Legal experts at Webber Wentzel say that South Africa’s National Health Insurance Bill has left many questions and mounting worries over what will happen to the country’s medical insurance industry once it has been implemented.
Medical aids and medical insurers are not the same thing in South Africa, governed by different laws and serving different needs.
While the NHI Bill gives a cursory explanation for what will happen to medical aid schemes under the NHI – specifically that they will only be able to cover services not covered by the NHI – the legal experts said the private medical insurance industry is far more nuanced, and has been left in the lurch.
The NHI Bill was passed by the National Assembly in June 2023 and is currently with the National Council of Provinces for consideration.
The Bill has been closely scrutinised by various stakeholders in the healthcare sector, and concerns have been raised by medical schemes and insurers about the effect the Bill will have on their current businesses.
According to Webber Wenztel, the bill, among other things, covers:
Clause 33 of the Bill states that once the National Health Insurance (NHI) is fully implemented, medical schemes can only offer complementary coverage for services not reimbursed by the NHI.
Clause 6(o) of the Bill allows individuals to purchase services not covered by the NHI through voluntary medical insurance schemes.
“This means medical schemes cannot cover services already covered by the NHI, potentially jeopardising their existence. This approach may face constitutional challenges related to the right to access healthcare, property rights of medical schemes, and freedom of trade and profession,” the group said.
While it is expected that the Minister of Health will introduce regulations limiting benefits to services not reimbursable by the Fund, there has been zero indication when these regulations will be published.
According to the legal experts, there are four broad categories of businesses that will be impacted by the NHI.
Currently, only medical schemes may carry on the “business of a medical scheme” as defined in the MSA, Webber Wenzel said.
This business and the various definitions attached – such as relevant health services and treatments, etc – are very wide, and are now at risk under the NHI.
However, medical insurers are completely distinguishable from medical aids, the experts noted, and operate on a very different level. There is some crossover, however, and this has muddied the waters on how insurance products will be impacted by the NHI.
“It is apparent that there is an overlap of products provided for in the Insurance Act and offered under the MSA,” the experts said.
To address this, the Demarcation Regulations were drawn up to provide for the demarcation between the insurance business and the medical schemes business.
Essentially, the regulations provided that a benefit that would otherwise have been a medical scheme benefit, but meets the exact requirements set out in the Demarcation Regulations, is classified as an insurance product.
In March 2017, the Counsel for Medical Schemes (CMS) issued an exemption framework for insurers as a transitional arrangement while the development of a low-cost benefit option (LCBO) for medical schemes was developed.
“To the extent that an exemption was granted to an insurer in terms of section 8(h) of the MSA, and subject to the conditions of the exemption, the insurer was permitted to continue to underwrite those products until the expiry of the exemption,” Webber Wenztel said.
On 25 January 2022, the CMS granted insurers that had previously been granted an exemption in terms of the Exemption Framework an extension of a further two years.
However, even this whole process risks being snuffed out by the NHI – leaving questions over what will happen once the exemptions lapse.
According to Webber Wenzel, the low-cost benefit option has been investigated since 2005, and in 2015, the CMS introduced guidelines to allow medical schemes to introduce these options.
This was done because of a growing number of working South Africans did not have medical scheme coverage due to affordability issues.
Notably, the LCBOs have the potential to alleviate pressure on the public healthcare system and allow resources to be redirected to the poor, the experts said. However, this process has slowed to a halt, and it remains to be seen what comes of it if anything.
“While the NHI bill is a piece of framework legislation, it does not provide clarity on what will become of insurance under the current regime. The fate of medical schemes is dealt with in a very cursory manner, without considering the nuances of the current regime,” the said.
“The LCBO could have been a path to make healthcare more accessible, but the process has become stifled, and it may never come to fruition.
“What is left in the wake of the NHI Bill is a great deal of uncertainty. Industry participants and stakeholders will have to keep abreast of the process and ensure that their comments are taken into account as the system evolves.”
Commentary by Lenee Green, Partner, Mateen Memon, Associate & Mariam Ismail, Trainee Attorney at Webber Wentzel