‘Many years’ to go before NHI poses a threat to medical schemes, says Discovery

“It’s too soon to panic.” That’s the message to medical scheme members from Dr Ryan Noach, the chief executive of Discovery Health, after the National Assembly passed the National Health Insurance (NHI) Bill on Tuesday.

The bill will now be considered by the National Council of Provinces, but it is unlikely that significant changes will be made to the legislation before it is sent to President Cyril Ramaphosa for assent.

There is a long way to go before the NHI legislation has any impact on medical schemes and the private healthcare system, the head of South Africa’s largest open scheme said during an interview with Newzroom Afrika.

According to Noach, the Department of Health is of the view that it will take 10 to 15 years from the date on which the Act is promulgated to implement NHI completely.

Discovery, which administers medical insurance plans for about four million people, believed it would take “huge sophistication” and “many, many years” to get a health insurance plan such as NHI right. Therefore, there was a long time before the implementation of NHI became a reality, and there was no need to panic at this stage, Noach said.

Much of the conflict between the government and the private healthcare sector over NHI centres on a single sentence (section 33) in the bill: “Once National Health Insurance has been fully implemented as determined by the Minister [of Health] through regulations in the [Government] Gazette, medical schemes may only offer complementary cover to services not reimbursable by the [NHI] Fund.”

Noach said the bill does not define “fully implemented”, but Discovery assumes it means when the benefit pathways and contracting are complete, and all South Africans have free access to health care funded by NHI.

NHI will provide certain benefit packages, but what these packages will contain has yet to be determined, he said.

The big question: how will it be funded?

National Treasury has not published a money bill, the complementary legislation to finance NHI, and without the money bill, it was not known how NHI will be funded, Noach said.

The Minister of Finance, in his Budget speech in February, made very little reference to NHI, except to say that work by Treasury on the financing of NHI was nascent and had not advanced, he said.

Section 49 of the bill states that NHI will be funded by general tax revenue, reallocating funding for medical scheme tax credits to NHI, an employer and employee payroll tax, and a surcharge on personal income tax.

Noach said the Department of Health has stated that the private sector and the public sector currently contribute about 8.5% of GDP towards the cost of health care.

They “quite naively” assume that this 8.5% can simply be redirected into NHI, but an Act and regulations will be required to support how NHI will be financed, he said.

Noach said he was not at all concerned that the public sector could seize the contributions of medical scheme members.

The funds are “well protected” by the medical schemes, which are effectively trust funds. “They’re functioning as mutuals, and they hold those funds on behalf of the members.”

By law, there was “no way” that anyone could take or nationalise those funds. “That would be completely beyond the realm of realistic thought. It would be like taking people’s pension money and nationalising it,” he said.

‘Unparalleled monopoly’

The bill envisages that a state-managed NHI Fund will be the sole purchaser of healthcare services from the public and private sectors, on behalf of all South Africans.

Noach said the scale of this monopoly would be unparalleled. “We can’t find another country in the world that manages to do this.”

Even in the United Kingdom, which probably has one of the most successful national healthcare systems in the world, he said 12% of the population chooses to purchase private medical insurance.

Discovery was not aware of any national health systems that by law excluded the participation of private insurance and private funders.

The Department of Health’s representatives have referred to the NHI Fund spending R550 billion a year, or between R5 trillion and R7 trillion over 10 years. The intention was for a single fund to disburse this amount of money to about 100 000 different healthcare providers, assuming the healthcare market remains the same, which, he said, it will not.

By this Noach meant that NHI could result in a brain drain of specialist medical professionals.

Noah said those working in the private sector are very concerned about NHI, “and we think there’s a real short-to-medium-term risk to healthcare professionals. We are seeing early signs of that. We’re doing all we can to calm the health professionals, partner with them and work with them and reassure them, because we do believe that the outcome here could be optimistic.”

Discovery supports a multi-funder NHI

Noach said his criticisms of the NHI Bill did not mean that he and Discovery were against a national health insurance system. Discovery supported NHI, but it should be achieved by reforms to the private and the public healthcare sectors to establish a “collaborative environment”, he said.

Noach said many elements of the NHI Bill were smart, feasible and implementable. However, Discovery opposed making NHI the exclusive funder of healthcare services. The NHI Fund would be bigger than Eskom, which was “an inherent risk for the country”.

NHI should be a multi-funded environment, instead of a monopolistic single funder “trying to be everything to everyone”.

According to Discovery’s actuarial analysis, a multi-funded model would probably be better for all South Africans because of differences in utilization between socio-economic groups, Noach said.

‘PMBs to blame for high contributions’

According to Noach, the prescribed minimum benefits (PMBs) are the reason medical scheme membership in South Africa is “extremely expensive”.

The “egalitarian” Medical Schemes Act requires schemes to fund in full about 300 conditions (PMBs) from their pool of risk funds. This is the main reason entry-level cover costs about R1 000 a month, he said.

The medical schemes industry has been campaigning since 2007 for the legislation to allow schemes to provide less comprehensive low-cost options.

Discovery welcomed the announcement that the Council for Medical Schemes has indicated its intention to send the Minister of Health a proposed legislative amendment that will approve these low-cost benefit options, which will cost R300 to R450 a month, Noach said.