nhi bill - sama · presentation of the national health insurance fund bill. dr anban pillay. sama...
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NHI BILL
Dr Selaelo MametjaHead of Knowledge Management and Research Department
SAMA
Background: Historical Phases of Healthcare Financing dialogue in SA
Policy Context:• The Reconstruction and Development Programme (RDP)• Constitutional mandate (Section 27)• 1997 White Paper for the Transformation of the Health System• Medical Schemes Act of 1998: Community rating, prescribed minimum
benefits• SAMA supports Universal Coverage and access to good quality medical
care
Key issues
• Quality of care
• Equitable access to health care, Health risks and financial protection
• Improved efficiencies
• Role of Voluntary Medical schemes clearly defined
• Governance and regulatory independence
NHI Policy Phases in SA
GREEN PAPER(2011) WHITE
PAPER(2015)
NHI POLICY(2017)
NHI BILL
(2018)SAMA written
submissionSAMA
written submission
SAMA written
submission
NHI Bill, 2018
• Released concurrently with Medical Schemes Amendment Bill• Both Bills have 3 months comment period (21 June -21 Sept)• Followed by HMI draft report comments due 08 September• A lot of the implementation detail will be in the Regulations
BUT o Referral Guidelineso Guidelines on Formularieso Tender for Universities (Test) and o Clinical Service Provider (Oncology, school health, psychiatry, maternal
health• SAMA busy with member consultations towards a Submission
NHI Bill, 2018
FOOD FOR THOUGHT: “The hallmark of (any) Legislation is Functionality Not Perfection”- Lawyer
NHI Bill Consists of 9 Parts, comprised of 55 Sections
Definitions
Definitions are based on existing legislation but serious discordance in definitions or relevant sections Missing definitions E.G.
i. Quality : Remains measure of Health systems accountability. The ambiguity becomes stark in the phrase “reasonable quality” (Section 6.1.h) and “sufficient quality”: Quality was defined in White paper.
ii. Complementary coverageiii. Mandatory pre-payment: who is going to payiv. Active purchasing/ strategic purchasing
Objective of the Fund
• establishing and maintaining an efficient Fund through the consolidation of revenue so as to protect users against financial risk;
• serving as the single public purchaser of health services in terms of this Act > the equitable and fair distribution and use of health care services;
• ensuring the sustainability of funding for health care services; and• providing for equity and efficiency in funding by actively purchasing health care
services, medicines, health goods and health related products from certified, accredited and contracted service providers.
The objective is not to improve quality of care despite recognition that Quality is important
Types of Quality of Care Measures
Donabedian proposed for quality of care assessment
• Structure : Through OHSC norms and standards
• Processes of care: necessary for quality improvement
• outcomes of care: Outcomes are as a result of entire health system,
cannot blame clinicians only
Sec 2- Application of the Act
“Act applies to Both Public and Private health establishments (except military health establishments)”
~ However, size of the private sector stake in NHI remains unclear (details in Regulations?)
PART 1: Sec 3-6 The NHI Fund & functions
FUNCTIONS AND DUTIES• National public entity in terms of PFMA• Accountable to the Minister???? • mandatory prepayment• Single public purchaser • Enters into Contracts with certified & accredited parties,• Determines Prices annually: Problematic as the fund cannot play role of buyer and
determine prices• Design health services-Committee of the Board• Pays providers in accordance to quality & value of services• Develops & maintains a Service & Performance Profile for each contracted provider, supplier
etc• Providers etc will be contracted with the proviso of servicing “at lowest possible price”
PART 2: Sec 7-12 Rights to HealthCare
Eligible users have rights to:• Comprehensive Health package object to affordability and means• Citizens, permanent residence, dependants, inmates• Refugees: ONLY emergencies, notifiable conditions and MCH at
PHC• Free at point of care, standard of care at reasonable time• Information (His /hers ; or info about by the Fund)• Not to be refused care ‘on unreasonable grounds’• To be transferred to a more equipped provider at no cost• Complain and appeal against decisions of funds- more on complains
process
Role of Medical Schemes
SUPPLEMENTARY COVERAGE: private insurance complements coverage provided BY NHI and covers a limited set of interventions that address the particular gaps in a country’s public coverage
COMPLEMENTARY: provide coverage that is not covered by NHI N can be used for co-payments or to cover areas of care such as oral and eye care
SUBSTITUTIVE: provides coverage that will otherwise be available in state: provided to those who cannot be covered by NHI
Role of Medical Schemes
NHI BILL“Users have rights to purchase complementary services not covered by schemes through voluntary medical insurance, out of pocket and private health insurance”
NHI WHITE PAPER“the role of medical schemes in the health system will change and once NHI is fully implemented, medical
schemes will offer complementary cover to fill gaps in the service coverage offered by the NHI.”
NHI GREEN PAPERAs part of the transition process, medical schemes will play a supplementary role. Once NHI is fully implemented,
medical schemes will offer complementary cover to fill gaps in the universal entitlements offered by the State
PART 2: Sec 7-12 Rights to HealthCare cont..
