Discovery responds to the NHI: medical aids aren’t going anywhere

Insurer and finance group Discovery has issued its official statement on the National Health Insurance (NHI) Bill which was tabled last week (8 August).

Discovery Health is by far the largest open medical aid scheme in the country, accounting for 56% of all beneficiaries in that sector and 31% of the overall market.

According to the latest Council for Medical Schemes (CMS) report, it currently has around 2.8 million beneficiaries.

The group’s shares took a hit on the JSE earlier in the week, which many analysts ascribed to the news of the NHI. At the time, the group said it was still studying the bill and its implications for the medical aid industry.

The key sticking point in the bill is how it deals with the current medical aid system in place in South Africa.

Under the NHI, medical aids will have a significantly reduced role in South African healthcare, only able to provide ‘complementary’ or ‘top-up’ coverage for services that are not covered by the NHI.

The NHI director-general previously stated that this is because it would be inappropriate for the state to legitimise buying cover for services that are already covered by the NHI.

Analysts and commentators have argued that this would effectively destroy the medical aid industry in South Africa – where the possible membership pool of private medical aids would be incredibly limited, and end with the result of making these schemes completely unaffordable to all but the very rich.

Private hospitals, too, would suffer as a consequence, which could result in thousands of jobs being lost.

The future of medical aids

In a statement to shareholders about the NHI, Discovery reiterated that it supports the drive towards ensuring that all South Africans have access to quality health services based on need rather than affordability.

“Our position on NHI is unequivocal: we are supportive of an NHI that assists in strengthening and improving the healthcare system for all South Africans – little is more important.

“We are committed to assisting where we can in building it, and making it workable and sustainable,” it said.

However, the group stressed that substantially limiting the role of medical schemes – as the bill seems to imply – would be counterproductive to the NHI.

“Crucially, by preventing those who can afford it from using their medical scheme cover, the burden on the NHI will be increased and will drain the very resources that must be used for people in most need.

“This would be detrimental to all South Africans, and would undermine the objectives of the NHI as we understand it,” Discovery said.

The role of medical aids needs to be made clearer, the group said, as it is still very open to interpretation.

Notably, the wording of the bill also makes it seem as if medical aids will still be supported in the country for those who choose not to follow the processes set up by the NHI.

“The NHI Bill makes the point that this ‘complementary role’ for medical schemes will only apply once the NHI is ‘fully implemented’ and that it defines ‘referral pathways’ to which it will apply, indicating that where patients choose not to follow the referral pathways, the NHI will not reimburse their care, and that they can then claim from private health insurance,” Discovery said.

“These elements of the NHI Bill all speak to a continued and important role for medical schemes, and we will engage actively and constructively to make these points and to ensure an ongoing critical role for medical schemes and for private healthcare providers as the process goes forward.”

The group said that as far as it can tell, medical aids are still going to be around for the foreseeable future.

“We do not envisage any material impact on the medical scheme administration business of Discovery Health for the foreseeable future.

“The rollout of the NHI is expected to take place over an extended period and will be constrained by the current fiscal position.

“In addition, as noted above, the Bill remains open to interpretation regarding its impact on medical schemes, and we expect medical schemes to continue operating alongside the NHI.

“We also think that once fully emerged, the NHI will create additional opportunities for medical schemes to innovate in their products and for the development of new health insurance products outside of the medical scheme environment,” it said.

Read: Discovery on the NHI and future role of medical schemes