Medical schemes fight regulator’s move to scrap low-cost benefits
Several health insurers also lodge appeals against shock circular
The medical schemes industry is fighting back against the regulator’s shock move last year to scrap primary health insurance and low-cost benefit packages, with its two biggest associations lodging formal appeals.
According to industry sources several health insurers have also lodged appeals.
In December, the Council for Medical Schemes (CMS) issued a circular saying no primary health insurance plans would be permitted after March 2021, and ended a long-running process to develop low-cost benefit options that would be pared down, cheaper versions of traditional medical scheme packages.
Circular 80 effectively overturned an agreement that was agreed to by health and finance ministers that allowed primary health care plans to remain in place until a new low-cost benefit regime had been implemented.
The CMS is a statutory body charged with overseeing the R160bn medical schemes industry, and protecting the interests of the 8.92-million lives it covers.
It has now emerged that the Board of Healthcare Funders (BHF) and the Health Funders Association (HFA) have challenged circular 80 with the CMS appeals board. Both associations represent medical schemes and administrators, and each holds a dominant player: SA’s biggest restricted scheme, the Government Employees Medical Scheme (Gems) belongs to the BHF, while SA’s biggest open scheme, Discovery Health Medical Scheme (DHMS) belongs to the HFA.
Urgency of matter
BHF head of research Clinton Murove said the organisation lodged an appeal with the CMS appeal board in terms of section 50 of the Medical Schemes Act, but does not yet have a date for a hearing. Murove said he knew of at least a dozen parties that had lodged appeals against circular 80.
Given the urgency of the matter, the BHF was also preparing to take legal action, he said.
The CMS declined to answer Business Day’s questions or indicate how many appeals it has received.
“The registrar cannot be seen to be interfering in the independent legal proceedings, therefore we cannot disclose the entities that have either lodged the appeals or the content thereof,” said CMS spokesperson Grace Khoza.
The HFA has lodged a joint appeal with DHMS, its administrator Discovery Health, four other medical schemes (Bankmed, Fedhealth, Profmed and LA Health) and two other administrators (Momentum Health and PPS Healthcare).
Discovery Health CEO Ryan Noach said circular 80 would strip more than 500,000 South Africans of affordable access to private health care. Primary health insurance premiums cost a fraction of traditional medical scheme cover, as they provide fewer benefits, and are often heavily subsidised by employers. Discovery Life, which holds the licence for a primary care product, submitted its own appeal in December, he said.
Discovery Life and Discovery Health are subsidiaries of the JSE-listed health and life insurer Discovery.
“Discovery Primary Care is a product that is highly valued by employers and employees in formal employment. Many of the large employer clients that have purchased this product for their employees have raised serious concerns about their employees’ wellbeing following this circular,” said Noach.
Health insurance industry consultant Kerry Hertog said there was mounting industry opposition to circular 80, and a picket at the CMS offices in centurion was planned for Thursday.
Free Market Foundation health care adviser Mike Settas, who worked previously in the health insurance industry, said CMS registrar Sipho Kabane had verbally assured stakeholders of his intention to reverse circular 80 at a meeting in January, but had taken no further action.
“[It] leaves the industry in a policy vacuum, creating a great deal of anxiety and jeopardising the future of these products,” he said.