NHI Fund will NOT fund services in these instances:
Medically unnecessary
Cost-ineffective interventions
Bypassing referral system,
But how about vulnerable populations: Perpetuate inequities
PART 3 & 4 :Sec 13- 24 Board of Fund
Board is purportedly “Independent”; accountable (expected to justify actions) to
Parliament
Max term of office is 5 years renewable only once
Board consists of no more than 10 persons with expertise in areas ‘including/care financing; health economics; public health planning; M& E; Law; Labour; Actuarial science; IT & Communication
“Freedom to make decisions” Cambridge Dictionary
PART 3 & 4 :Sec 13- 24 Board of Fund
Appointment of the Board Call 4 public nominations : Minister Adhoc committee appointed by Cabinet MUST
Conduct public interviews Forward recommendations to Minister for approval
The Minister MUST notify Parliament of the final appointment Minister can dissolve the Board after consulting with Cabinet> No
input from Parli The Board will advice the Minister The Minister will also approve the CEO appointed by Board CEO report to the Board and Parliament on annual basis
1. National Assembly 300-400 members2. National Council of Provinces
• President• Deputy president• Ministers
• Constitutional Court• Supreme Court• High Court• Magistrate Court
Structure and functioning of SA government: NATIONAL LEVEL
Parliament
Legislative Authority Judiciary AuthorityExecutive Authority
ParliamentCabinet
PART 3 & 4 : Sec 13- 24 Board of the Fund
Sec 22.3: CEO must establish the following Units within the Fund:
a) Planningb) Benefits designc) Price determination> Separate bodyd) Accreditatione) Purchasing & Contractingf) Service provider paymentg) Procurementh) Performance monitoring i) Risk and fraud prevention Investigationj) Investigating
PART 3 & 4 : Sec 13- 24 Board of Fund
Distressed COLLAPSING
keepthe Minister informed of the quality of
the health services
PART 5: Sec 25- 31 Ministerial Committees(1)
Mandate1. Health service benefits2. Level of care at which services will be reimbursed3. detailed and cost effective treatment guidelines
Sec 25: Benefits Advisory Committee
Appointed for 5 years, renewable onceComposition:a)All heads of medical schoolsb)WHO delegatec)9 nominees from Provincial Health Departmentsd)1 nominee by the CMSe)1 nominees by HASA or similar private body
PART 5: Sec 25- 31 Ministerial Committees (3)
Mandate: to recommend prices of health service benefits to the Fund
Sec 26:Health Benefits Pricing CommitteeComposition: (16-24 members)a)Health DGb)1 person at the level of Deputy DG from National Treasuryc)Not more than 11 members appointed on basis of their special knowledge & experience in:o Clinical & service deliveryo Operational health mx establishment & service deliveryo Actuarial and health benefit design or pricing strategyo Health economicso Labour relations
PART 5: Sec 25- 31 Ministerial Committees (4)
Mandatea) Advice to Board and Minister on the functioning of the Fund b) Comments & advice from a community perspectivec) Comments & advice from a provider perspective
Sec 27: Stakeholder Advisory Committee Composition:
a) One member from each Statutory Councils: HPCSA, SAPC, SANC, Allied Health professions Council, Traditional Health Practitioners Council, SA Dental Technicians Council
b) Other Regulatory bodies: MRC, CMS, c) NGOs, organised labour AND Businessd) Tertiary institution (2)
PART 6: Sec 32- 39 General Provisions
DefinitionsGovernance: rule; controlStewardship the job of supervising or taking care of something
Sec 32: Role of Minister
The Minister is responsible for the:“governance & stewardship of the national health system”“governance & stewardship of the Fund”
PART 6: Sec 32- 39 General Provisions
Sec 38: Accreditation of service providers
Conditions for contracting:Certification with OHSC and Professional Regulator eg HPCSAAdherence to treatment protocols and National pricing regimenAdherence to referral pathwaysSubmission of info to National Health Info databaseFund has rights to deregister the provider if above not met
Will the same conditions fro contracting apply to public sector?
PART 6: Sec 32- 39 General Provisions
Sec 34: National Health Information Repository & Data System NHA 74 (NHIS)
• Providers must submit info for the Health Payment Registration System: procedure codes, medicines, LOS, diagnostics, referrals
• The Fund may use submitted information to:• Monitoring & Evaluating outcomes,• Plan and budget , • Monitor performance of providers, • Monitor compliance with guidelines
• Providers etc. must comply with the law i.r.o access & protection of health records:
PART 6: Sec 32- 39 General Provisions
Sec 35: Purchasing of health care servicesNHI Fund must active and strategic purchasing from public and private on behalf of users: Directly to Hospitals or CUP1. National Level: based on Diagnostic Related Groups as determined by Minister in
consultation with Nat Health Council and Board: contract All hospitals excluding District, all inclusive performance based.
2. Provincial Level: based on Global Budget or DRGs as determined: All inclusive/performance based. Provincial, District?, regional, specialised hospitals
3. At sub District Level: Funds for PHC will be transferred to Contracting Unit for PHC (CUP). Capitation based
4. Emergency services: Capped fee based basis, with adjustment for severity where necessary
PART 6: Sec 32- 39 General Provisions
Sec 39: Payment of service providers
The Fund , in consultation with the Minister, must determine the nature of service provider payment mechanismsI. Specialist & Hosp services→ “all-inclusive ”, Performance based
paymentII. Primary care Establishments→ Risk adjusted capitation for
population size and services BUT not epidemiologyIII. Certified & accredited Primary care Providers must be remunerated
by the CUP
PART 6: Sec 32- 39 General Provisions
Sec 37: Contracting Unit for PHC (CUP):
“The CUP is the organisational unit with which the Fund contracts for the provision of PHC services within a specified geographical sub-district area…”• CUP is composed of: a District hospital, Clinics, and/or CHCs and WBOTs,
Private primary providers organised in horizontal networks• Assists the Fund on its function incl identifying service needs; identifying
accredited providers & issuing certificates, etc.
Appeal tribunal has ssame powers as high court
Users have right to complain
CEO’s office Investigating unit
Office should respond in 30 days
Decision in writing
Lodge appeal in 60 days to the Ministerial appointed tribunal
Appeals process
the job of supervising or taking care of something
Appeal tribunal Appointed by Minister
THE SOUTH AFRICAN MEDICAL ASSOCIATION
Tel: +27 (0)12 481 2000 | Fax: +27 (0)12 481 2100Block F | Castle Walk Office Park | Nossob Street | Erasmuskloof | Ext 3 | Pretoria | 0183
PO Box 74789 | Lynnwood Ridge | 0040Reg No 1927/000136/08: NPC
www.samedical.org
PRESENTATION OF THE NATIONAL HEALTH INSURANCE FUND BILL
Dr Anban PillaySAMA CONFERENCE
Sun City
19th August 2018
WHAT IS NHI?
• NHI is a health financing system that pools funds to provideaccess to quality health services for all South Africans based ontheir health needs and irrespective of their socio-economic status.NHI is intended to ensure that the use of health services does notresult in financial hardships for individuals and their families.
• NHI represents a substantial policy shift that will necessitate amassive reorganisation of the current health system, both publicand private and also derives its mandate from the NationalDevelopment Plan (NDP) of the country.
2
UN Sustainable Development Goals (SDGs)
• Goal 3.8“Achieve Universal Health Coverage, including financial risk protection, access to quality essential health-care services, and access to safe, effective, quality and affordable essential medicines, and vaccines for all”.
