By the Free Market Foundation
The Free Market Foundation (FMF) is concerned that too few people are aware of and/or understand the implications of the demarcation regulations in the healthcare insurance market that came into effect from 1 April 2017 and which have a dramatic effect on how consumers pay for healthcare and the type of care we receive. The demarcation regulations force insurance companies to behave as medical aid schemes in terms of products and benefits offered. This is forcing up the cost to consumers and reducing the range and choice of benefits available.
A further concern is that the price we pay for healthcare is inflated because government actions and interference by regulation have artificially raised the price of medical scheme cover for questionable motives.
Insurance is a simple business or should be: you pay a monthly fee, which provides financial protection against unforeseen, sometimes catastrophic events. Everything can be insured: cars, homes, your life and even pets. Yet health insurance is becoming more complicated and expensive and depriving citizens of protecting themselves from health risks.
Medical aid schemes are not health insurance but in reality are pre-paid healthcare plans that cover routine check-ups, less serious illnesses and, depending on the benefit option, recurring expenses like prescription and chronic medications in addition to protecting you from a health disaster.
However, government interference has systematically raised the cost of medical aid schemes. The Medical Schemes Act made it mandatory for healthy people to cross-subsidise unhealthy people. Medical aid schemes are forced to charge person with a much lower risk of getting sick, the same amount as a person with a much higher risk.
Government also compels every medical scheme option to provide a minimum package of benefits, known as PMBs to cover all members even if they do not need such cover. Because medical schemes are now obligated to pay healthcare providers in full for PMBs, there is no incentive for service providers to control the costs, which are then passed onto the consumer in higher medical scheme contributions.
Regulatory add-ons have made healthcare much more expensive and complex than any other form of insurance irrespective of whether you get your medical scheme cover through your employer, through the government or if you pay your own premiums.
In laying the foundations for the National Health Insurance scheme the government has progressively and increasingly made it more expensive for individuals to take care of their own healthcare needs and in the process is swelling the numbers on an already overstretched public healthcare system.
Government intends to further limit medical scheme options by restricting them to providing complementary cover to the as yet undefined NHI package of benefits and to providing only one benefit option despite different people having very different healthcare needs and abilities to pay. This will destroy the private medical scheme market in South Africa and deny people access to quality healthcare. These two measures have caused the price of insurance to rise dramatically.
FMF health policy unit director Jasson Urbach said, “The solution is to allow health insurance to be exactly that: insurance. We should encourage a real health insurance market to develop by allowing insurance companies to innovate and respond to consumer needs as they do in any other market. Then, stop forcing people to buy plans that include things they won’t use and don’t want. Doing these two things would introduce genuine affordable health insurance for many more people”.
He continued, “For those who have pre-existing conditions yet cannot afford any insurance plan, we do what every compassionate society does and make sure that they get the medical care that they need, without disrupting the whole concept of insurance and making healthcare more expensive for all. Increasingly citizens face no choice as government squeezes and will ultimately destroy the private healthcare market”.