The healthcare demarcation regulations that came into effect on 1 April 2017 will seriously damage the nation’s ability to afford healthcare.
Leon Louw, executive director of the Free Market Foundation, says insurance companies responded to a market opportunity by offering hospital cash-back plans, primary health care (PHC) insurance policies and gap cover following the increase in the cost of belonging to medical aids since the introduction of prescribed minimum benefits in the Medical Schemes Act of 1998.
However, the demarcation regulations are intended to put an end to this, by effectively banning the low-cost benefit options offered by insurance companies as they are now also subject to the scope and obligations of the Medical Schemes Act of 1998. Louw says due to government interference in a private sector, the demarcation regulations will prohibit “perfectly legitimate business transactions between freely consenting partners”.
“According to government, insurance companies have been unduly treading in the domain of medical schemes. Thus, after 1 April, both medical aids and health insurance companies fall under the Medical Schemes Act. However, insurance companies were treading there precisely because medical aid schemes were too expensive as a result of government interference in a private sector per the Act. In other words, government created a problem, which the private sector solved, and now government is trying to undo the solution. Insurance companies must now comply with stringent Council for Medical Schemes requirements and also offer the same 270 prescribed minimum benefits which medical schemes are required to – the very thing that drove up prices in the first place.”
By effectively outlawing the low-cost benefit options offered by insurance companies, government is going to rob two million South Africans of the healthcare packages they voluntarily chose, says Louw. “This back-to-front thinking is seriously damaging to the nation’s ability to afford healthcare.”
“Not only will this unequivocally violate South Africans’ right to access to healthcare, but it will also violate their right to freedom of association, given that they decided to associate with health insurance instead of medical aid schemes. The Constitution is clear on both these rights and does not leave room for confusion: South Africans have freedom of choice when it comes to their healthcare. Government should respect this.”