A review of the reform legislation relating to medical schemes in South Africa : 1994 to 2007

Mahmood, Aklaaq Ahmed (2007-12)

Thesis (MBA (Business Management))--University of Stellenbosch, 2007.

Thesis

ENGLISH ABSTRACT: The democratic government of South Africa inherited a healthcare system that was fragmented and inequitable. The Department of Health was mandated by the Constitution and the Bill of Rights to implement a system whereby quality, affordable healthcare could become available to all citizens of the country within the constraints of the available resources. The objective of government, through reform legislation, is to establish a social health insurance (SHI) system for the country which will ultimately lead to the implementation of a national health insurance (NHI) system in order to achieve universal coverage. Medical schemes have been identified as an important component of this transformation process. The private healthcare industry, represented largely by medical schemes, acknowledges that SHI is the ideal pathway chosen by government to achieve universal coverage, but is concerned with the process being used to achieve this aim, the pace at which transformation is occurring, and the effect of this on medical schemes. The movement towards an equitable healthcare system required the introduction of reform legislation necessary for the establishment of an enabling environment. The implementation of community rating, open enrolment and prescribed minimum benefits (PMBs) reforms, succeeded in ending the risk-rating of those medical schemes that were excluding members who were considered vulnerable. However, these legislations were not followed by a risk equalisation mechanism in the form of a proposed risk equalisation fund (REF) for the South African environment. The main purpose of this fund is to ensure that equity within the medical schemes industry is maintained through the equalisation of the risks that had resulted from the implementation of the first components of reform legislation. The research into the experiences of other countries shows that South Africa is the only country in the world that has implemented the above legislation without a system of risk equalisation. All indications are that the proposed implementation of the REF has been delayed to beyond 2009. In addition, the reform legislation regarding the statutory solvency ratio requires medical schemes to maintain this ratio at 25 percent. This, together with the delay in REF is placing financial pressure on medical schemes. Low income medical schemes (LIMS) legislation is pending implementation. Its purpose is to provide basic medical cover to the lower income market until such time that the components of SHI have been fully negotiated; it is thus an interim measure, but no indication to implement LIMS has yet been given. The average number of years for a country to implement SHI is 70. The South African situation is only 13 years old and though some success has been achieved during this relatively short period, much more still needs to be accomplished. The research shows that, the approximate timelines and intended sequence of implementing the reform legislation were perhaps too ambitious. This has caused the industry stakeholders to be disillusioned about the current state of affairs. Given the time that has elapsed, and considering the progress that has been made thus far, it is recommended that the existing plan be revised or even replaced with a more realistically timed one. This will restore some of the confidence into the “future healthcare vision of universal coverage” for South Africa intended by the government, through a system of social health insurance.

AFRIKAANSE OPSOMMING: Die demokratiese regering van Suid-Afrika het ‘n gesondheidsorgstelsel geërf wat gefragmenteerd en onregverdig was. Die Departement van Gesondheid het in die Grondwet en die Handves van Menseregte die mandaat gekry om ‘n stelsel te implementeer waarvolgens bekostigbare gesondheidsorg van goeie gehalte vir alle landsburgers beskikbaar kon word binne die beperkinge van die beskikbare hulpbronne. Die regering se doelwit met hervormingswetgewing is om ‘n maatskaplike gesondheidsversekeringstelsel (SHI) vir die land daar te stel wat uiteindelik sal lei tot die implementering van ‘n nasionale gesondheidstelsel (NHI) met die oog op universele dekking. Mediese skemas is geïdentifiseer as ‘n sleutelkomponent van hierdie transformasieproses. Die privategesondheidsorgindustrie, wat grotendeels deur mediese skemas verteenwoordig word, erken dat SHI die ideale weg is wat deur die regering gekies is om universele dekking te bereik, maar is besorg oor die proses wat gebruik word om hierdie doelwit te bereik, die pas waarteen transformasie geskied, en die uitwerking hiervan op mediese skemas. Die beweging na ‘n regverdige gesondheidsorgstelstel het vereis dat hervormingsgswetgewing ingestel word soos nodig vir die daarstelling van ‘n omgewing wat dit moontlik maak. Die implementering van gemeenskapsevaluering, oop lidmaatskap en hervorming van voorgeskrewe minimum voordele (PMB’s) was suksesvol vir die beëindiging van die risikoevaluering van daardie skemas wat lede uitgesluit het wat as kwesbaar beskou is. Maar hierdie wetgewing is nie opgevolg deur ‘n risikogelykstellingsmeganisme in die vorm van ‘n voorgestelde risikogelykstellingsfonds (REF) vir die Suid-Afrikaanse omgewing nie. Die hoofdoelwit van hierdie fonds is om te verseker dat gelykheid binne die mediesefondsindustrie gehandhaaf word deur die gelykstelling van risiko’s wat die gevolg was van die implementering van die aanvanklike hervormingswetgewing. Navorsing oor die ondervinding in ander lande toon dat Suid-Afrika die enigste land in die wêreld is wat sodanige wetgewing geïmplementeer het sonder ‘n stelsel van risikogelykstelling. Alle tekens dui daarop dat die voorgestelde implementering van die REF uitgestel is tot na 2009. Daarbenewens vereis die hervormingswetgewing ten opsigte van die statutêre solvensieverhouding dat mediese skemas hierdie verhouding op 25% handhaaf. Tesame met die vertraging in REF plaas dit finansiële druk op mediese skemas. Lae-inkomstemedieseskemas (LIMS) is verdere hervormingswetgewing wat wag op implementering. Die doel daarvan is om basiese mediese dekking te voorsien aan die laer-inkomstemark totdat die komponente van SHI ten volle onderhandel is. Dit is dus ‘n oorgangsmaatreël, maar daar is nog geen aanduiding gegee van die implementering van LIMS nie. Die gemiddelde tyd wat dit neem vir ‘n land om SHI te implementeer, is 70 jaar. Die Suid-Afrikaanse situasie is net 13 jaar oud, en hoewel daar heelwat sukses behaal is in hierdie relatief kort tydperk, moet daar nog baie meer bereik word. Navorsing toon dat die geskatte tydperk en voorgenome opeenvolging van die implementering van die hervormingswetgewing dalk te ambisieus was. Dit het veroorsaak dat die belanghebbers in die industrie ontnugter is oor die huidige stand van sake. Met inagneming van die tyd wat verloop het en die vordering wat tot dusver gemaak is, word daar aanbeveel dat die bestaande plan hersien word of selfs vervang word deur een met ‘n meer realistiese tydsbeperking. Dit sal ‘n mate van vertroue herstel in die Suid-Afrikaanse Regering se “toekomsvisie van universele gesondheidsdekking” deur ‘n stelsel van maatskaplike gesondheidsversekering.

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