‘Council Against Medical Schemes’ prohibits medical aid for the poor

[Nat Quinn]

It has been 22 years since low-cost medical insurance plans were first contemplated. We still don’t have them.

Only 16% of the population can afford private health insurance, the government complains. The other 84% are dependent on the public healthcare system.

And that’s the government’s own fault.

The 16% spend about R205 billion on private healthcare via their medical aid schemes. The 84% have to make do with a budget of R259 billion, which pays for a public healthcare system that the government itself admits is poorly managed and overcrowded. And that’s putting it mildly.

Combine those two pots of money, so the logic goes, and the government will have R400 billion or more to lavish on a luxurious new public healthcare system that will serve 100% of the population and give everyone equal care.

The government will pay for all medical care, hospitals will be well-run and fully staffed, and everyone will get all the treatment they need with zero fees at the point of care.

And pigs will fly.

Being socialists, they don’t stop to think that the private pot does not belong to them. It comes from after-tax income, to which the government has no right to lay claim.

They also refuse to acknowledge that the reason private medical schemes do not cater for the less affluent is because it is illegal to do so.

Prohibiting healthcare

The government does not permit medical schemes, or anyone else, to offer affordable medical aid plans at lower prices to poor people. Instead, medical schemes are required to offer a generous package of ‘minimum prescribed benefits’, whether or not clients want, need or can afford them.

‘They keep saying “government provides most healthcare”,’ says Leon Louw. ‘Well, obviously, because they prohibit private healthcare for most people.’

Louw, who refers to the CMS as the ‘Council Against Medical Schemes’ and the DoH as the ‘Department Against Health’, recently founded the Freedom Foundation after being ousted from the venerable Free Market Foundation in a palace coup.

The statutory regulator of health insurance companies, the Council for Medical Schemes (CMS), would like everyone to think that it is working hard to introduce what it calls ‘Low-Cost Benefit Options’ (LCBOs)

However, by the CMS’s own account, it has been eight years since the term was coined, and then only to revive a process that was never actioned a decade earlier. The issue of low-cost medical insurance was first raised by the Centre for Actuarial Research (CARe) of the University of Cape Town in 2001, 22 years ago.

The CMS has recently taken to attacking critics who dare suggest it might want to hurry up, since the poor aren’t getting any richer and medical cover isn’t getting any cheaper.

‘Prevarication and stalling’

Fourteen months ago, Christoff Raath, joint CEO of Insight Actuaries, told the Board of Healthcare Funders (BHF) that ‘prevarication and stalling’ on the part of the CMS has deprived up to 20 million low-income South Africans from basic private healthcare.

According to MedicalBrief, he said that an estimated 10 million people could be covered by low-cost benefit options costing from R124 to R166 a month, and that if the Treasury scrapped medical scheme credits and used the money to provide a R100 monthly grant towards low-cost benefit cover, the figure could rise to 20 million people, or a third of the population.

Louw says Discovery estimates the market for low-cost plans to be between five and eight million. Dischem, he says, believes it’s 12 million. Louw himself puts the likely size of the market for low-cost medical cover at nearer 40 million.

The CMS reacted angrily to Raath’s claims, and promised punitive action. It swore that it was still working on LCBOs, and that the market for them would in any case be limited to perhaps 2.3 million people.

Yet more than a year later, there’s no sign of the new regulatory framework.

Superior cover

‘An assertion that the removal of the current tax credits for scheme members and the requirement to comply with the currently guaranteed Prescribed Minimum Benefits (PMBs) to create a new market of between 10 and 20 million versus the current 8,9 million members is too ghastly to contemplate,’ the CMS declared.

So, in the eyes of the (privately insured) members of the CMS, it would be ‘ghastly’ to permit any cover that does not meet the PMBs, even at a much lower price than existing PMB cover.

Much like with minimum wages, the logic seems to be that it is better for the poor not to have health coverage at all than to have health coverage that doesn’t meet the standards of what the rich can afford.

‘The CMS will continue to ensure that all lives in the medical schemes industry are protected from inferior cover,’ it fumed.

‘The cover is not inferior,’ says Louw. ‘They are preventing cover.’

He points out that as many as 80% of South Africans pay cash for private healthcare in the informal sector, primarily from traditional healers, but also from doctors and dentists whom they pay in cash.

‘By prohibiting low-cost cover, they’re preventing superior cover,’ Louw argues. ‘They keep saying the rich get better healthcare, but that’s because they prohibit private insurance cover for the poor.’

Attacking journalists

Late last year, the BHF took the CMS to court to find out why it was dithering and delaying. It argued that its failure to develop and implement an LCBO framework was irrational, unreasonable and unlawful.

The CMS proceeded to dither and delay again, forcing the applicant to apply for an order to compel it to provide the documents, information and minutes required by the court. CMS said the information was not relevant; the court begged to differ.

That order was granted last month, and journalists like Katharine Child duly reported on it (paywalled article).

Again, the CMS reacted angrily.

‘Attempts to sway public opinion on the LCBO (a highly public-health sensitive matter) is puerile journalism,’ it announced, absurdly, as if public has no right to know the reasons for the CMS’s failure to permit LCBOs.

It promised to spend more of the time it should be spending on finalising LCBO regulations to haul Child before the Press Ombud.

It has yet to do so, according to Child.

Pernicious motives

I asked Louw why the CMS is so reluctant to finalise the process. Is it incompetent? Is it simply bureaucratic sclerosis? Or does it have a more pernicious motive?

‘All of the above. Yes, yes, and yes,’ he said. ‘The CMS through its demarcation regulations [which prescribe minimum benefits] has been trying desperately to prevent innovation and prevent low-cost healthcare for the poor.’

The more pernicious motive, Louw says, is to pave the way for the NHI. As long as the poor are prohibited from buying low-cost medical cover, the case for an NHI, however vaguely formulated, is stronger.

‘Everybody already has universal healthcare,’ says Louw. ‘The only thing NHI does is ban private healthcare and ban private health insurance. It has no other purpose. So the two are linked.’

Once private health insurance is outlawed by the NHI, the entire LCBO question becomes moot. It seems CMS is simply treading water until then.

Three interventions

Louw proposes three regulatory interventions that could be made without delay to improve access and lower the costs of private health insurance.

‘One, allow insurers to compete freely with medical schemes. If insurance proves too expensive, medical schemes don’t need to worry, so allow them to offer what only medical schemes may offer now.

‘Two, allow both to serve the majority of South Africans with low-cost benefits.

‘Three, stop racial discrimination. The people who are excluded by the regulations are overwhelmingly black. The poor ought to be liberated and deregulated.’

Instead of the CMS angrily lashing out at critics, South Africans should angrily demand the low-cost medical insurance options the CMS has been promising them for 22 years.

The government cannot claim that private health insurance ought to be prohibited because the market has failed poor people, when in fact the government made it illegal to serve poor people in the first place.

 

SOURCE:‘Council Against Medical Schemes’ prohibits medical aid for the poor – Daily Friend

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