Low-cost plan still pie in sky

Low-cost medical plans can offer workers in the private sector access to much-needed basic healthcare, but despite employers being willing to sponsor this cover, uncertainty about the legality of the products may hinder growth of membership.

Discovery Health’s primary healthcare plan is in legal limbo following failure to obtain the necessary approval. Discovery’s plan covers 30,000 employees who previously did not have healthcare cover.

As public sector healthcare facilities remain troubled and the implementation of National Health Insurance (NHI) is still years away, employers have focused on primary healthcare plans to provide workers with access to private doctors, medicines, basic tests, optometry, dentistry, emergency services and limited private hospital cover for trauma and accidents at much-reduced contribution rates.

Benefits differ greatly but such products start from about R160 a month, with many around R400 to R500 a month.

They cover hundreds of thousands of lives.

The demarcation of health insurance and medical scheme business aimed to ensure good cross-subsidisation of older, sicker members by younger, healthier members.

Primary healthcare plans now need to register as schemes with an exemption from providing the expensive prescribed minimum benefits (PMBs).

Demarcation regulations under the insurance acts came into effect in April 2017, but the Council for Medical Sciences agreed that insurers’ primary plans could apply for exemption from the Medical Schemes Act while it developed a standardised, low-cost medical scheme option focused on primary healthcare.

But the acting registrar for medical schemes, Dr Sipho Kabane, said the low-cost medical scheme option would not be ready for implementation by March 2019, as expected. Only a draft for discussion would be ready by that date.

The council announced a framework for the low-cost option in 2015, but this was withdrawn and Kabane said revising it would take account of the PMB review currently under way, plans to align schemes to NHI proposals, as well as the recommendation by the Competition Commission’s health market inquiry that a standardised package of benefits be developed for schemes.

Avril Jacobs, a senior compliance officer at the registrar’s office, says Discovery’s appeal shows that while the low-cost benefit option is being developed, only a limited number of existing insurers active in the market who have obtained exemptions from registering as medical schemes, may continue to provide these plans, which are regarded as doing the business of a medical scheme.

The council reports that it granted exemptions to just 18 providers of primary healthcare plans out of 36 applicants representing 171 products. The council considered warnings to consumers about the scope of the products, discrimination, unfair waiting periods, failure to comply with Financial Sector Conduct Authority prudential requirements, failure to treat customers fairly and policyholder protection rules.

In June, Discovery was denied an exemption under the Medical Schemes Act to operate its primary healthcare plans and earlier in October its appeal against this decision was denied by the council’s appeal board. The appeal board agreed with the registrar’s office that Discovery Health is not entitled to apply for an exemption as it is not a registered insurer, although Discovery does have a registered insurer within the group.

The board says it sympathises with the beneficiaries, but Discovery’s Primary Care plans are illegally doing the business of a medical scheme.

It gave Discovery until February 2019 to remedy the situation.

Agility Insurance Administrators was in August also denied an appeal against the acting registrar's decision not to grant it an exemption and a directive that it should stop doing the business of a medical scheme illegally.

Discovery Health CEO Dr Jonathan Broomberg is optimistic, however, saying Discovery had been denied exemption on technical grounds and a new application for exemption was being reviewed.

Primary healthcare plans now need to register as medical schemes