How to ease headaches caused by medical aids
Panel recommends ways to simplify and improve policies
It should be much easier to choose a suitable medical scheme from among the many on the market and to know it provides for a high standard of health-care services, the Competition Commission's health market inquiry says.
The panel that conducted the inquiry, led by former chief justice Sandile Ngcobo, also thinks schemes discriminate against older, sicker members as they are typically forced to pay more to belong to plans that offer comprehensive cover.
So the inquiry strongly recommends that all schemes be forced to offer a single standardised benefit package defined as a list of conditions and the relevant treatment.
It also says it will be much easier to understand what cover the schemes offer if these benefits are the same as the list of revised minimum benefits that emerges from the Council for Medical Schemes' (CMS) review of the prescribed minimum benefits (PMBs).
There is widespread agreement in the medical scheme industry that the revised PMBs should include benefits for preventive health care, such as vaccinations, and primary health care, such as visits to your GP and the tests and medicines they recommend.
The council has stated that it expects to be costing and reviewing the revised minimum benefit package between April next year and March 2021.
Health economist Dr Lungiswa Nkonki, a member of the health market inquiry panel, tells Money it is the job of the CMS and the department of health to decide what is in the basic benefit package, but the inquiry panel hopes the regulator will follow its recommendations on how to define the package.
The panel also suggests that schemes price this package of benefits in line with the health-care deals a scheme can secure, rather than the members the scheme attracts. It has proposed measures to ensure providers charge fair prices for essential benefits and to improve competition among providers.
Currently, the PMBs cost all members more in scheme options with older, sicker members because these members claim more. This cost is spread among all the members of an option, and sometimes other options also subsidise loss-making ones, but this typically results in healthier, younger members leaving the option for something more affordable.
The older, sicker members therefore tend to land up in options with benefits designed to suit them, while younger members end up in leaner, cheaper options. In this way you end up paying in line with your state of health, which may be poor through no fault of your own.
To correct this, the inquiry recommends putting in place a mechanism like the risk equalisation fund (REF), which the council ran in a test or shadow phase until 2011.
According to the council, in 2017 some schemes spent as little as R300 per beneficiary a month to provide members with PMBs while others spent close to R2,000.
To ensure that the differences in cost of basic benefits are only a result of the scheme's trustees being able to negotiate for value for money and not because members are healthier, a risk adjustment process would pool funding for the basic benefits and pay it back to schemes in line with their membership profiles, with more per member going to schemes with members who have the most illnesses.
The inquiry panel believes the department of health should use all possible means to reduce the cost of health care
Nkonki says the health market inquiry believes there is still a wealth of knowledge from the REF shadow process that could be harnessed to quickly implement risk adjustment mechanisms if there is political will and commitment to do so.
She says the process was abandoned because it was viewed as a mechanism to entrench schemes and share the risks over smaller groups or risk pools, but the inquiry is of the view that such a mechanism is key to making health care more affordable.
Nkonki says the panel believes the private sector's expertise should be used to develop an affordable basic benefit package that can become the National Health Insurance (NHI) benefit package.
She says some argue that if the NHI fund alone is purchasing health-care services it will be able to drive down prices, but the panel is not convinced of this and believes the department of health should use all possible means to reduce the cost of health care.
Rajesh Patel, head of benefits and risk at the Board of Healthcare Funders (BHF), is not sure a risk adjustment mechanism will be implemented. He says the inquiry's recommendations are focused on improving competition, but not all of them may be necessary for a streamlined, affordable health-care system.
Though the inquiry thinks scheme members should share the risks of the basic benefit package, if you want to buy more than essential services you may have to pay for additional benefits, as you do for insurance, in line with your age and health risks.
The inquiry recommends another proposal first mooted years ago - that schemes be allowed to offer a set number of easy-to-compare supplementary health-benefit packages that you can buy in addition to the basic benefits, but which will be priced according to your age and risk. The inquiry says these supplementary benefits will do away with the need for a gap-cover policy.
Charlton Murove, head of research at the BHF, says these supplementary benefits will fall into the nice-to-have category.
He says the cost of the basic package will be addressed through measures such as ensuring members get treatment earlier because benefits are comprehensive, and through GP referrals being mandatory for visits to specialists.
Nkonki says the inquiry believes risk rating on supplementary benefits should only be introduced if the basic benefit package is comprehensive.
The inquiry has made recommendations aimed at ensuring the trustees of a scheme are better equipped to determine which health-care providers can offer value for money, and if its recommendations are adopted there could be some savings from changes to the doctor, pharmacy and hospital networks some scheme options insist that members use.
Broker commission visible
In addition, Nkonki says while the inquiry sees value in brokers, it wants you to be able to ditch your broker and pay a lower contribution if your broker isn't really helping you.
She says many members do not know that their scheme pays a broker on their behalf and do not use brokers to get the health-care services they need or to get claims paid.
By making you aware of the broker fees, the inquiry hopes to nudge brokers to be more active in offering you assistance.
More than a decade ago the CMS proposed removing the limit on broker commissions and getting members to opt in for broker services, but the proposal was abandoned.
Nkonki says she hopes that this time the recommendation is adopted as it is backed by a comprehensive analysis of the sector.
Patel says the inquiry has made some "great" recommendations, but there are a lot of unresolved, conflicting policy issues, including those with the Conduct of Financial Institutions (Cofi) Bill, which covers medical schemes as financial products.
He says good leadership and stewardship are required to arrive at the best government policy that is good for competition and for people's health and which meets the requirements of the Cofi Bill.
While it is likely that some of the health market inquiry's recommendations will be implemented, there will be no immediate changes to your cover until this happens.
Public hearings on the NHI Bill begin on October 25 and the draft Medical Schemes Amendment Bill has yet to be re-issued for comment or tabled in parliament.