The Board of Healthcare Funders (BHF), the biggest representative body of the private healthcare funding industry, representing medical schemes, administrators, and managed care organisations in sub-Saharan Africa, has voiced its concern about the inability of its members to provide tailored low-cost benefit options (LCBO) to the public and the Council for Medical Schemes (CMS) failure to regularly review prescribed minimum benefits (PMB), a failure that continues to render private healthcare inaccessible and unaffordable for millions of people.


Responding to a statement issued by the CMS which dismissed claims by medical schemes that the Regulator has not reviewed PMBs since 2003, and a blanket refusal to exempt medical schemes from providing LCBOs, the BHF has challenged the Regulator – noting that the Regulator has and is not fulfilling its mandate.


According to the BHF, currently, insurance companies are allowed to provide customised low-cost benefits to the public at affordable premiums, while medical aid schemes are prohibited by the CMS regulations from offering similar products.


“It is concerning that the statement issued by the Regulator misrepresents the BHF’s concerns,” says Charlton Murove, Head of Research at the BHF.


He says contrary to what the CMS said in its press statement, the BHF does not seek to do away with PMBs, which are a set of defined benefits to ensure that all medical scheme members have access to certain minimum health services, regardless of the benefit option they have selected.


Murove added that “The BHF is not proposing the cancellation of exempted insurance products; we know there are a lot of people who depend on them. Rather, the BHF is calling on the CMS to allow medical schemes to provide these similar products, i.e., providing low-cost benefit options through the same exemptions granted to the insurance products. Medical schemes are not-for-profit entities and can provide LCBOs at a much lower rate than insurance companies, that are driven by profits.


“In addition, insurance companies have been approved to provide these services that medical schemes for the longest time have been requesting to provide from the Regulator – and there is no rationale for the Regulator’s lack of approval in this regard,” said Murove. 


According to Murove, the BHF is of the view that medical schemes are optimally positioned to offer these benefits to consumers because medical schemes have the infrastructure and know-how to provide these solutions. Furthermore, the beneficiaries of these products would benefit from medical tax credits (where they are eligible) if they buy into a low-cost benefit option through a medical scheme, while the policyholders of these insurance products cannot access medical tax credit.


“To state that the industry is saying the PMBs should be taken away is very inaccurate and misleading. Medical schemes are not allowed to provide options that do not offer PMBs, thereby compelling members to buy PMB benefits that they cannot afford.


Murove explains, “An issue to make a note of is that beneficiaries are being forced to buy the current PMB benefits, which are inefficient, expensive, outdated; and in much need of a review at the moment.” 


We realise that PMBs are an important pillar in terms of protecting beneficiaries, however, the issue is that the PMBs are meant to be reviewed every two years and the CMS has not done so in a very long time. The failure by the CMS to review the PMBs has created a barrier to entry and rendered access to private healthcare prohibitively expensive for millions of people,” says Murove.


He adds that the last significant review of the PMB was in 2003, and it was only in 2020 that the regulator effected a slight change to the PMBs by including COVID-19 as one of the PMBs. COVID-19 has impacted many south African, who have had to opt-out of medical schemes due to financial constraints.  Medical schemes are geared to provide the required net to provide access to the much-needed health services.  We could add that we are preventing them going to the already overburdened state facilities.


“The Regulator needs to bring the PMBs up to date to meet the current needs of the health citizens,” says Murove.


He says the disagreement about the number of people that will be brought into the fold of the private healthcare system through LCBO products is a side issue. “For us, it does not matter how many people it is, the issue is that there are lives that are being impacted by the lack of movement by the regulator to exempt medical schemes from the provision of LCBOs. For the CMS to raise a debate around this is to make the problem smaller than what it is; the real problem is the regulator’s inactivity around this issue,” Murove adds.


He points out that the CMS is creating a problem that will lead the CMS to have to grant extended exemptions to insurance companies by not allowing schemes to participate.


“If the schemes had been offering this product from the inception of the demarcation regulations in 2017, medical schemes would have moved forward as they are geared for this anyway. The type of cover that would be provided by the medical schemes will be more standardised and richer than the current offerings in the market, being provided by insurers – who do not necessarily operate in a specialised healthcare sector.”


He said, “The refusal by CMS to grant exemptions to medical schemes continues to perpetuate the current problem of access that we are experiencing in healthcare. At the moment, there appears to be no real commitment to solving the problem, but instead a deliberate effort by the Regulator to delay the process,” Murove said.


The BHF urges the regulator to bring the PMBs up to date – noting that 20 years is a long time to not have a reviewed set of PMBs. Critically, the issue of LCBOs must also be resolved.