Healthcare industry at odds on new regulations.
Insurance and medical aid industry stakeholders are significantly divided on a number of proposals in the second draft of the Demarcation Regulations, most notably its provisions for medical expense shortfall cover, or gap cover.
Issued by National Treasury on April 30 and aimed at clearly defining and separately regulating health insurance policies from medical schemes, the period for public comments on the second draft closed at the end of July and final Demarcation Regulations are expected next month.
Treasury is concerned that health insurers attract younger and generally healthier members out of medical schemes, since premiums are risk-rated, and that they position their policies as alternatives to medical scheme cover when the protection is not the same. It believes that a clear demarcation is important in order to entrench the principles of open enrolment, community rating and cross-subsidisation (where younger, healthier members subsidise older, sicker members) within medical schemes.
Dissenting voices abound
The South African Insurance Association (SAIA), an industry body representing 60 member companies in the short-term insurance industry, says it welcomes the inclusion of gap cover in the second draft (the first draft proposed a ban on gap cover products), but thinks the R50 000 cap on this benefit should be removed so as not to exclude cover for costly procedures such as joint replacements.
Suzette Olivier, general manager: legal at the SAIA says capping gap cover will lead to a massive reduction in cover for consumers but not necessarily to a reduction in premium. “Policyholders receive huge value for little or no additional premium,” Olivier says of gap cover products.
Treasury says the R50 000 limit on gap cover benefits is based on public submissions indicating that this covers the top two events for which gap-cover policies pay out. It is also a means of ensuring healthcare providers don’t simply charge based on the gap cover available, Treasury says.
Health economist and Wits University professor, Alex van den Heever warns that gap cover products will not only cause buy-downs from comprehensive medical scheme options, but will also be in direct conflict with the Medical Schemes Act (MSA) and likely face a legal challenge.
“The most responsible route forward would be for National Treasury to remove gap cover products from consideration in this round and defer them to the Competition Commission’s healthcare market inquiry to properly consider the options,” he says.
Alexander Forbes Health (AFH) has also appealed to Treasury to wait for the Competition Commission’s findings before finalising the regulations. The inquiry will seek to understand the impact of competition among medical schemes and other providers of health insurance in South Africa on affordability and product and service quality.
AFH managing director, Busi Tladi suggests the maximum entry age on some gap cover policies (which can vary from 65 to 80) should be replaced with a Late Joiner Penalty, similar to that contained in the MSA, “where creditable coverage is linked to the applicant’s length of medical scheme membership, as a pre-requisite for gap cover”.
AFH supports the conditions contained in the second draft of the Demarcation Regulations that require health insurance policyholders to be members of medical schemes. “This requirement preserves the principle of cross-subsidisation by discouraging younger and healthier members from terminating medical scheme membership in favour of health insurance,” Tladi says.
Steph Bester, CEO of health insurance provider The Unlimited says the draft regulations are in violation of section 27(a) of the Constitution in that they deny South Africans the right to access healthcare services by outlawing health insurance products that provide access to primary health care. Under the proposed regulations, health insurance products that are seen to be doing the business of a medical scheme, such as providing GP visits or dental care, will fall under the MSA and have to comply with its provisions.
Spokesperson for the Board of Healthcare Funders (BHF), which represents most medical schemes in South Africa, Heidi Kruger recently told Moneyweb that government could not stop people from protecting themselves by taking out shortfall cover until certain reforms to make healthcare more affordable were in place. “However, we agree that gap cover products should be fairer and perhaps not include risk rating,” she said.
JOURNO PROFILE
NAME: Hanna Barry
BIO: Hanna Barry is Moneyweb's financial services reporter. She holds a BA(Hons) in Politics and Philosophy from Rhodes and an MA in Media Theory and Practice from UCT. She previously wrote for RISKSA,...
EMAIL: hanna@moneyweb.co.za
We Recommend
Absa will cover quake damage(Financial)
South Africa business confidence index improves (South Africa)
No comments:
Post a Comment