NHI and Changes to the Medical Schemes Act
A Very Different Perspective from IHS

September 2018

There has of course been a lot of talk and much reported and written recently about the Gazetted June 2018 recommended changes for implementation of the NHI, the proposed changes to certain rules governing medical (aid) schemes as well as the possible “redundancy” of (/ unnecessary) (expenditure on) medical aid brokers due to their function being regarded by the Ministry of Health as an unnecessary expense.

Certain constant arguments regarding the above are:

  • Healthcare is a basic right / need for all people and as such, a satisfactory public healthcare service should be available to all.
  • Private hospitals are run as profitable businesses and are expensive and unaffordable to the majority of the population.
  • Medical schemes are expensive and only available to the “wealthier” members of society.
  • Medical aids should do away with items that are costing their members more, ie: co-payments, late-joiner penalty, etc
  • Medical aid schemes (especially the bigger ones) have large levels of reserves that could be used to assist in funding the NHI. It is important to note that these reserves are only at their current size based on compliance with the laws governing medical aid schemes (ie: 25%).
  • Medical aid brokers are unnecessary links between clients and medical aid schemes that are costing the schemes large amounts in commissions. By eliminating these commissions, schemes could reduce their premiums.

Just to look at the above from a slightly different angle by using an example from another industry:

For every single person food is a basic need (you can’t live long without nourishment!). Every person living in our country has the right to at least eat basic foods and not to go hungry. Like in the healthcare industry, there are state-funded facilities that help to provide food to the hungry. Like with most other government funded efforts, there are many inadequacies and the private sector has stepped up in this regard all over the place to do its bit. Government has also tried to help a bit by reducing the price of some basic commodities by, for example, making them free of VAT.

Despite food being a basic need for every person, there are many people in our country that are starving and are unable to access facilities to provide them with this basic need. So let’s look at the food industry for that smaller part of the population that has the money and can afford to make luxury choices to satisfy their need to eat, and eat well!

Our country is filled far and wide with fantastic places to buy food which all go way beyond fulfilling the basic need to eat. Let’s just look at the restaurant industry. There may be a very upmarket establishment in Camps Bay that provides brilliant food and service and that charges exorbitant prices. Just to look at this restaurant whilst referring to a few of the above bulleted points:

  • Their main purpose is to provide food to hungry people which simply put, is providing for a basic need that everyone has. (BASIC NEED)
  • They are an upmarket facility and undoubtedly run as a profitable business and as such, are unaffordable to the majority of the population. (NOT AFFORDABLE FOR ALL)
  • They charge whatever prices they feel necessary and are able to add extra charges to the basic prices as they see fit, ie: corkage fee, additional charge for chips / veggies, non-optional cover charge for entertainment, etc. (CO-PAYMENTS)
  • From their profits, they are able to accumulate any amount of funds over a period of time that they can use as they see fit to cover unforeseen expenses. They do not need to use any of this to fund any less fortunate restaurants or feed the poor and hungry unless they decide to be charitable in some way. (RESERVES)
  • Although all the restaurant really needs is a waiter and a chef to provide the basic service to the clients (MEMBERS), they are able to employ additional staff like a ‘maître d’ to act as a “go-between” and enhance the service provided to patrons. Many clients may not even be aware that this person exists in the restaurant unless for some reason they have an issue that perhaps needs resolving. There is no doubt that these extra staff members are an additional expense to the restaurant and as a result removing them would allow the menu prices to be reduced. This may make the food slightly more affordable to people that otherwise could not eat there. (BROKERS)

This example shows that, as in the medical aid industry, those with more money can afford to purchase better quality services. Are they (the Government) going to look at regulating other industries in the same way? Nobody is going to say that there cannot be upmarket eateries that are not affordable to the majority of the population. Another thing to consider is that if you take all private hospitals, medical schemes, administration companies and brokerages, there are a lot of employees that are all paying a large amount of tax on an ongoing basis which could be directed specifically back into the NHI side of government’s financial commitments.

Why is it that with many industries providing essential services to the population, government is deciding that it is only the healthcare industry where they feel it is unfair for the wealthy to be able to buy superior quality services and facilities and that there should be no brokers earning commissions? One could just look at the right to housing and then take a similar look at the property market, the high-end houses that the wealthy can afford and the estate agents and their commissions from acting as the “go-between” between the seller and the buyer!!!!