How forcing medical schemes to cover 271 Prescribed Minimum Benefits raises the price of healthcare
Drip by toxic drip, the South African government is slowly and systematically poisoning the private medical scheme and insurance industries in South Africa. With each new pronouncement by government, SA consumers’ options are increasingly being limited, which is bad news for anyone who, in future, becomes seriously ill.
The latest dose is Treasury’s budget announcement to reduce medical scheme tax credits, presumably with a view to eventually phasing them out completely. The slow and steady removal of medical scheme tax credits will inevitably lead to a reduction in the number of people covered by private medical schemes as premiums rise and become less affordable. This will increase the burden on already over-stretched, state-run hospitals and clinics, and will have the predictable consequence of worsening healthcare outcomes in SA.
This latest move follows the demarcation regulations introduced in April last year that purportedly draw a line between medical schemes and health insurance policies such as gap cover, hospital cash back plans and other primary health insurance products. Again, this has the effect of raising the cost of cover since health insurance products will now be regulated under the more onerous and costly provisions contained in the Medical Schemes Act (MSA).
Consider, for example, the case of a young man diagnosed in early 2018 with a potentially fatal, inoperable cancer. His only hope of survival is a course of new age cancer drugs. However, these drugs are very expensive, but his medical scheme will only cover half of the total cost of nearly R1 million. This leaves him with a shortfall of about R500,000 that he needs to cover out-of-pocket. He could claim the shortfall from his gap cover policy, but, whereas previously gap cover benefits were unlimited, under the new regulations, they are now limited to R150,000 per annum per beneficiary. On these rare occasions when highly specialised, expensive treatments are required, medical schemes cannot cover the full cost of the treatment as they run the risk of bankrupting the entire scheme and having to deny cover to all beneficiaries enrolled on that option.