Bafana Nkosi

Finweek English Edition - - Healthcare -

AS THE AN­TIC­I­PATED im­ple­men­ta­tion of the Risk Equal­i­sa­tion Fund (REF) has been slow – due to the fact that the Med­i­cal Schemes Amend­ment Bill, of which it forms part, was de­layed by among other things the changes at the Health Min­istry – progress with the Bill and REF will be the top pri­or­ity among med­i­cal aid sup­pli­ers this year, says Bafana Nkosi, chief prin­ci­pal of­fi­cer of Boni­tas Med­i­cal Fund.

“I hope we don’t have to wait un­til the end of the year be­fore the Bill gets passed. In fact, I’d love to see the speedy pro­mul­ga­tion and im­ple­men­ta­tion of the Med­i­cal Schemes Amend­ment Bill so we can get on with the prover­bial job,” says Nkosi.

The Bill – which will e8ect the es­tab­lish­ment of the REF – pro­poses tighter gov­er­nance mea­sures within schemes and is widely con­sid­ered to be a pos­i­tive step for­ward for the med­i­cal aid in­dus­try. “How­ever, it’s crit­i­cal that this be in­tro­duced with some form of sub­sidy in terms of in­come or else there’s a risk that we’ll chase more lives out of the sys­tem,” says Nkosi.

Un­til the leg­is­la­tion that has been con­sid­ered by Par­lia­ment, the REF unit at the Coun­cil for Med­i­cal Schemes (CMS) con­tin­ues to re­ceive quar­terly data sub­mis­sions from schemes, con­sid­ers the qual­ity of the sub­mis­sions, cal­cu­lates the 1nan­cial im­pact on schemes and gives feed­back to schemes in that re­gard, says CMS com­mu­ni­ca­tions man­ager Alek­san­dra Serwa.

As things stand, the num­ber of peo­ple who hold med­i­cal aid mem­ber­ship seems to have stag­nated at around 7m and the REF, which un­der­pins the Health Depart­ment’s vi­sion of an equal health in­sur­ance sys­tem for South Africans, will make med­i­cal aid mem­ber­ship manda­tory for all em­ploy­ees. “The in­ten­tion is to make med­i­cal aid more a8ord­able, sta­bil­is­ing the in­dus­try and en­sur­ing greater eq­uity in the al­lo­ca­tion of health­care ser­vices and re­sources,” says Nkosi.

He says the REF’s suc­cess­ful de­ploy­ment will level the play­ing 1elds be­tween schemes sub­stan­tially, as it will be­come a cen­tral fund for med­i­cal schemes and used to re­dis­tribute con­tri­bu­tions to med­i­cal schemes with poorer risk pro1les. That means in ad­di­tion to the con­tri­bu­tions re­ceived from mem­bers most schemes will re­ceive al­lo­ca­tions from or make con­tri­bu­tions to the REF, de­pend­ing on the risk pro1le of its mem­bers.

“When the Med­i­cal Schemes Amend­ment Bill is adopted, med­i­cal aid schemes will have to de­cide on a set of com­mon bene1ts, in­clud­ing the Pre­scribed Min­i­mum Bene1ts (PMBs) that will be o8ered to all mem­bers at the same con­tri­bu­tion rate. Schemes will no longer be able to o8er di8er­ent op­tions with di8er­ent lev­els of hospi­tal cover.

“What that means is mem­bers who are sicker or older than oth­ers won’t au­to­mat­i­cally be pay­ing more. In ad­di­tion, in­come cross-sub­sidi­s­a­tion will mean lower in­come earn­ers won’t be faced with in­come bar­ri­ers to gain ac­cess to med­i­cal aids, thus ex­pand­ing the num­ber of lives cov­ered and im­prov­ing the in­dus­try’s over­all risk pro1le.”

The REF will pro­vide a fund­ing ve­hi­cle for med­i­cal schemes to pay the same for the manda­tory PMB bas­ket of ba­sic bene1ts. That equal­i­sa­tion will en­able the costs and risks of fund­ing the PMB pack­age to be spread evenly across the var­i­ous schemes,

ac­cord­ing to the ra­tios of young and healthy or sick and el­derly mem­bers of re­spec­tive schemes.

“That will equalise the risk in the en­tire in­dus­try,” says Nkosi. “Cross-sub­si­dis­ing the el­derly and sick with younger and health­ier mem­bers is a bedrock prin­ci­ple of med­i­cal scheme leg­is­la­tion and we be­lieve the adop­tion of that ap­proach will prove to be one of the most bene1­cial mar­ket moves made in years.”

With re­gard to PMBs, two con­sul­ta­tive work­shops were held with stake­hold­ers dur­ing 2008 and two con­sul­ta­tion doc­u­ments pub­lished. Com­ments on the sec­ond draft of the con­sul­ta­tion doc­u­ment have been con­sid­ered by the PMB re­view steer­ing com­mit­tee. A third draft of the PMB re­view con­sul­ta­tion doc­u­ment will be pub­lished soon.

“The pur­pose of the con­sul­ta­tion doc­u­ment is to doc­u­ment the prin­ci­ples un­der­ly­ing the se­lec­tion of con­di­tions and/or ser­vices de1ned in the PMBs. Stake­holder par­tic­i­pa­tion in­cludes the pro­vi­sion of cost data that will as­sist to en­sure the re­vised PMB pack­age is a8ord­able. The process is likely to con­tinue un­til end-2009,” says Serwa.

Nkosi says schemes with more costly client bases, such as those with a high pro­por­tion of re­tired mem­bers, will be sub­sidised by schemes that hold the bene1t of mem­bers still young and healthy. “The goal is to grow a sin­gle risk pool while re­tain­ing in­di­vid­ual schemes and, ul­ti­mately, that will lead to schemes be­ing forced to di8er­en­ti­ate them­selves through cost and qual­ity of the cover they pro­vide,” Nkosi says. “That’s an ideal sit­u­a­tion as far as Boni­tas is con­cerned, as med­i­cal aid providers will be com­pet­ing on lev­els that ac­tu­ally mat­ter rather than only where pro1ling is con­cerned, as has been the case in the past.”

PMBs will be re­viewed con­tin­u­ally – par­tic­u­larly with a na­tional health in­sur­ance (NHI) im­mi­nent – to en­sure they don’t conMict with the con­tents of the NHI. The NHI will ba­si­cally en­sure even those who can’t a8ord med­i­cal aid have ac­cess to health­care. The main aim is that those who can a8ord to pay will help to sub­sidise those who can’t. How­ever, the way it’s im­ple­mented is cru­cial, Nkosi says. “While it should be es­tab­lished and reg­u­lated by Gov­ern­ment, pri­vate health­care should be al­lowed to ad­min­is­ter and run it to en­sure max­i­mum e2­ciency.”

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