HEALTH INSURANCE: CMS REPORT ON LOW-COST BENEFITS OPTION OUT FOR COMMENT

---

HEALTH INSURANCE: CMS REPORT ON LOW-COST BENEFITS OPTION OUT FOR COMMENT

• 17 February 2025
• Health & Safety
• SA Legal Academy

The Department of Health has gazetted a notice calling for input on a report prepared by the Council for Medical Schemes (CMS) on ‘low-cost benefit’ option guidelines and recommendations compiled by the medical schemes and insurance industry. Stakeholders have three months from the publication date to prepare and submit their input. Not only are comments sought on the report itself; they are also sought on concerns raised by Health Minister Aaron Motsoaledi in the Government Gazette notice.

According to the report’s executive summary, the document constitutes a ‘rigorous evaluation’ and ‘meticulous analysis’ of the industry’s low-cost benefits option guidelines and recommendations. This is noting that:

• their purpose was to:
  • provide low-income households with a mechanism for accessing affordable, quality healthcare services (among other things by ‘diminishing the extent of out-of-pocket payments), and
  • ‘secure the long-term sustainability of public health resources’
• they were informed by input received during a ‘thorough and extensive engagement process within the industry, … initiated … in 2020’
• the guidelines and recommendations were ‘meticulously formulated’, and
• they were submitted to the CMS for consideration with the intention that recommendations should then be made to the Minister.

To that end, in 2022 the CMS:

• published the industry guidelines and recommendations on its website, calling for public comment, and then (having processed the input received)
• circulated a draft framework report, risk assessment and roadmap for further input.

It is not clear when the ensuing CMS report with recommendations was submitted to the Minister for ‘further review and consideration’. However, in addition to evaluating the industry’s guidelines and recommendations the CMS report also seeks to address ‘two pivotal questions’:

• whether it is the role of medical schemes to provide low-cost benefit options, and
• ‘the fate of insurance companies currently offering primary health insurance products under the demarcation exemption framework’.

Against that backdrop, the CMS report:

• ‘advocates against the introduction of a low-income earners option’, and
• ‘proposes a phased discontinuation of … currently exempted products’.

According to the Government Gazette notice, having considered the CMS report the Minister is concerned that:

• the benefits being proposed by the industry are ‘less than the … benefits package …(already) offered at no charge by the public healthcare system’
• the industry’s proposals ‘are not supported by any research linked to the specific sector of the population’ to whom a low-cost benefits option would be available
• the low-cost benefits option appears to be more about maintaining the prevailing ‘exorbitant pricing structure’ than ‘higher levels of efficiency and lower profit margins for private healthcare providers and administrators’
• more details are needed on the services to be offered by a low-cost benefits option and in what quantity, and
• it is not clear how the industry’s proposals would be aligned with the National Health (NHI) Insurance Act and NHI policy.

In the Minister’s view, in developing an affordable, comprehensive benefits package for low income households, it would be more ‘appropriate’ to implement recommendations in the Competition Commission’s 2018 health market inquiry report regarding:

• the creation of a ‘multilateral price negotiation forum, and
• amendments to the 1998 Medical Schemes Act.

Please click the link below for more information:

• Government Gazette notice
• CMS report
• 2018 Competition Commission inquiry report (executive summary)

Published by SA Legal Academy Policy Watch

Follow us on X @SALegalAcademy (you can also join us on LinkedIn and Facebook)

0 COMMENTS

LEAVE A COMMENT