War over healthcare

A power struggle over the future of South Africa’s healthcare appears to have left the two key pieces of legislation staggering through Parliament — or not being enacted at all, depending on who one asks.

Elements within Cosatu have been leading the charge against the Medical Schemes Amendment Bill and the National Health Amendment (NHA) Bill as part of a wider attack on the medical aid industry. They are calling for all national spending on health — totalling about 8,5% of the GDP — to be diverted into a single state health supplier.

The two Bills were submitted to Parliament by the Department of Health with the intention of strengthening the regulation and stability of the healthcare industry and controlling costs.

But the envisaged strengthening of private medical schemes is the key reason why Cosatu is opposing the legislation. The union federation has called for the medical scheme industry to be fundamentally changed, if not completely abolished.

In a presentation made in July, National Education, Health and Allied Workers Union’s (Nehawu) head of strategy and policy, Tebogo Phadu, said that “eliminating private medical schemes (along with other “middle-men” in the sector) would be essential for containment of healthcare costs”.


Phadu estimated that between R30-billion and R40-billion a year in total healthcare expenditure could be saved by a national health insurance scheme, although the scheme would need to be funded by increased taxation.

With just a few weeks to go in this year’s legislative programme the progress of the Bills through parliament’s approval processes has been keenly watched — and contested — by myriad stakeholders.

Officially there has been no decision on the future of the Bills — according to one senior health department official, even the director general, Thami Mseleku, does not know what will happen to his own legislation.

But it appears to be accepted that the NHA will not go through Parliament this session.

The fate of the Medical Schemes Act seems even more unclear. Phadu told the Mail & Guardian that the Bill will go through minus one vital component — an assertion confirmed by a senior ANC source and another individual who sat in on a meeting of the ANC health and education sub-committee last month.

Others involved in the process say the Medical Schemes Amendment Bill will either be officially withdrawn or effectively filibustered out of this parliamentary session, which only has weeks to run.

Meanwhile, the man who should be able to cut through the confusion — parliamentary health committee chair James Ngculu — flatly contradicted all these assertions.

Ngculu said that neither Bill has come under discussion, or has even been published for public comment, and that no date has been set for public hearings.

But a presentation by an unspecified parliamentary committee dated August 21, and listing the status of legislation, says that the health committee was due to be briefed on the Medical Schemes Act on August 19, while public hearings were scheduled for the last week of August and committee deliberations for the first half of September.

Policymakers view the confusion as a sign that the legislation is still being contested. It has to pass through two decision-making bodies: the ANC’s sub-committee on health and education and the parliamentary process.

The most contentious part of the Bill is the development of a Risk Equalisation Fund (REF), due to come on stream in about three years, which will allow cross-subsidisation between schemes to reduce risks to those with a more costly member profile.

Phadu says that the ANC sub-committee on health had agreed to withdraw the key components of the proposed legislation that deal with the REF. It would not be needed as proposed if their model of National Health Insurance (NHI) was adopted.

Discovery Health’s head of strategy and policy, Jonathan Broomberg, who has provided industry input on the legislation, said that the REF was “a crucial component to the social solidarity framework and deferring it could undermine the ability to create risk pooling across the industry”.

Broomberg said that already some smaller medical schemes, especially those with a high proportion of pensioner members, were under strain because escalating healthcare costs outstripped contribution income.

It would be “grossly irresponsible” to destabilise such risk pools in the hope of a future NHI which could not meet the needs of all South Africans. Current estimates of cost savings were “no more than propaganda” because no proper costing had been carried out, he said.

Phadu said that while Cosatu was not calling for the abolition of medical schemes there was a debate over whether medical aids would be used to top up the NHI or be abolished once national insurance was introduced.

Even if top-up medical insurance is allowed, it will have a profound impact on access to healthcare, as it is unlikely to be allowed to cover procedures covered by the NHI. The effect would be heightened competition for the same financial resources.

Phadu’s suggestion is that current spending on private healthcare would be diverted to the NHI through taxation, in addition to the state expenditure.

One representative on the ANC sub-committee said Phadu’s proposal to use all funding on healthcare all was not acceptable.

“You can’t take money people pay to private insurance and pay into the NHI; that would will be expropriation. Rather you need to invest in the public sector so that people don’t need to buy privately; let there be natural attrition.

“In the meantime, there needs to be regulation of the private sector. We can’t let them operate without control,” she said.

If the Medical Schemes Amendment Bill fails to make its way through Parliament this year it will not only affect the future of the REF but will also have an impact on the short-term issue of regulatory demarcation.

The issue was raised when short-term insurer Guardrisk won a court case in which it claimed that its top-up health insurance product did not fall under medical scheme legislation.

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