access for all, said Harris.

“This structure eradicates the current two-tier system, leverages the expertise of the entire healthcare sector, and leaves consumers with the discretionary ability to buy additional cover where they choose.”

Discovery Health does not support the single-funder model currently proposed under NHI as it:

  • Is fraught with execution risks and uncertainty of success, given the massive re-organisation of both public and private sectors that is required;
  • Has the potential to lead to governance and accountability challenges;
  • Does not take into account some of the realities of South Africa’s economy;
  • Does not accord with international learnings and precedent; and
  • Will eliminate competition from the market, at the expense of innovation and consumer choice, leading to an inefficient and ineffective system.

“With a blended funding model medical schemes serve as an essential ‘safety valve’ for the NHI, absorbing excess demand, while generating additional funding for the healthcare system,” said Discovery chief executive Ryan Noach.

“This reduces the burden on the healthcare system as a whole, while promoting the progressivity of healthcare financing.”