- With the introduction of the NHI long overdue, health reforms in the health system remain in limbo.
- Experts say this results in members paying 25 to 30 percent more than they should be paying.
- Industry should pursue attractive short-term reforms
- Read more articles about finance News24 Business top page.
Health reforms in the healthcare system remain in limbo amid the long-delayed rollout of National Health Insurance (NHI), resulting in enrollees paying 25-30 percent more than they should.
One of the reasons private health users pay such high costs to join the health scheme is because the scheme operates within a “broken regulatory system”, Christoph Raas, co-CEO of Insights Actuaries and Consultants, told the Board of Health Funds' (BHF) annual conference in Cape Town earlier this month.
The BHF is a volunteer organisation representing the health system and its managers.
The health plan's regulatory system was only partially implemented and then stagnated. An unintended consequence of this was that about 2% of annual contribution increases over the past 20 years were the result of members switching to cheaper options or dropping out of the plan, Rath said.
When members move en masse to cheaper options, it often disrupts the pricing of the cheaper options, resulting in increased contributions.
Stagnation of National Health Insurance Reform
Since the government decided to introduce national health insurance starting in 2007, progress on health care reform has stalled.
Since 1999, health system laws have required systems to accept everyone who applies for coverage, provide certain minimum benefits, and charge the same premiums to all members of a given option, regardless of their health status or age.
Lars said this created a “toxic environment” for the health care system, but that it was never planned.
That's because the law should have been accompanied by other reforms to make plan membership more affordable, including mandatory enrollment for everyone who can join the health plan, risk equalization funds to ensure that plans with sicker older members don't pay more for health care than plans with younger, healthier members, and subsidies for health care costs across income brackets.
Work on some of these reforms had been started but then put on hold to allow for the introduction of the National Health Insurance, and now, 15 years later, it has finally been formalised in law to be signed by President Cyril Ramaphosa. Implementation is expected to take several decades, the conference was told, with the system remaining in place to cover in the meantime.
The NHI Act provides that health schemes will be prohibited from providing the same benefits as the NHI only if the NHI is fully implemented. Two lawyers, Neil Kirby of Worksmans Atneys and David Jellal of Bowmans Law, told the conference that the bill, particularly its provisions relating to health schemes, were likely to be challenged as unconstitutional.
Serious damage
Lars said the flawed regulatory structure was causing great harm to the system.
He said Health Squared, the health scheme which was dissolved in 2022, was the victim of a broken system and that even the best board, chief executive, regulator and Ministry of Health could not have saved it, he said.
The system's aging and sickness-prone members meant that benefits were 60 to 80 times more expensive than other systems. The system also had governance problems, but risk-equalizing mechanisms might have prevented many members who were hospitalized or undergoing cancer treatment from having to find alternative insurance on their own after just a few days.
Mr. Rath said that without the risk equalization fund, the plan would not be able to merge with other plans, whose trustees have a fiduciary duty to refuse to merge with a plan that has such high-risk participants.
The dark side of the fact that health plan trustees are doing everything in their power to attract younger, healthier members is that trustees are afraid to increase benefits such as cancer care lest they attract members with poorer health, Rath said.
NHI is many years away
The government's approach to NHI will take a long time to deliver relief to health care users, with the first three to five years focused on establishing the fund itself, national health department director-general Sandile Buthelezi told the conference.
Buthelezi said the health system had enough money for the national health insurance scheme, as the country spent 13-14 per cent of its gross domestic product on health, but this money needed to be spent efficiently.
He said the Ministry of Health was working to resolve management issues and recruit more doctors, standardise the medical coding system, ensure quality standards in medical facilities, standardise the regulation of medical professionals, develop a strategy for remote medicine and telehealth, and introduce digital records linked to the Ministry of Home Affairs biometric system.
Mark Brecher, UK Treasury's secretary of state for health and social development, also said the evolution of the NHI was likely to be gradual over a number of years.
He said the National Health Insurance Law would not be promulgated in one piece, but in several sections with major reforms in the public sector, such as the creation of semi-independent hospitals and districts, to be devoted to the first few years.
Brecher also noted that the government will struggle to raise the extra tax revenue for expensive reforms, with debt repayments currently taking up a fifth of tax revenue, and that there are many competing priorities, such as social relief grants for those in need.
Self-help scheme
Lars said that while the health system is a regulatory orphan, it should make things easier for members by:
- Because holding reserves unnecessarily increases the cost of contributions, each scheme will publish information about its risk-based alternatives to holding reserves.
- Working together to evaluate the effectiveness of medical advances, such as expensive biological medicines.
- Working with a cell captive that can independently equalize the costs of expensive hospital events.
It will use the Competition Commissioner's proposed collective bargaining mechanism to determine reimbursement rates for doctors, hospitals and other health care providers, and address regulators' interpretation of the law and their insistence that each health care option is self-supporting, which has led to indirect discrimination against older and sicker members who pay higher fees to join comprehensive options.
Brecher said the industry should be more proactive in finding ways to make the health insurance system more efficient, because universal health insurance is still years away and the system is too expensive for many low-income workers.
He said the industry should pursue compelling short-term reforms, including many of the reforms proposed in the health care market study.
- A basic package of benefits common to both public and private health care.
- An alternative method of reimbursing providers instead of paying a fee for each service.
- A greater role for primary health care
- We use generic drugs and leverage our provider network and treatment protocols to ensure patients receive a higher level of care.
This article was first published on SmartAboutMoney.co.za, Initiatives by the South African Savings and Investment Association (ASISA).
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