The future role of medical schemes

395. The role that medical schemes will play within NHI must be considered within the current context of the existing two-tiered health system. The establishment of NHI will ensure that the State optimally utilises available resources to the benefit the national population including post-retirement entitlements. This requires that government intervenes strategically and decisively to eliminate fragmentation in funding pools which has been shown to adversely impact on the performance of the current health system. This fragmentation and resulting inequities in access to and use of health services provides the basis upon which NHI is necessary to ensure the progressive realisation of universal health coverage.

396. NHI funding will be mobilised through mandatory prepayment. Individuals will not be allowed opt out of making the mandatory prepayment towards NHI, though they may choose not to utilise the benefits covered by the NHI Fund.

397. One of the core objectives of NHI is to optimise the utilisation of available resources, including financial and human resources, and to ensure that people do not insure against the same health care costs twice. To this effect, it is important that mechanisms are put into place so that medical schemes work in tandem with the NHI Fund in streamlining covered health care entitlements to ensure value for money and to

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eliminate duplicative cover and double dipping. This requires an alignment of the health benefits offered by the medical schemes industry and those covered by the NHI Fund.

398. Medical schemes currently operate as voluntary prepayment health financing intermediaries, offering private medical insurance cover to those that can afford and are employed. Medical schemes are funded from the contributions of employees and employers in various permutations. The State makes contributions to medical schemes on behalf of its employees, mainly in the form of subsidy contributions and tax credits administered via the tax system. In many instances, medical scheme cover for many individuals and households ends with the termination of a person’s employment, for example, upon retirement or retrenchment which means that such individuals and households will then fall back onto the State for the health care they need.

399. In line with international experience, individuals and households will have the opportunity to purchase voluntary private medical scheme membership to complement this universal entitlement if they choose to. Private health insurance coverage, such as that offered by medical schemes can play various roles (see Table 9) within South Africa’s universal coverage health system. As part of the transition process medical schemes will play a supplementary role. Once NHI is fully implemented medical schemes will offer complementary cover to fill gaps in the universal entitlements offered by the State.

Table 9 : Alternative roles of voluntary health insurance  

coverage Provides coverage that would otherwise be available from the state. It is purchased by those who choose to opt out of statutory health insurance or are excluded from participating in some or all aspects of the national health insurance system (such as foreign visitors, professionals involved in extreme sports, etc).

Complementary Scope of coverage

Depth of coverage

Provides coverage for services excluded or not fully covered by statutory health insurance. It sometimes covers whole areas of care, such as dental care in many European systems or outpatient pharmaceuticals in Canada. It can also cover the cost of statutory user charges, where cost sharing exists (e.g. France). Its form is influenced by the nature of the benefits covered by statutory health insurance.

Supplementary Consumer

preference Usually covers the same range of services as statutory health insurance, aims to increase the choices of provider (e.g.

private providers or private facilities in public institutions) and level of inpatient amenities (e.g. a single room). By increasing the choices of provider it may also provide faster access to health care. Often sold in combination with complementary and/or substitutive private health insurance.

400. With the implementation of NHI, the role of medical schemes in the health system must change. A key step in leading to this change is that the State will have to identify all the funding for medical scheme contribution subsidies and tax credits paid to various

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medical schemes (such as the Government Employees Medical Scheme, the Police Medical Scheme, Parliamentary Medical Scheme, Municipal Workers Union Medical Scheme, State entity medical schemes e.g. Transmed as well as various private medical schemes to which State employees belong) and reallocate these fund towards the funding required for NHI. However, it is necessary to take into account the reality that irrespective of how comprehensive the NHI entitlements will be, some personal health care services will not be covered. This may be as a result of these health services not fitting into the mainstream of medically necessary and efficacy-proven interventions approved for NHI.

401. In future, all medical schemes will only offer complementary cover for services that are not included in the health service benefits and medicines approved by the NHI Benefits Advisory Committee. The cover provided by medical schemes must only complement (and not duplicate) the NHI service benefits. Part of this work will require a complete overhaul to the existing Prescribed Minimum Benefits regime, taking into account the burden of disease and changing population demographics. This will ensure that the population is granted greatest possible access to health care services by everyone within available resources.

402. When NHI is fully implemented, it is anticipated that the number of medical schemes will reduce from the current 83 to a much smaller number.

403. The transition from the current role to a future evolved role of medical schemes will require changes to the Medical Schemes Act. The amendments will be initiated in the second phase of implementation as part of the broader phased implementation approach.

404. Government recognises that there is existing expertise residing in the medical schemes industry with regards to various areas of the NHI. Where necessary and relevant, this expertise may be drawn upon to support the implementation activities for the establishment of a single payer, publicly-administered NHI Fund over the 14-year phased implementation period. The expertise will be drawn upon where necessary to build in-house capacity within the publicly-administered Fund, rather than to outsource any component to a private entity.

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