3
South Africa is an outlier: world’s largest share of spending from VHI
Source: WHO estimates for 2012, countries with population > 600,0004
The Country’s Plan - The NDP
Chapter 10: Promoting Health - Targets for 2030, • Under Universal Health Coverage:
– Everyone has access to an equal standard of care regardless of their income;
– A common fund enables equitable access regardless of what people can afford to pay or how frequently they need to make use of health services
5
THE WHITE PAPER ON NHI
6
FEATURES OF NHI
• Universal access• Mandatory prepayment of health care• Comprehensive Services• Financial risk protection• Single fund• Strategic purchaser• Single-payer
722/08/2018
Health care
COVERED PO
PULATIO
NSt
ewar
dshi
p of
fina
ncin
g an
d pr
ovisi
on
(gov
erna
nce,
regu
latio
n, in
form
atio
n)
Collection of funds
Provision of services
Purchasing of services
Pooling of funds
Allocation mechanisms
Allocation mechanisms (provider payment)
Allocation mechanisms
Social solidarity and cross-subsidisation
Economies of scale and efficiencies
Single Pool for Income and Risk
Single Payor / purchaser
Prepayment Taxes/ Contributions
8 8
The NHI Bill• This cannot be achieved without creating a single common
fund, which in itself will directly contribute towards:– a unified health system by improving equity in financing, – reducing fragmentation in funding pools across both the
public and private sectors, and – making health care delivery more affordable and
accessible for the population
• The NHI Bill is a crucial step in creating the common Fund.
9
Parts of the NHI Bill
10
Establishment of the NHI Fund
Right to health care
The Board of the Fund
The CEO Ministerial Committees
General provisions applicable to
operation of Fund
Complaints and appeals Financial matters Miscellaneous
Key Features of the Bill
Beneficiaries Covered(Section 7)
Mandatory Pre-payment
(Section 3(4))
No co-payments, free at point of service (Section
9 (a))
Registration of users (Section 8)
Public and Private Providers (Section
5(1)(d))
Strategic Purchasing (no more tenders for health services) (Section 35(1)
Fighting Corruption (Section 6 (1) (I)(vi),
Section 6(1)(L))
Rights of users (Section 9 (a))
Purchaser-Provider Split (Section 35(1))
Single Purchaser (Payer)(Section 3(3))
Comprehensive Health Service Benefits
(Section 11 (1) & 11 (2))
Affordability (Section 9)
11
Key Features of the Bill (contd.)
12
Entry point to health care system – PHC
(clinics, GPs and other PHC providers)
(Section 11(2)(a))
Referral Pathways Section 11 (2)(b)
When are Services not covered
Section 12 (2)
Method of Payment –capitation, DRGs, Global
fees (Section 35 (2), (3), (5)
Procurement through Chief Procurement Officer
(National Treasury)
Sources of Funding -Minister of Health and
Finance to jointly determine (Section 46 (1),
(2), (3))
Ministerial Committees (Section 25, 26, 27, 28)
Appeals and Complaints (Section 40)
Schedule of Amendments (Annexure)
NHI Committee• Benefits Advisory Committee
• Health Benefits Pricing Committee
• Stakeholder Advisory Committee
• Technical committees
13
Transitional Arrangements• Described in section 54 of the bill.• Specifies the structures, and process of implementation• Phase 1 was from 2012 to 2017.• Phase 2 will be for a period of five years from 2017 to 2022 and will—i. continue with the implementation health system strengthening initiatives,
including the alignment of human resources with that which will be required under the Fund;
ii. include the development of National Health Insurance legislation and amendments to other legislation;
iii. include the undertaking of Initiatives which are aimed at establishing institutions that will be the foundation for a fully functional Fund; and
iv. will include the interim purchasing of personal healthcare services for vulnerable groups such as children, women, people with mental health disorders, people with disability and the elderly.
14
Transitional ArrangementsPhase 3 will be for a period of four years from 2022 to 2026 and will include—i. the continuation of Health systems
strengthening activities on an ongoing basis;ii. the mobilisation of additional resources as
approved by Cabinet; andiii. the selective contracting of healthcare services
from private providers.
15
Consolidation of Financing Streams
• Presently, according to STATSSA, this is how the SA population is divided in termsof income, employment and hence, indirectly medical scheme coverage
• In reorganising the population, cognisance will be taken of these variouscategories, i.e. when we implement NHI, we have to start with those who are notcovered
Interim Insitutional Structure
Civil servants and their dependants
(incl. SoEs)
5.5m
Formal Sector Employed and their dependants (large
business)
12m
Formal Sector Employed and their dependants (SMMEs)
6m
Informal sector and their dependants
8m
Individuals in householdswith no income or are not
employed
24m
• Government Employees• State Owned Enterprises • Public Entities
• Domestic Workers• Hawkers• Taxi industry• Casual labourers
• The elderly with no income
• Children • School kids (12m)• Unemployed• Unemployable
Only 8.8m of these people have accessto health services via medical schemes
The central philosophy of Implementation ofNHI is to bring into fold those people who arenot insured (specifically those who are unableto afford medical scheme cover).16
THANK YOU
17
NHI and Scheme Regulation
Dr Sipho KabaneNHI and Scheme Regulation
SAMA Conference
NHI POLICY REFORMS (1998-2018)
Green Paper: National Health Insurance:
Healthcare for all South Africans
White Paper: National Health Insurance:
towards Universal Health Coverage
National Health Insurance Policy : towards Universal Health
Coverage
NHI Implementation: Institutions, bodies & commissions
Towards Universal Health Coverage
Social solidarity, Efficiency, equity,
effectiveness, Health care as a Public Good,
affordability and appropriateness
Nominations: NHI Ministerial & National Advisory Committee Members
Medical Schemes
Amendment
Bill
Medical Schemes Act Regulations
Medical Schemes Act promulgation
NHI Bill
Phase 1: NHI (2012-2017)• Improving the management of health facilities; • Improving throughput from training institutions to address key Human resources for
Health requirements; • Strengthening infrastructure programme and procurement of equipment; • Implementing improved and integrated health information systems and technology;• Rationalising of laboratory services; • Effective and integrated procurement of Health Commodities; • The implementation of and compliance with National Quality Standards for Health; • Re-engineering of Primary Health Care; • The contracting of health practitioners to strategically enhance the quality of Primary
Health Care; • Restructuring and improving the provision of Occupational Health, Mental Health,
Disability and Emergency Medical Services as part of the comprehensive health entitlements that will be covered by the NHI Fund.
