CMS move to scrap products irks insurer
• Move to scrap low-cost products could be a catastrophe for consumers, says Day 1 Health’s Richard Blackman
The medical scheme regulator’s move last week to scrap health insurance products is at odds with the constitution and will have potentially “catastrophic consequences” for consumers, warns insurer Day 1 Health CEO Richard Blackman.
The medical-scheme regulator’s move last week to scrap healthinsurance products is at odds with the constitution and could have “catastrophic consequences” for consumers, warns insurer Day 1 Health CEO Richard Blackman.
The Council for Medical Schemes (CMS) issued a directive on December 4 that sent shock waves through the private health-care industry, announcing that no more exemptions to the Medical Schemes Act would be granted for entities that offered less cover than the law required after March 2021.
The circular, issued by CMS registrar Sipho Kabane on December 4 means primaryhealth and hospital-insurance products, as well as bargainingcouncil medical schemes that offer pared-down benefits, will have to be wound down by this deadline.
While the CMS says it is developing a primary healthcare benefit package for medical schemes, many industry players expect it will be added to the current benefits, pushing up the cost of medical scheme cover. Sources have also expressed doubt that the work will be completed by March 2021.
The circular also brought to a halt work that has been under way for several years to develop low-cost benefit options aimed at low-income workers, which were intended to replace health insurance products.
As things now stand, it means there will not be alternative products available to the beneficiaries of primary-health insurance products.
In the absence of a viable alternative, the demise of these products would be a violation of consumers’ constitutional right to access to health-care services and of their right not to be deprived of property, said Blackman.
The Constitutional Court has previously held on a number of occasions that the right to property includes contractual rights, he said.
Health-insurance products provide access to primary health care for about 500,000 people, according to the CMS.
These products are typically subsidised by employers and cost a few hundred rand a month, a fraction of the price of medical scheme cover.
Part of the reason they are so cheap is they provide limited benefits and offer cover only to people who are employed, thus excluding pensioners.
Blackman said Kabane’s assertion in the circular that health-insurance beneficiaries had access only to state facilities was untrue.
“Over 98% of all of our authorised hospital cases received thus far in 2019 were admissions to private hospitals, mostly Life Healthcare and Mediclinic, with whom Day 1
Health has formal contracts,” he said. Patients who used state facilities had their bills paid by Day 1 Health at rates regulated by the government, he said.
The circular said products targeting low-income workers presented an opportunity for inferior benefits.
“Such products potentially use the state as a designated service provider without entering into the necessary agreement,” it said.
According to Blackman, Day 1 Health covers about 20,000 lives.