National Health Insurance… where to from here for medical schemes?

National Health Insurance… where to from here for medical schemes?

20 June 2023

The passing of the National Health Insurance (NHI) Bill by the National Assembly on 13 June has sparked widespread outrage from concerned parties, from private medical scheme members to healthcare providers and more.

While this negative reaction and uncertainty is completely understandable, Fedhealth Medical Scheme would like to assure members and brokers that there really is no immediate cause for alarm. The NHI is years away from being implemented, and as such members should not expect any changes to their medical aid membership in the foreseeable future.

Although the NHI Bill certainly raises serious concerns, Fedhealth recognises the need for structural change to improve healthcare for all in South Africa. We believe this should leverage the strengths of the key elements of the current public and private healthcare systems, and we remain confident that the final outcome will be rational and workable.

With this in mind, here are some thoughts to consider:

  1. Scheme reserves are safe – A medical scheme is a mutual fund and its pool of money belongs to its members. The government will therefore, under current legislation, not be able to get access to medical scheme reserves for the purposes of funding NHI.
  • As mentioned, although the NHI bill has been passed, the potential implementation will take place over a fairly lengthy period estimated to be between 10 to 15 years. 
  • Furthermore, the industry anticipates a number of legal challenges to be instituted which will further delay any implementation of the NHI.
  1. The Bill currently doesn’t refer to the likely costs of the NHI once its fully implemented. Any fundamental change that improves quality and access and seeks to contract with private providers, will require substantial additional funding. It’s expected that National Treasury will soon publish a costing document, which is likely to be based on an incremental approach to providing NHI benefits. The Bill specifies that payroll taxes and a surcharge on personal income tax could be considered as sources. Such taxes would need to be determined by National Treasury. There are great material challenges to raising new revenues to supplement the current government budget for healthcare, and this is unlikely to change in the foreseeable future. This suggests that the rollout of the NHI will be slow, unless there is a substantial improvement in the country’s economic prospects.
  • Removing the tax credit that members of private medical schemes are currently entitled to, will have a palpable effect on the take-home pay of members, including members belonging to the government’s own closed medical scheme, GEMS. It remains to be seen whether this move will just be accepted by South Africans, including government employees!
  1. Section 33 of the Bill states: “Once National Health Insurance has been fully implemented as determined by the Minister through regulations in the Gazette, medical schemes may only offer complementary cover to services not reimbursable by the Fund.” 

It’s unclear when the NHI will be considered “fully implemented”, and this will most likely be quite far in the future due to resource constraints. There’s also no concrete definition of services to be covered by the NHI, and it appears that this definition will be expanded on an incremental basis. The Bill is open to interpretation. It states that medical schemes cannot cover services “reimbursable” by the NHI. At the same time, the Bill states that to obtain reimbursement, patients will have to follow the NHI’s “referral pathways.” If patients choose their own providers, they will not be able to claim from the NHI but will be able to claim from private health insurance. When read together, the Bill appears to accommodate medical schemes being able to fund any services that are not reimbursable by the NHI, due to patients choosing not to use NHI pathways.

You can also listen to an interview with Fedhealth Principal Officer Jeremy Yatt on this topic.

The NHI Bill has just been passed – what does that mean for medical aid members?

With so many critical aspects of the NHI still up in the air, there is no immediate need for panic.

We will keep all Fedhealth members and partners abreast of any relevant or noteworthy developments as they occur.

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