Teachers and their colleagues across the public service sector are currently “marking” the government’s report card on a vital subject: meeting employee healthcare needs through affordable medical scheme benefits.
It could be this time next year before all the marks are in, but at the moment the judgement appears to be “Must try harder – can do better”.
Marks add up every time another public sector worker joins the new Government Employees’ Medical Scheme (Gems). No ticks are awarded when incoming recruits join as they have no choice but to sign on. But, grades will rise dramatically should existing employees – teachers included – embrace the scheme.
So far there has been no rush to join, though the public sector can at least claim credit for taking up the affordability challenge thrown to the private sector some time ago.
Medical schemes have long been reproached for not doing enough to make benefits more affordable and accessible.
Twenty years ago, about seven million South Africans were covered by private medical schemes. The figure has hardly moved since then, despite population and economic growth. The coverage blind spot is particularly evident in the pay ranges from R2 500 to R6 500 a month.
Coverage gains are seen in many spheres; why not medical schemes? Home ownership is up from 5,1-million households in 1994 to 7,9-million today. The number of registered taxpayers jumped from two million in 1994 to five million in 2004.
Official finger-pointing like this lacked credibility as long as the public sector was known for such a high percentage of workers without medical cover.
The government’s total payroll runs to 1,1-million workers. Of these, 380 000 were believed to have no formal medical cover. Those with medical aids belonged to more than 50 different schemes in various sectors.
Consolidation into one government scheme might promote efficiency and economies of scale. Affordability might improve, bringing medical benefits to the uncovered 380 000.
This was the worthy aim of the Gems architects.
To harness efficiencies of scale, the initial proposal was that Gems membership be made compulsory for all public sector employees.
This provoked resistance. Enforced transfer to Gems could have threatened the viability of existing medical schemes with a strong public sector membership component.
In addition, employees with existing cover were concerned that they might be forced into the Great Unknown with no guarantee that previous service levels would be maintained.
The government relented. Membership was made compulsory for new recruits, but current employees were allowed to continue their existing arrangements.
The government was learning a key lesson. Choice is a ticklish subject in the medical schemes sector.
Indeed, benefit choice is built into Gems design.
Five different benefit plans are available, covering hospitalisation, levels of chronic medicine benefit, day-to-day service by providers, doctor and specialist visits, provision of acute medicines, dentistry and optical services.
All five schemes offer an HIV/Aids benefit and an emergency assistance benefit.
Gems planners have not ducked the affordability challenge. For example, a single member earning less than R2 500 a month who opts for Gems Sapphire plan pays just R109 a month (a R327 contribution less a two-thirds subsidy by the employer as per the medical scheme subsidy entitlements of government employees last year).
Efforts have also been made to manage costs by establishing extensive networks of preferred providers in every benefit category.
Even so, response from potential members has been muted.
Gems was launched in January this year with the target of attracting 500 000 members from the 1,1-million workers on the payroll.
After three months, it had achieved a little more than 1% of this target.
It is believed that teachers benefit from relatively high coverage by existing schemes and are among the vast majority of government workers who have adopted a wait-and-see policy.
Gems’ design appears to satisfy published policy on scheme structure.
The Department of Health champions prescribed minimum benefits available to all as the basic foundation of all schemes. On top, it would like to see basic benefits package building blocks containing some benefit options.
At the apex of the structure an “upper crust” option is permissible, offering top benefits for those who can afford them. The concept can be summarised as a basic pool at the bottom; special silos on top.
If Gems is a defacto prototype for the Department of Health medical scheme structure of choice then acceptance or rejection by the potential membership takes on huge significance.
The private sector response to the affordability challenge was to launch the most comprehensive research exercise ever undertaken in the medical scheme sector to find out what lower-paid workers want from benefit cover – the Low-Income Medical Schemes (Lims) initiative.
Respondents placed relatively low value on hospitalisation and chronic medication, but high value on dental, optical and GP services.
Private sector schemes are now contemplating Lims packages for lower-paid workers which reflect these findings, subject to the regulators accepting the necessary conclusions of the private sector’s research.
By early next year, these Lims products should be brought to market. This will coincide with Gems’ first anniversary.
One year will presumably be a good time for an assessment of just how successful the public sector offering has been.
If Gems fails to take off, the emergence of a Lims alternative could save a lot of government blushes. The range of Gems benefit plans could be extended to include a Lims compliant alternative. This might encourage some public service workers to migrate from a private-scheme Lims package to the Gems equivalent.
With this additional channel open, Gems just might rate a pass-mark. Quite literally, Lims could become a handy fall-back position. If policymakers fall off their current medical scheme learning curve, Lims might break their fall.
Colin Bullen, head of the specialised consulting division of Lekana Employee Benefit Solutions, is an actuary who specialises in healthcare efficiencies and sits on several health industry and consultative bodies