Employers turn to private primary healthcare plans in lieu of elusive NHI
While national bodies to and fro on benefits, many companies have opted to pursue their own plans
Some employers are not waiting for the elusive National Health Insurance (NHI) scheme to improve the health of their workers, absenteeism levels and productivity.
Nor are they waiting for the health department and medical scheme regulator the Council for Medical Schemes to hammer out a set of benefits for a low-cost medical scheme option.
Instead, about 400,000-450,000 employees have been signed up for primary health-care plans that at least give them access to GPs, medicine, basic blood tests and X-rays in the private sector so they can avoid the time-consuming and inefficient clinics and state hospitals for these services.
But it’s a small dent in a potential market of about 8.3-million households.
Primary health-care plans typically start at about R240 a month per person, increasing with the number of services covered and insured amounts added for hospital stays or ambulance services after accidents.
Newer products developed under occupational health-care legislation, however, are cutting this cost to about R125 a month.
In 2017, regulations under the Insurance Act differentiated health insurance from medical schemes. Providers of primary health-care plans are expected to apply for exemptions from the Medical Schemes Act, while a low-cost medical scheme option, enjoying a general exemption from the act and catering for these plans, is devised.
In March, instead of publishing a draft of the low-cost option benefits, the Council for Medical Schemes published a document reviewing the merits of developing a voluntary option when compulsory membership with government subsidisation of contributions appears to be more successful internationally.
While the policymakers have been dithering, the insurers who obtained exemptions are slowly growing their plans.
Martin Neethling, head of Sanlam Health insurance and distribution, says there is a lot of interest in primary health-care cover, but uptake has been slow as a result of the time it takes businesses to sign up, the weak economy and regulatory uncertainty.
He says the council’s decision to roll over the exemptions under the Medical Schemes Act for another year could renew interest. Sanlam is quoting for plans covering 70,000 lives, he says.
The biggest appetite for this cover is among those earning R14,000-20,000 a month, Neethling says.
Jill Larkan, head of health care at GTC, says only about 1% of employees in the employer groups GTC advises are signed up for primary health-care plans and medical schemes are still preferred by employers who have decided to cover all their employees.
Two years ago the Council for Medical Schemes granted only 23 of 40 providers exemptions for primary health-care plans. New insurers cannot enter the market because the exemptions were only available to those operating when the regulations were issued.
Discovery Health was among those who were initially unsuccessful in obtaining an exemption, but in February its life assurance company was granted an exemption to continue a scheme for 30,000 lives.
Another unsuccessful provider, Agility Insurance Administrators, has taken the decision by the council’s appeal board not to give it an exemption for its 1,000-member plan, Agility Staffcare, on review in the Pretoria high court, said company CEO Neels Barendrecht. A court date has not yet been set.
Primary health care can be provided to employees outside of the Medical Schemes Act and its exemptions under the Occupational Health and Safety Act. Neethling said Sanlam offers this cover as well as insurance products. Insurance products can be offered to employees who want to take out the cover, or an employer can make the cover compulsory for employees. The compulsory products are significantly cheaper, he said.
Like compulsory insurance plans, occupational health care is made available to all employees, but Neethling said there are strict rules about what benefits can be offered and Sanlam has taken legal advice on what can be offered.
Avril Jacobs, compliance manager at the council, says the authority regards occupational health care as that provided by an employer in order to enable an employee to do their job. For example, a miner may need to pass certain health-safety checks before going down a mine and be evacuated in the event of a mine collapse.
Reinder Nauta, the innovator behind the CareCross network that once served about 180,000 lives, has now set up National Health Care, a provider network that includes 1,400 doctors and pharmacies such as Clicks, Dis-Chem, Medirite and some Alpha Pharm pharmacies.
National Health Care, an accredited administrator and managed care entity, backed by among others African Rainbow Capital, provides occupational health-care services including unlimited GP visits, medicines, basic blood tests and X-rays, and will also serve as a network for low-cost medical scheme options.
Nauta says National Health Care has contracted independent actuaries to advise employers on the potential costs of providing a package of benefits to their staff through its network and employers are then only billed for the actual costs incurred plus an administration fee.
Nauta says a call-centre company in financial services in the Western Cape was recently quoted R210 a month for an insurer’s primary health-care plan for each of its 140 employees. This amounted to R355,000 for the year.
National Health Care has for the past six months been able to provide the same services for R125 a month per life, representing a 41% saving for the company.
In addition, the company reduced its absenteeism substantially.
Mandla Moyo, National Health Care’s financial director, says tax deductions and benefits from reduced absenteeism far outweigh the R125-a-month cost.
Uptake of low-cost schemes
About 5.8-million households could be eligible for cover from a low-cost medical scheme option that targets members earning less than R6,000 a month, but if the income threshold is increased to R16,000 a month, about 8.3-million households would be eligible, the Council for Medical Schemes notes in a recently released discussion document on the development of a low-cost benefit option for medical schemes.
It estimates that since it would be voluntary for members to join, about 100,000 earning below R6,000 would join and between about 300,000 and 380,000 households earning below R16,000 could take up the option.
A higher number are likely to take up the option if a less generous package of benefits, excluding hospital benefits, dentistry and optometry and costing about R400 a month, is developed, and fewer if the package includes some of these benefits and the cost increases to R800 a month.
It is now more than 12 years since the first industry workshops on low-income medical schemes and more than three years since the council published a draft set of benefits for these options. The proposed benefits attracted much criticism from medical practitioners and were subsequently withdrawn.