Phase 2:NHI (2018-2022)
NHI Transitional Structures
• Ministerial Advisory Committee on Health Care Benefits for National Health Insurance
• National Health Service Pricing Advisory Committee
• National Advisory Committee on Consolidation of Financing Arrangements
• Ministerial Advisory Committee on Health Technology Assessment for National Health Insurance
Health System Reform Forum
HEALTH SYSTEMS REFORM FORUM
CMS: NHI related Strategic Projects
• Standardization of Options• Consolidation of schemes <6000 membership• Consolidation of government funded schemes• Risk based Capital Solvency Framework• Elimination of Co-payments and Balanced Billing• Beneficiary Registry• Service Benefit Review• Low income benefit option framework
Contracting for Vulnerable Groups
• Maternal Health (Pre, Peri and Post Natal)
• Child Health (School Health Services: Vision, Hearing and Oral Health)
• Elderly (Cataracts, Hip & Knee replacements)
• Mental Health Users
Medical Schemes Act Bill
Contents
• Background and Context• Ministerial Policy Statements• Comments on Policy Statements• Key Features of the Bill• Areas requiring strengthening• Conclusion
Pronouncements: MSA Bill• Abolish Co-payments (Complaints; 25% solvency to be reviewed)• Abolish usage of Brokers• Shift from PMB’s to Comprehensive Service Benefit• Standardization of Scheme Options• Declare entities conducting a business of a MS without registration illegal• Central Beneficiary and Service provider registry• Introduce income subsidization model• Pass discounts back to members in DSP’s• Membership Terminations and waiting periods• Board of Trustee and PO requirements
Background and Context
• CMS was a key contributor to the Bill• CMS will like all stakeholders comment on the Bill • CMS will maintain a keen interest in the process up to promulgation• CMS will be the key implementer of the new Act and Regulations• Medical schemes industry will be regulated based on the provisions
of the Act and Regulations• Mandate of CMS based on the MSA as amended and Regulations• CMS will continue playing this role for as long as the Act and
Regulations are in force
Background and Context
• MSA Bill needs to be read with the NHI Bill and the HMI provisional recommendations
• NHI policy document and NHI Implementation structures released in June 2017 also important for context
• Comment period on the Bill still open• Industry players should add their inputs into the process
Ministerial Policy Statements• Elimination of Co-Payments Review of 25% solvency requirement• Elimination of Broker Services• Replacement of PMB’s with Comprehensive Service Benefit• ALL benefit options to be approved by Registrar• Outlawing Fake Schemes• Central Beneficiary Registry and Service provider registry• Income Distribution Model• Discounts and Savings passed on to members• Cancellation of Scheme membership• Improved Governance of Schemes
Comments on Policy Statements
Co-payments:• Complaints by members• ↓ Out of pocket expenditure• Estimated at R29bn (does not include claims not tendered)• All schemes have about R59bn of reserves (Average of 33% vs 25%
solvency)• Balance solvency requirements against impoverisation due to OOP
expenses• CMS to move towards a Risk Based Capital Solvency Framework
Comments on Policy Statements
Elimination of Broker Services:• Membership to schemes stagnant (8.8m)• Schemes are reducing in numbers• Broker numbers are not decreasing• Members collectively paid R2.2bn to brokers• Members have never known their brokers• What were the value added services• Members should only pay for services rendered
Comments on Policy Statements
• CMS supports these statements by and large as these are aimed at member protection
• CMS understands the reasoning behind these pronouncements• CMS sees these statements as providing direction and policy intentions• CMS takes these pronouncements very seriously• CMS sees some of these as immediately implementable and some in
the medium to long term• CMS will unpack and bring these up for consultation with key industry
stakeholders• Those that can be implemented through the legislative process will be
brought into the current engagements• Those that do not require a legislative will be appropriately handled
with the key industry players
Key Features of the Amendment Bill
• To exclude the application of the Consumer Protection Act, 2008; • Creation of a Central Beneficiary Register;• To empower the Registrar to amend the rules of a medical scheme
that has failed to amend its rules in accordance with a directive;• To re-determine the provisions relating to the admission of
beneficiaries to a medical scheme and the cancellation of membership
• To set out various requirements applicable in determining the contributions payable to a medical scheme by its members;
• Mandatory Minimum Benefits instead of PMB’s
Key Features Continued• To provide for a Health Services Providers Register;• Council may require information from suppliers of relevant health services
concerning the services rendered by them to beneficiaries; • To do away with appeals to the Council• To establish an Appeal Board consisting of part time members, and to
determine its jurisdiction and powers• To introduce an enhanced system of governance of medical schemes• To empower the Council to determine broker fees from time to time and
define the circumstances in which a medical scheme may receive payment of broker fees due by its members to a broker
• To declare the carrying on of the business of a medical scheme by a person not registered as a medical scheme, to be a separate offence and to prescribe the criminal penalties that may be imposed on persons convicted of that offence
Areas of the Bill that need strengthening
• Definitions• Central Beneficiary Registry section needs rewording• Governance of Administrators• To provide for application to the High Court for an appropriate
order in the event of irregularities in any election of a member or members of a board of trustees of a medical scheme;
• To extend the functions of the Council for Medical Schemes (“the Council”);
Definitions to be added
Associated party (linked to medical scheme or intermediary by virtue of a family or business relationship.
Emergency medical condition, public sector health service and preferred providers.
Mandatory Minimum Benefits
Comprehensive Service Benefits
NHI Bill
Corporation between the Fund, DoH and CMSBenefits Advisory Committee
Stakeholder Advisory CommitteeHealth benefits pricing committee
