New medical insurance demarcation regulations coming into effect from April this year will rob millions of South Africans of access to affordable private healthcare, while forcing them to hang around for “pie in the sky” low-cost services provided by the NHI.
This is according to Leon Louw, executive director of the Free Market Foundation, who said that the government’s interference in the private healthcare sector should be seen as “insidious assault on personal freedom”.
“The demarcation regulations penalise us for protecting our health, force us to buy insurance for strangers, and subject us to the biggest and most costly bureaucratic empire on the continent – National Health Insurance (NHI).
“It is minimising our choices and maximising inefficiency. Basic principles of economics and the rule of law, especially the separation of powers, are being compromised to vanishing point,” Louw said.
National Health Insurance is government’s plan to put in place a compulsory, state-run universal healthcare scheme, that is partly funded by private medical aid users (through tax credits) and other measures.
According to health minister Aaron Motsoaledi, the scheme is seen as a replacement for medical schemes in the country, but will not banish the role of private healthcare outright – though it is expected that private medical insurance must transform to fit into the new landscape.
Among these transformations is the closing down of smaller schemes (with fewer than 6,000 members), and bringing all medical aids under the Medical Schemes Act.
These changes have been met with criticism from the private healthcare sector, with various reports showing how medical aid users stand to lose thousands of rands each year to the NHI, while many more will lose their health plans altogether.
One of the biggest casualties of government’s plans are low-cost medical schemes, which, under the new regulations, will be forced to operate as fully-fledged medical aids, making their business models and processes obsolete.
Until deregulation, the private insurance companies were not as highly regulated as medical aid schemes and could afford to offer cheaper and more innovative products to target groups of consumers.
Now, under the demarcation regulations, they must offer expensive prescribed minimum benefits which, at today’s rates, costs on average R680 per month.
Also, they are precluded from risk profiling members and prevented from charging late joiners a higher premium except in certain circumstances.
“This may sound good for the consumer but, in reality, drives up costs and restricts choice for the majority of medical insurance subscribers. The demarcation regulations are not in consumers’ interests,” Louw said.
The end result of the process – limiting the insurance sector – is to immediately remove access to low cost medical care for millions, he said.
“By forcing insurance companies to behave like medical aid schemes means that low cost benefit options for low- to middle income earners will effectively disappear. Meanwhile, we wait for NHI and low cost benefit products for all – pie in the sky.”
Louw said that the government should leave the private sector to those who can afford it and focus on financing health care for those who cannot.
“With the demarcation regulations, government has introduced more heavy-handed regulation into one of, if not the most, regulated sectors of the economy.”