Ironies prevail in ‘low cost’ private health cover, ‘uncovered’ utilisation

The medical schemes regulator appears reluctant to allow private medical schemes to enter the primary healthcare space in the form of low-cost benefit options (LCBOs), while little attention appears to be paid to the actual private care spend by uncovered individuals.

The regulator’s reluctance, in fact, has prompted litigation from the Board of Healthcare Funders (BHF): “But the huge irony here is that the private sector is already there in the form of insurance entities,” Christoff Raath, of Insight Actuaries & Consultants, pointed out in his IHRM “State of the Industry” webinar on Friday.

He also drew attention to the fact that while it was generally believed that the private sector was responsible for 15% of the population’s healthcare, this was probably much closer to 30%: “And probably more when the amount of out-of-pocket payments made for private services by mainly members of the informally employed population are considered.”

Referring to the LCBO “debacle”, Raath reiterated the perception that the regulator was reluctant to allow medical schemes to provide primary care cover “because space must be left open for NHI rather than allow the private sector to make progress in this”.

“I have nothing against the insurance industry but have to make the point that while medical schemes are not allowed to participate we have non-regulated insurers making progress in this space!”

“Worried about anti-selection affecting schemes? It’s already happening! Schemes are already losing members to insurance entities,” Raath added, postulating whether or not the regulator would “turn around now by trying to scrap licences of all health insurers”.

“I think the regulator is underestimating the size of the market where millions in policies have already been sold.”

Turning to the actual utilisation of the private sector by the uncovered, Raath said that there were no actual figures to put to this: “There is an amount of money being paid by uncovered members of the population making use of the private sector, but we don’t have a proper scientific benchmark where we stand on this.

“We like to say the private sector is limited to 15%,” he continued, “but I would say this is much closer to 30% or even much higher when one considers the amount of people paying out-of-pocket, members of the informally employed population such as domestic workers and taxi drivers.

“Take, for instance, a taxi driver who cannot afford to queue for a day when he can see a GP immediately for R450…”


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In an earlier reference to the implications of the NHI on health services and cover, Raath suggested that the initial impact would probably be on the originally mooted 30 million uncovered at the beginning of the NHI process.

“While there seems to be a rush to get the NHI Bill passed, we are told it will be an incremental process. NHI D-G Dr Nicholas Crisp, in fact, has said we will need medical schemes for decades.

“For those thinking of planning at this stage,” said Raath, “little is going to change substantively, certainly in the short term. The regulator may say schemes can’t cover x or y any more, but the impact will be on non-scheme members, the 30 million, half our population, brought into the fold at the outset.”

Reminding his audience that the NHI Bill was now having to be approved by the National Council of Provinces (NCOP), this, he said, would “not be a walk in the park”: “It’s not going to change the world in the short term.”

More concerning, he concluded, was not the impact but the perceptions created by NHI such as “doctors being scared and emigrating”, schemes and their long-term sustainability, and “employers not needing to look after employees any more”.

“The perceptual risks and unintended consequences, therefore, are real and immediate.”


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