Annual determination of prices (Facilities & professionals) Collate utilisation data (M&E)
Implementation of information management systemNational Health Information Repository and Data System contributionService and performance profile of all contracted service providers
Comprehensive health service benefitsReferral pathways (no copayments)
Purchasing of voluntary health insurance (complementary services)
INTERSECTION-NHI BILL AND MSA BILL
INTERSECTION NHI BILL & MSA REPORTS
MSA Bill
Share available resources, expertise and processes with the FundComprehensive health service benefits
Collect prices, utilization and costs of relevant health servicesEstablish, maintain and administer a Central Beneficiary Register
Health Care Providers RegisterNo co-payment or the use of deductible
Regulation of Voluntary Health Insurance
Conclusion
• Excited and happy that Bills have finally been released• On the whole the Bills are supported by the CMS• There are areas that need redefining and strengthening• CMS will be making further inputs into the process like other
stakeholders• We hope this publication of the Bills and attendant process,
answers the often asked question about the immediate future of schemes
• We are looking forward to the finalisation of the process to ensure that the CMS is an effective and efficient industry regulator
Conclusion
• We note the interactions between the 2 Bills and the Health Market Inquiry provisional recommendations
• We see all three as talking to the Health Reform that is cited in the NDP
• We also see the CMS in particular playing a key role in the transition towards the full implementation of the NHI
A CRITICAL ASSESSMENT OF SOUTH AFRICA’S HEALTH REFORM LANDSCAPE
Prof Alex van den HeeverChair in the field of Social SecurityWits School of Governancealex.vandenheever@wits.ac.za
Presentation to the South African Medical Assoication19 August 2018
There is quite a lot to talk about…
• Significant structural concerns with the health system, both the public and private health sectors/systems
• Three sets of reforms have recently been tabled, two in Bill form and a third the provisional outcome of the Health Market Inquiry into the private health system
• This talk reviews the adequacy of tabled reforms against the backdrop of a health systems diagnostic - the focus is principally on the systemic features of the system influencing performance
Context
Universal Health Coverage
• Is an objective of all countries• Is achieved through many different mechanisms –
with no country the same
• But note:– National Health Insurance is a mechanism and not an
objective– South Africa has universal health coverage – with lapses
entirely a consequences of government failure to act
National Health Accounts: South Africa (% of GDP)
3.3 3.7 3.6 3.5 3.3 3.2 3.2 3.1 3.2 3.1 3.2 3.3 3.3 3.5 3.9 3.9 4.1 4.1 4.1 4.1
3.4 3.3 3.6 3.7 3.9 3.7 3.9 3.9 4.0 3.9 3.6 3.4 3.4 3.53.8 3.9 3.9 3.9 4.0 4.0
1.5 1.4 1.3 1.2 1.21.1 1.0 0.9 0.9 0.9 0.8 0.8 0.7 0.7
0.6 0.6 0.6 0.6 0.6 0.6
0123456789
1019
95
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Perc
enta
ge o
f GD
P
Year
Sum of Gov exp (% of GDP) Sum of Social security (% of GDP)
Sum of Private pre-paid (% of GDP) Sum of OOP (% of GDP)
Source: World Health Organisation, National Health Accounts
Some features of the public health
system
There a number of headline concerns regarding the performance of the public health system
• Contingent liabilities – medico-legal claims R35 billion (National Treasury) (Actual figure likely to be higher and increasing)
• Accruals relating to non-staff expenses – around R7 billion for Gauteng Province with an unknown level for provinces outside the Western Cape
• Quality of care indicators suggest the public health system is under-performing relative to what is feasible (i.e. performance failures are not principally a function of resources – which have in fact improved over time)
Real changes in public health sector remuneration broken down by cost driver (from
2005/6 to 2015/16) (2015/16 prices)
-4 000
-2 000
0
2 000
4 000
6 000
8 000
10 00020
06/7
2007
/8
2008
/9
2009
/10
2010
/11
2011
/12
2012
/13
2013
/14
2014
/15
2015
/16
Rand
s (m
illio
n)
Financial year
Unit cost change Population Post changes (residual)
Quality of public health care – the Office of Health Standards Compliance
Only 11.9% of public hospitals meet the basic OHSC norm, representing only 18.8% of the beds evaluated
But the quality assurance scores don’t correlate with health outcomes using facility-based MMRs
(Facility-based MMR (maternal mortality ratio per 100,000 live births) averaged for the period 2010 to 2012)
??
?
Score range Number of hospitals % of total Number of
beds % of total
80%+ 16 11,9% 8 377 18,8%70-80% 25 18,5% 11 798 26,5%60-70% 38 28,1% 13 775 30,9%50-60% 27 20,0% 6 658 15,0%40-50% 25 18,5% 3 521 7,9%30-40% 2 1,5% 110 0,2%20-30% 1 0,7% 40 0,1%10-20% 0 0,0% 0 0,0%0-10% 1 0,7% 240 0,5%Total 135 100,0% 44 519 100,0%
Row LabelsWeighted
average quality score
MMR Benchmark MMR
Western Cape 74,5 77,1 19,0Gauteng 72,2 141,1 19,0Eastern Cape 59,0 167,2 19,0North West 73,6 179,2 19,0Limpopo 61,4 182,7 19,0Kwazulu Natal 71,2 185,2 19,0Mpumalanga 58,4 194,2 19,0Northern Cape 46,3 202,6 19,0Free State 63,0 209,4 19,0
Changes in total beds in South Africa 1976 to 2010: public and private sector
020,00040,00060,00080,000
100,000120,000140,000
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Beds
Years
Beds (pub) Beds (prv)
Source: derived from Health Systems Trust data
Some features of the private
health system
Medical scheme real per capita claims cost changes from 1980 to 2016
01 0002 0003 0004 0005 0006 0007 000
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
Ran
ds
pe
r b
en
efic
iair
y p
er
ann
um
(2
01
4 p
rice
s)
Year
General practitioners Medical specialists Dentists
Dental specialists Allied and support Private Hospitals
Provincial Hospitals Medicines (out-of-hospital) Ex-gratia payments
Other benefits
Source: Annual Reports of the Council for Medical Schemes
ICU/HC beds per 100,000 in South Africa (2016 estimate)
5,9 11,9
17,4
8,9 1,9 3,3 4,9 4,8
14,3 10,0
4,0 7,4 7,6
4,2 1,4 1,3 2,6 3,0 8,5
4,9
21,3
33,4
49,4
42,0
8,0 14,7
19,4 16,9
31,7 35,8
0,0
10,0
20,0
30,0
40,0
50,0
60,0
East
ern
Cap
e
Free
Sta
te
Gau
teng
Kw
aZul
u-N
atal
Lim
popo
Mpu
mal
anga
Nor
th W
est
Nor
ther
n C
ape
Wes
tern
Cap
e
Tota
l
ICU/HC per 100,000 RSA ICU/HC per 100,000 PUB ICU/HC per 100,000 PRV
What happens elsewhere?
