Why medical aids in South Africa could be around for longer than you think: legal expert

South Africa’s recently published National Health Insurance Bill has opened up government’s plan for universal healthcare to much commentary and criticism – particularly relating to the future of medical aids in the country.

Under the NHI, medical aids are expected 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.

However, according to Werksmans director for healthcare & life sciences, Neil Kirby, the current wording on the NHI Bill shows there may be more room for traditional medical aids in the country than commentary around the bill initially lets on.

Specifically, Kirby noted that the bill does not contain a clause that compels any persons to belong to the fund.

“On the face of the NHI Bill as currently proposed, there is no mandatory requirement for South Africans to join the fund,” he said.

“This is a departure from previous iterations of the NHI Bill in which an express requirement existed both to become a member of the fund as well as to make a payment in respect of that membership.

“On that basis, there would be an argument to be made that the fund is to be established only for those who wish to join it and those who wish to continue with current funding models for obtaining their healthcare services would be entitled to do so.”

This reading of the bill is similar to the response from South Africa’s biggest medical aid scheme, Discovery, which pointed out that the wording 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.”

You will pay whether you like it or not

According to Kirby, while there is no explicit wording making membership of the fund mandatory, two sections in the bill do speak more towards the intention of the scheme – implying that membership is compulsory.

“Perhaps the fact that the NHI Bill is silent as to mandatory membership of the fund is not necessarily an indication of the manner in which the NHI Bill intends to operate, which, once again, implicates the freedom of association provisions in the Bill of Rights,” he said.

“Therefore, two sections of the NHI Bill may provide us with an indication of what, actually, is intended in respect of membership of the Fund.”

These are:

  • Clause 33, which purports to limit the benefits available from a medical scheme in so far as “medical schemes may only offer complementary cover to services not reimbursable by the fund”; and
  • Clause 49, which outlines the chief sources of income of the Fund, including general tax revenue, payroll tax and a surcharge on personal income tax.

“In so far as the NHI Bill prohibits medical schemes from offering benefits otherwise provided by the Fund, this will mean that members of a medical scheme who currently enjoy particular benefits from that medical scheme, more particularly primary healthcare benefits, will mean that in order to obtain such benefits, one would have to be a member of the fund,” Kirby said.

Indirectly, clause 33 of the NHI Bill operates on the basis of a mandatory membership of the Fund, while clause 49, shows that all South Africans, in one form or another, make payment for the establishment and maintenance of the fund.

While a “membership fee” will not be levied, amounts will be deducted from tax-paying South Africans in order to provide income for the fund.

As for the mandatory membership, Kirby said that the bill will ultimately have to be tested against section 18 of the Bill of Rights, which entrenches the right of association.

“The overall implications of the NHI Bill, from a membership point of view, will have to be understood in the fullness of time and through the process of obtaining public comments on the NHI Bill as is currently envisaged through the Parliamentary process through which the NHI Bill must pass in order to become law,” he said.


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

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Why medical aids in South Africa could be around for longer than you think: legal expert