Hospital association proposes mandatory medical scheme enrolment

Reviving a set of healthcare reforms that were abandoned when the ANC embarked on National Health Insurance (NHI) could slash the number of patients who rely on public health facilities and improve everyone’s access to care, SA’s biggest private hospital association said on Monday.

Before the ANC’s 2007 resolution on NHI, the health department had planned to introduce compulsory medical scheme membership for everyone in formal employment and their dependants, along with a risk equalisation fund to level the playing field between schemes.

If similar plans were brought into play today, mandatory medical scheme membership could triple the size of the medical scheme market from 9.2-million to 27.5-million beneficiaries and reduce the number of people dependent on the state from 53.8-million people to 35.5-million, according to the Hospital Association of SA (Hasa). The analysis assumes a dependency ratio of 2.4.

“We have done a lot of research on this and hope we can collaborate and co-operate with the government to take it forward,” private hospital group Netcare CEO Richard Friedland said in an interview with Business Day.

“This is an approach that won’t cripple the economy,” he said shortly after presenting the research at Hasa’s annual conference.

He told delegates that there were legitimate concerns about the feasibility of the reforms proposed in the NHI Act, signed into law by President Cyril Ramaphosa in May, and that the scheme would take far too long to implement.

Critics of NHI have questioned its financial viability, given SA’s high unemployment rate and small tax base. Previous analysis commissioned by Business Unity SA showed raising the extra R200bn the health department has said it needs to fund NHI would entail unrealistic and unaffordable tax hikes. It would require increasing personal income tax by 31%, increasing VAT from 15% to 21.5%, or collecting a payroll tax of R1,565 per month from everyone in formal employment.

Introducing compulsory medical scheme membership for people in formal employment would improve access to healthcare services for both public and private sector users in the near term, said Friedland.

Compulsory medical scheme membership would bring more young and healthy lives into the system, reducing the cost of monthly premiums by 25%-30%.

Reducing the number of people dependent on the state would increase annual public health per capita spending by 52% from R5,054 to R7,659, alleviate the strain on public hospitals and clinics, shorten waiting lists, and free up money to hire more staff and improve infrastructure.

Friedland said the scheme could be implemented in three phases, starting with people who are formally employed and earning above the tax threshold. This would increase medical scheme coverage from 9.2-million beneficiaries to 15.4-million. Public sector per capita spending would increase by 12.9%.

Phase two would include formally employed people earning below the tax threshold, which would push up medical scheme coverage to 27.5-million lives and expand public sector per capital spending by 52%.

Phase three, which assumes a recovery of the economy and the creation of more jobs, would see ongoing benefits to public expenditure: for every 1-million formal jobs created, the public health system would see a reduction of about 2.4-million people.

Compulsory health insurance schemes were a feature in many countries, said Friedland. Mandatory contribution schemes for civil servants had been implemented in 61% of the countries in Africa, while Thailand and many other Asian countries had started with mandatory cover for the formal sector before expanding to the non-formal sector.

Friedland also appealed for greater collaboration between the public and private sectors to train healthcare personnel, and to reduce state sector waiting lists for oncology and elective surgery.

kahnt@businesslive.co.za