Country ICU/HC per 100,000
France 11,6 Switzerland 11,0 Spain 9,7 United Kingdom 6,6 Netherlands 6,4 Sweden 5,8
Index trends in private hospital beds compared to medical scheme claims
data 2000 to 2017
100
120
140
160
180
200
220
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Indi
ces
YearTotal beds Acute bedsICU & HC beds Psych bedsDay beds BeneficiariesHosp costs Specialist Claims (pbpa)
Number of medical schemes
46 41 41 35 33 27 26 25 24 23 22 21
83 83 80 78 7773 71 67 62 60 60 60
129 124 121113 110
100 97 92 86 83 82 81
0
20
40
60
80
100
120
14020
05
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Num
ber
of m
edic
al s
chem
es
Year
Open Restricted Total
Medical scheme beneficiaries (000)
4 906 5 050 4 951 4 889 4 815 4 800 4 760 4 760 4 847 4 900 4 921 4 940
1 930 2 077 2 527 2 986 3 253 3 516 3 766 3 919 3 929 3 914 3 871 3 9256 836 7 127 7 478
7 875 8 069 8 316 8 526 8 679 8 776 8 814 8 792 8 865
01 0002 0003 0004 0005 0006 0007 0008 0009 000
10 000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Med
ical
sch
eme
bene
ficia
ries
Year
Open Restricted Total
Average age by open medical scheme (2016)
0,0
10,0
20,0
30,0
40,0
50,0
60,0Th
ebem
edM
akot
iH
osm
edG
enes
isM
edim
edSi
zwe
Dis
cove
ryM
edsh
ield
Sure
med
Bon
itas
Mom
entu
mM
edih
elp
Key
heal
thC
ompc
are
Res
olut
ion
Fedh
ealth
Topm
edB
estm
edC
ape
MP
Spec
tram
edSe
lfmed
Aver
age
age
of s
chem
e
Open commercial medical scheme
Average age by scheme
Medical scheme age structure by monthly risk contribution band (2016)
Contrib band (risk) (Rands) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0 - 501 22 19 26 23 24 20 25 25 24 24 25 18501 - 1001 18 16 16 15 16 15 17 17 19 20 20 181001 - 1501 22 22 22 24 23 23 21 20 20 21 22 211501 - 2001 34 35 35 35 34 30 29 29 32 33 32 312001 - 2501 35 39 44 43 45 40 35 37 41 37 36 382501 - 3001 50 45 44 41 48 53 50 43 39 42 44 473001 - 3501 49 57 51 50 46 48 48 50 54 53 55 533501 - 4001 49 54 60 63 46 46 35 53 52 55 53 564001 - 4501 50 69 64 61 58 62 59 49 49 56 62 704501 - 5001 56 64 67 58 55 58 57 58 59
5001+ 26 54 58 60 49 64 63 59 59 60 49 52Average 32 32 31 32 32 32 32 32 32 32 33 33
Underwriting results by contribution band (2016 prices) for the 2016 financial year (Discovery
Health Medical Scheme)
year 0 - 501 501 - 1001 1001 - 1501 1501 - 2001 2001 - 2501 2501 - 3001 3001 - 35012005 15 178 294 -57 951 059 255 314 737 -1 209 590 189 2006 1 533 047 561 419 462 -1 150 736 188 2007 399 492 263 925 530 650 -170 866 280 2008 389 527 784 804 991 442 -434 076 759 -288 713 007 2009 194 565 568 880 507 890 -637 713 094 -294 266 816 2010 -23 767 937 1 056 213 575 -708 568 036 -359 894 247 2011 -86 872 044 1 162 869 151 -805 002 624 -377 951 287 2012 -327 685 936 1 612 581 488 -697 821 391 -344 037 109 2013 -131 616 267 1 973 050 385 -2 226 767 -463 028 120 -314 914 766 2014 -233 119 822 1 657 866 830 405 786 290 -623 382 462 -330 841 858 2015 -469 663 653 1 652 357 090 365 785 600 -660 736 649 -348 639 776 2016 -445 440 004 1 421 009 737 287 774 602 -810 367 370 -350 527 015
Grand Total 15 178 294 -790 998 060 13 963 712 435 -4 059 433 445 -4 576 161 351 -1 338 433 509 -350 527 015
Source: Council for Medical Schemes data from schemes audited financial statements from 2005/6 to 2016/17
National health insurance bill
Key features
• Establishes a National Health Insurance Fund– Functions
• Procurement/purchasing• Accreditation – in conjunction with the OHSC
Provincial health services
Private health services
RationaleWHAT PROBLEM ARE WE SOLVING IN SOUTH AFRICA TO ACHIEVE UINVERSAL HEALTH COVERAGE?
• The World Health Organisation recommends that countries should spend 5% of GDP onhealth.
• South Africa currently spends 8.7% of GDP on health (2018)• The private sector spends 4.5% of GDP on health but only provides care to 16% of the
population.• The public sector spends 4.2% of GDP on health but only provides care to 84% of the
population
DEEPLY ENTRENCHED INEQUITIES
There is no diagnostic provided that talks to the actual
structural problems in the health system
General TaxesRevenue
Pooling/Purchasing
Household contributions
Provision Public services Private services
National Fund Medical Schemes
ContractContract
Supplementary benefits
The Big Idea
General TaxesRevenue
Pooling/Purchasing
Household contributions
Provision
Medical Schemes
Public services
Assumes 100% substitution of
expenditure from medical schemes to
public sector (zero-sum game)
National Fund
Private services
ContractContract
The Big Idea
General TaxesRevenue
Pooling/Purchasing
Household contributions
Provision
Medical Schemes
Public services Private services
National Fund
ContractContract
The Big Idea
Financing – according to the MOH
“We made a mistake with the figures. I then went for advice to the World Bank and the World Health Organisation and they asked why am I trying to do this, it can’t be quantified by any human being because the costs are so variable.” (Minister of Health)
The following are the financing issues not addressed…
• In developing countries general tax revenues cannot fund a single system for all – it will hit a limit insufficient to offer universal coverage
• Additional revenue needs to be mobilised through– Contributory social insurance schemes– Contributory regulated private health insurance – usually
mandatory, risk-equalised and government subsidised with a package of services that must be guaranteed and underwritten by private actors rather than the government
The package… what is to be covered?
Supply-driven – what is provided is the package
subject to treatment protocols and referral
systems
Public sector - funded exclusively by general
taxes
Explicit positive and negative lists
Contributory/insurance -funded mainly by own
contributions
Risks• Prices not managed• Service quality not transparent and not managed• Public sector – demand exceeds supply• Insurance systems – supplier induced demand• Poor contracting
The system of guaranteed protection (of the package) requires constant review, which takes account of societal priorities and technical
considerations – no such reviews are presently carried out and the NHI Bill does not suggest it understands the distinction between a supply-
driven and an insurance package
+ =
Key proposals with systemic implications
• Governance of the NHIF and the OHSC– Effectively everyone appointed by the MOH
• Central hospitals to fall under the national MOH
Transitional arrangements
• Phase 1 – “Phase 1 encompassed a period of five years from 2012 to
2017 and included testing of effective health system strengthening initiatives.”
• There is no evidence of any “system strengthening initiatives”
• Phase 2 will be for a period of five years from 2017 to 2022 and will -– continue with the implementation health system
strengthening initiatives, including the alignment of human resources with that which will be required under the Fund
– include the development of National Health Insurance legislation and amendments to other legislation
– include the undertaking of Initiatives which are aimed at establishing institutions that will be the foundation for a fully functional Fund
– will include the interim purchasing of personal healthcare services for vulnerable groups such as children, women, people with mental health disorders, people with disability and the elderly
• Phase 3 will be for a period of four years from 2022 to 2026 and will include-– the continuation of Health systems strengthening activities
on an ongoing basis– the mobilisation of additional resources as approved by
Cabinet– the selective contracting of healthcare services from
private providers
Building blocks of a costing
General tax funded public sector package Tax credit
Private contributions
Income
Low High
Rand
spe
r cap
ita
Building blocks of a costing approach
General tax funded public sector package
Additional funding
Income
Low High
Rand
spe
r cap
ita
Private contributions (how would the private sector top-
up an in-kind subsidy?)
