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NHI and your Medical Aid – What some leading commentators are saying.
On 8 August 2020, the National Health Insurance Bill (“NHI Bill”) was introduced in the National Assembly.Whilst the bill is in line with the government’s constitutional obligation to provide quality universal healthcare for all, this bill is causing much debate.
And members of medical schemes, in particular, are concerned about what the future may hold.
Read more on the proposed NHI Bill....
NHI was first discussed in 2003.
Subsequently, with a number of failed projects as a legacy, most of us were hoping that the ANC would see sense and understand that, with South Africa’s small taxpayer base, a first-world healthcare system cannot be funded.
After all, we don’t even have anything like a first-world education system!
The roll-out of the NHI is expected to take place over an extended period and it will be limited by the country’s current economic and financial position - making the proposed Bill a potentially unattainable objective!
Under the NHI, medical aids will have a significantly reduced role in South African healthcare, only able to provide ‘complementary’ or ‘top-up’ coverage for services that are not covered by the NHI.
The reasoning is that this is because it would be inappropriate for the state to legitimise buying cover for services that are already covered by the NHI.
The NHI director-general previously stated that analysts and commentators have argued this would effectively destroy the medical aid industry in South Africa – where the possible membership pool of private medical aids would be incredibly limited, and end with the result of making these schemes completely unaffordable to all but the very rich.
Wits’ Professor Alex van den He-ever, who was a lead economist on the Health Market Inquiry, told Business Day that most schemes and medical aid administrators informed him in private conversations that they did not think NHI would work, but they support it publicly because it is the right thing to do politically.
Private hospitals, too, would suffer as a consequence, which could result in thousands of jobs being lost.
Any shares related to medical aids, hospitals or pharma are going to be in trouble.
The government is going to severely limit the prices charged and this will affect the profitability of those companies.
As Ferial Haffajee eloquently states:
South Africa's private medical system is a mafia in desperate need of a shake-up – the health market inquiry by the Competition Commission, which will be finalised by next month, exposes how this system works.
Because there is virtually no competition in the tightly held private hospital system, a complex has developed where doctors who have rooms at hospitals are incentivised to create demand by often making admissions that may not be needed. Profits are stratospheric, as the inquiry's comparisons reveal.
Patients (or customers) are kept in the dark, with communication lines opaque, and the system rendered largely intransigent through techno-medico speak.
This is because in such an uncompetitive market, and in a field like healthcare, where risk needs to be mitigated, we are like sitting ducks.
Industry mafia.
The impact for us is that costs rise, while the system encourages and allows a system where the customer (patient) is often left in the dark with regard to treatment options and effective and clear diagnosis.
In the public narrative about the national health insurance initiative (NHI), the industry mafia is all over it, seeding the idea that the solution to the state-centric NHI is the status quo private sector.
As much as the NHI is a lulu, because it risks exactly the same state capture and cronyism that have South Africa's energy, transport and infrastructure systems in a vice grip, the private sector is often a similar story of capture.
Neither is a panacea for the public, which deserves good and cost-effective service that makes them healthier.
The view of a multitude of role players is that substantially limiting the role of medical schemes, would be counterproductive to the NHI.
Crucially, by preventing those who can afford it from using their medical scheme cover, the burden on the NHI will be increased and will drain the very resources that must be used for people in most need.
It is an undeniable fact that there are simply insufficient resources to meet the healthcare needs of all South Africans.
Over and above that, the legislative process may take a considerable amount of time.
More than 10 different Acts need to be amended to allow the Bill to be passed!
But, it is here and is not going away!
So what is in it for you – the South African medical aid member?
As Genesis Medical Aid states … “In a nutshell, nothing will change - at least not for the foreseeable future.We do not envisage any material impact on our business, the cost or the benefits provided to our members over the next few years.”
Notably, (according to Discovery ) the wording of the bill makes it seem as if medical aids will still be supported in the country for those who choose not to follow the processes set up by the NHI.
The NHI Bill makes the point that this ‘complementary role’ for medical schemes will only apply once the NHI is ‘fully implemented’ and that it defines ‘referral pathways’ to which it will apply, indicating that where patients choose not to follow the referral pathways, the NHI will not reimburse their care, and that they can then claim from private health insurance.
Discovery also think that once fully emerged, the NHI will create additional opportunities for medical schemes to innovate in their products and for the development of new health insurance products outside of the medical scheme environment.
In the meantime, there is no reason to be concerned about anything.
To the contrary, Genesis members can look forward to (once again) enhanced benefits and a below-average contribution increase for 2020!
What can you do to mitigate the effects (and you’ll need to do most of these well in advance of the proposed changes):
Take out good dread disease cover.
This will give you the funds to get private (or even international) treatment when you need it, because the NHI will deny you any choice of provider!However, not all dread disease insurance is equal when it comes to the definitions of benefits. There is a great disparity across the insurers and their cover changes all the time.
Please contact us for honest and comprehensive advice and quotes.
Investigate where your vulnerability is going to be should the NHI come into effect.
If your day-to-day expenses are high, see how you can mitigate them.
Understand what a Prescribed Minimum Benefit (PMB) is and whether you can use this legislation to your advantage.
Medical aids are obliged by law to provide these to you free of charge, some will even deliver free – but these services are being cross-subsidised by the medical aid, so expect to have to queue at a Govt. dispensary for them in the future – or pay for them.
(I have a PMB list from the Council of Medical aid schemes that I am happy to send you).
Over 65s have more generous medical tax breaks so make sure your tax adviser uses them (while they are still here)!
At the moment you can change your medical aid plan once a year, in around Nov.
We strongly advocate investigating the best private hospital and dental benefit plan there is and start your own savings fund for out of hospital costs.
At least you’ll get more interest on the investment than the medical aids are giving you – and you have the flexibility to use it as you see fit!
Save up at least 3-months expenses for the family, to at least cover your day-to-day expenses, like GP consults, medicine and eye care.
Join the best private hospital and dental benefit plan and essential dental treatments are paid for you – you don’t need your savings for these!
Remember, the hospital benefit is at the core of every medical aid plan, everything else is an add-on.
Hospital care is the one expense that can bankrupt you. And that after care in a state hospital can kill you!
Seriously consider the best private hospital and dental benefit plan option.
Why South Africa’s plans for universal healthcare are pie in the sky
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Last update: January 18, 2025