Another problem for medical aid members in South Africa
South Africa’s prescribed minimum benefits (PMBs) system remains largely unchanged despite significant changes in healthcare costs, treatment and disease patterns.
This is another challenge for medical aid members, who are already feeling the cost pressures of above-inflation premium increases over the years.
In an interview with The Money Show, Katlego Mothudi, managing director of the Board of Healthcare Funders (BHF), called for urgent reform of the system, arguing that the regulations are outdated and contributing to rising healthcare costs.
PMBs were introduced to ensure that medical scheme members could continue receiving treatment for certain serious conditions even after their normal medical aid benefits had been exhausted.
Before this protection was introduced, patients could be discharged from the hospital or referred to public healthcare facilities once their cover ran out.
Mothudi said the system was designed to be reviewed every two years because healthcare needs and costs were expected to change over time. However, the last major changes were made in 2003.
Mothudi said the cost of providing PMB cover has increased substantially since the system was introduced. In 2003, medical schemes allocated about 40% of their budgets to PMBs, compared with more than 60% today.
“This means that at the moment, because it establishes the threshold for entry into healthcare funding, you and every beneficiary on the scheme would be liable to about R1,600 per month, per beneficiary,” he said.
“For a family of three, it means you are out of pocket by R4,000, just at the lowest level.” According to Mothudi, responsibility for reviewing the PMBs rests with both the Department of Health and the Council for Medical Schemes.
He said several committees had been established over the past eight years to consider changes, but no major reforms had emerged.
He attributed part of the delay to the long-running uncertainty surrounding the National Health Insurance (NHI) plans.
Why PMBs must be revised
However, with the NHI still potentially years away from implementation, Mothudi believes the PMB system cannot remain unchanged.
“We are looking at at least maybe another 10 to 15 years,” he said, referring to the timeframe for the NHI suggested by some participants at a BHF conference.
He also believes reforming the system could ultimately help reduce pressure on medical aid members, although he cautioned that healthcare inflation remains higher than consumer inflation.
“The structuring of these PMBs, while it was relevant at the time when it was put into place, has now propagated cost,” he said.
One problem, according to Mothudi, is that PMB regulations require certain services to be paid for at cost. He said this could contribute to higher charges when practitioners diagnosed patients with PMB conditions.
“We saw prescribing on benefits actually driving up costs, not just based on the package itself,” he said.
Mothudi also argued that the current system does not cover enough conditions and places too little emphasis on preventative healthcare.
PMBs currently focus largely on diagnosis and treatment rather than encouraging regular screening and early intervention.
He said this approach can leave medical schemes with as much as 60% to 70% of their budgets tied up in hospital-focused cover, leaving less money for day-to-day healthcare.
The BHF has proposed that PMBs should be structured around healthcare services rather than specific diagnoses. It has also suggested introducing an essential medicines list similar to the system used in the public healthcare sector.
Mothudi said such changes could help reduce out-of-pocket costs, particularly for medicines and diagnostic services. He believes reform would also be consistent with the broader goal of universal health coverage.
“Revising prescribed minimum benefits this way actually subscribes to that notion. I would actually find it difficult for anybody to go against revising PMBs to avoid broader access,” he said.
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