?
The enhancement of the per capita expenditure on public sector users, even if realised, is very unlikely to materially improve service quality by much while retaining a strong demand for those with adequate incomes to demand private coverage
Health market inquiry
Key findings
• Substantial market failure on both the funder and provider sides of the system
• Significant market concentration– Medical schemes– Medical scheme administrators and related corporate
groups– Hospital groups
• Funder (administrator) profitability– Sustained high profit margins– Discovery at “multiples” of other administrators!
• No disruptive market innovation despite high costs and sustained high profits
• Supplier induced demand significant, with funders showing little interest in addressing the problem (retaining ffs)
• Providers and funders don’t compete on features that matter to consumers (such as costs and quality)
• Market lacks transparency for consumers– Scheme benefits complex– No information on health provider quality– Brokers not incentivised to properly advise members
• HPCSA ethical rules represent a barrier to innovation
RMIH
Royal BHPL
GEPF
DHLMMI HL
FRG
RMBH
Remgro
Mediclinic
MetrP-Health
MMI-G/riskMM-Health
MMI-CareC
D-Health
D-Vitality
D-Life CID-Life (LT)
D-Insure (ST)
MMI-Wellness
42.0%28.2%
33.9%13.5%
Ordinary shares of unknown
proportion
25.2% 25.8%
15.0%
8.0%
10.4%
8.6%
30.3%
15.0%
Majority shareholder
AfroCentric Investment Corporation
AfroCentric Health AssetsSanlam Wealthsmiths
AfroCentricHealth Pharmacy Direct
CurasanaWholesaler Activo Health
Medscheme
Aid for AidsHelios IT solutions
Bonitasmarketing
Pharmacy dispensing Pharmacy and medical products
wholesaler
Sells medical products to pharmacies
Dedicated broker arm for Bonitas open scheme
administered by Medscheme
Bonitas Marketing was previously owned by Bonitas
and sold to Meschemefollowing regulatory action by
the CMS
Formerly Lethimvula
71.3%
28.7%
28.0%100.0%100.0%94.1%
100.0%
Recommendations
• Proposals take the form of a package and partial implementation not supported– Risk adjustment mechanism on basic benefits– Basic and supplementary benefits – to achieve easy to
understand standardised benefits– Reinsurance (social) for start-up schemes – Efficiency discounts– Contribution subsidy – for income subsidy (converted from
tax credit)
• Brokers– Opt-in system (annual)– Explicit contracts with members– Members free to choose their broker– Only pay if a broker is chosen– Tied brokers earn less– Schemes must be able to deal directly with members if
members so choose – without an additional fee
Supply side regulator for healthcare (SSRH)
• Supply side regulator for healthcare (SSRH)– Licensing unit– Economic value assessment unit– Health services monitoring unit– Health services pricing unit
• Outcomes measurement and reporting– Outcomes Measurement and Reporting Organisation
(OMRO)– To be functional within 6 years– OMRO must be strictly independent from government
• Tariff setting – for fee-for-service tariffs– Regulated prices with meaningful consultation– Multilateral negotiations– (Coding systems public domain and determined by the
SSR)
• Bilateral negotiations (non-ffs)
The array of contracts in the private health system
Purchaser-driven contracts
Cons
umer
-driv
en c
ontr
acts
Price only (ffs)
Price + Demand
Price+ Demand + Quality
Price only (ffs)
Price + Demand
Price+ Demand + Quality
Only this part of the system would have prices determined
through multilateral negotiations
Industry has full discretion to enter into value-adding bilateral contracts
Medical schemes/
administrator
Impact of the Risk Adjustment Mechanism
Rating bands (number of)
Medical scheme options/plans differentiated by levels of coverage in order to indirectly risk rate
(number of)
0
1
2
3
4
5
6
7
1 2 3 4 5
Supplementary benefits
Mandatory benefits
A
B
C
Current system, with proliferation of options at varying levels of coverage
A, B, and C reflect stable “equilibrium” points that
fully accommodate for risk differentials between
schemes
Removal of demographic competition
Change in organisation of medical schemes benefits – heightening
productive competitionRi
sk g
roup
1
Risk
gro
up 2
Risk
gro
up 3
Risk
gro
up 4
Mandatory benefit
Supplem. benefit 1
Supplem. benefit 2
PMB
PMB
PMB PM
B
Non-transparent (current)Transparent (with revised regulatory
framework)
Mandatory reinsurance – system pooling –increasing opportunities for market entry of
small insurers without sacrificing opportunities for purchasing at scale
• Mandatory reinsurance– Retrospective reimbursement for relevant catastrophic
claims up to a fixed value, where incidence for a diagnostic category exceeds what is predicted by the REF
Expected cost before REF
Expected cost after REF
Actual cost experienced
Reinsurance reimbursement
A complete framework – not in recommendations
Mandatory package – can be differentiated based on efficiencies, with cost savings available
to consumers (in MSAB not HMI)
Risk equalised contribution/price per member (P)
Stan
dard
Net
wor
k 1
Net
wor
k 2
P1
P2
P3
Consumers choose providers based on transparent indicators of value (cost and quality) (providers can provide cash rebates/discounts to attract consumers
Medical scheme chooses the providers – but information on provider quality must be made explicit (i.e. scheme must make value-based choices to attract membership)
Competition generated between networks, network arrangements and free consumer choice)
Strategic way forward?
Although the currently proposed NHI is a notional option, it cannot achieve any
meaningful health systems objectives in the foreseeable future
For arguments sake lets say there are two options
• Option 1 – the NHI as proposed model for universal health coverage– Consolidates and centralises the pooling (vertical and horizontal) and
purchasing/procurement for the basic package of services for the entire population (does not address structural failures of the public and private systems; centralises functions that should be decentralised; fails to address governance framework)
• Option 2 – the hybrid NHI model for universal health coverage– Strategic pooling at the national level– Decentralised purchasing through
• Provinces – but with enhanced governance• Medical schemes – as proposed by the Health Market Inquiry
– Structural reforms targeted at systems weaknesses (governance for decentralisation in the public sector; in the private sector removal of competition on unproductive market features + enhanced competition on productive market features)
Option 2 – NHI designed on uniformity of the subsidy regime
General TaxesRevenue
Purchasing
Household contributions
Pooling
Risk adjusted resource allocation
Risk equalisation
Contribution subsidy
Provision Public services Private services
Provinces Medical Schemes
Contract
Conditional allocations
Contract
Supplementary benefits
Min benefits
Current NHI proposal Feasible and desirable
Resource allocation (not health-specific)
Centralised resource allocation
Centralised resource allocation
All purchasing
Purchasing
Private
Public
Resource allocation
Purchasing
Public
Public
Resource allocation
Purchasing
Private
Public
Sub-regional resource allocation
Public Public
National
Provincial
Local
Strategic purchasing and catastrophic cover
Private
Government tier
Public health system architecture
Discussion
Medical schemes amendment bill
This is provided as additional material as it is too long for the talk. It can be referred to if questions
arise. In large part the Health Market Inquiry supersedes what is contained in the disjointed
MSAB. It is however noteworthy that the Minister’s briefing was at odds with the actual content of the MSAB – raising serious questions about the quality
of the policy process
Medical Schemes Amendment Bill –what the Minister said
• “The first amendment is to abolish what has come to be known as co-payments…”– Furthermore, the data at our disposal shows that medical schemes are holding
reserves of close to R60 billion that are not being used.– Granted, there is a statutory requirement that medical schemes should have 25%
of their income in reserve. This is to cater for emergencies. But presently the R60 billion is equivalent to 33% reserves, which means unnecessary accumulation at the expense of patients.
– These huge reserves were accumulated partly through high premiums but also by introducing the co-payments such that medical schemes avoid having to pay or even dip into the reserves if the situation demands.
– Furthermore the Council for Medical Schemes (CMS) is busy reviewing this statutory requirement of 25% with a view to releasing enough money for patients rather than holding a lot of reserves while patients suffer the hardships.
• The MOH fails to understand the nature of a reserve relative to a current liability – such as a benefit payment
• “The second amendment is to abolish the practice of using brokers within the medical scheme environment”– “We are aware that most of the work supposedly done by
brokers is actually done by the Council for Medical Schemes - the statutory body.” (MOH)
– “We believe that brokers play an important role in advising members but that their interests should be aligned more closely to those of applicants/members.” (HMI)
• Brokers are not abolished in the MSAB!
• “The third amendment is to abolish the practice of Prescribed Minimum Benefits (PMBs) and replace it with comprehensive service benefits.”– “To address the lack of comparability across scheme
options and inability of consumers to compare the value of these options, the HMI proposes that a standardised benefit package be developed that must be offered by all schemes (the obligatory ‘base benefit option’).” (HMI)
• “The fourth amendment deals with the various unequal and even unfair benefit options which medical schemes are subjecting their members to.” – “The amendment prevents any medical scheme from
implementing any benefit option unless approved by the Registrar of the Council for Medical Schemes and in doing this the Registrar will have to determine first that such an option is in the best interest of the member.”
• This is already in the MSA – via the approval of amendments to rules in section 31(1)(a) and (b)
• “The fifth amendment is to declare the carrying on of the business of a medical scheme by a person not registered as a medical scheme to be a specific offence.”
• This is already in the Medical Schemes Act
• “The sixth amendment is the creation of a central beneficiary and provider registry and the management thereof by the Registrar of the Council for Medical Schemes.”– Was provided for in the MSAB of 2008 which was allowed to
lapse because it related to the REF– “Risk adjustment would be of little use if it is not applied to a
standard basket of benefits. In the absence of a standard package, it would be impossible to measure the risk across schemes fairly. Therefore, as indicated above, the HMI proposes that a risk adjustment mechanism be implemented for the base benefit package to be offered by all schemes.” (HMI)
• “The seventh amendment is to introduce income cross-subsidisation model”– “The essence of NHI which must start now even with the present medical aid
schemes is that the rich must subsidise the poor, the young must subsidise the old and the healthy must subsidise the sick. The present contribution table charges the same rate for a lower income earner and a high income earner for the same benefits. This practice completely negates the principles of income cross-subsidisation.” (MOH)
– “To address the needs of low-income scheme members, it is recommended that the current tax credit regime be reconstituted to take the form of a contribution subsidy administered through the RAM rather than though the South African Revenue Services. In this way the RAM would be able to integrate both a risk and income adjusted subsidy in a manner consistent with similar arrangements around the world.” (HMI)
• Income cross-subsides can only be introduced through government subsidies. There is no way that open medical schemes can assess incomes as a basis differentiating contributions
DOH consultation report of 2002
• “Income-based cross-subsidies are generally achieved through the tax system, or mandating insurance in a manner that closely follows normal tax principles. In essence people pay according to their means, but receive benefits according to their needs. The following instruments are important within the South African context:– The level of general tax funding for public services;– Subsidies to the private sector (tax subsidies versus on-balance sheet per
capita subsidies);– Contributions to medical schemes (flat-rate versus income-based); and– Mandating contributions to either social health insurance or medical
schemes.• The redesign of the income tax subsidy represents the only viable
short- to medium-term measure for achieving minimum required income-based cross-subsidies across the entire health system, both public and private.”
• The eighth amendment is to compel medical aid schemes to pass back savings if a member uses a designated service provider according to the rules of the scheme. – Presently medical aid schemes compel members to use
designated service providers in order to save money. – This is a good practice to be encouraged but however the
problem is that these savings are taken over by the scheme or the administrator instead of being passed on to the member in the form of premium reduction.
• I can’t find this in the MSAB
• “The ninth amendment deals with the cancellation of membership and waiting periods between joining a scheme and accessing benefits.”– “This is because under NHI there will be no penalty related to
late joining or age. This is further to protect the interest of living spouses after the passing of the principal member or after retirement prior to payment of their benefits.” (MOH)
– Waiting periods are retained in the MSAB – although some provisions are not clear
– The HMI retains waiting periods and looks for additional measures to attract membership for adults under the age of 30
• “The tenth amendment is Governance of medical schemes.” – “This amendment for minimum educational requirement
and expertise to be a member of a Board of Trustees or a CEO of a Medical Aid Scheme.”
• Ahem… The MSAB goes far further than this
• Provides for minimum and maximum board size (no smaller than 5 and no more than 10)
• Fit and proper requirements• Requirement for a scheme CEO • The CEO is allocated specific responsibilities in terms of the
Act (but no requirement for a CFO ?)• Establish parameters for BOT remuneration• Removal of a CEO by the BOT – including appropriate
disclosure to the Registrar• Ability to publish norms for good governance (as guidance)
Not mentioned by the Minister
Section 34 of the principal Act is hereby amended by the addition of the following subsection:"(3) The registrar may, after consultation with the Minister, restrict the extent of benefits offered by medical schemes, having regards to the benefit and services coverage under the Fund thereby eliminating duplicative costs for the same benefit.”
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