On 21 June 2018, the Minister of Health in South Africa published the draft National Health Insurance Bill, 2018 (NHI Bill) for public comment. The NHI Bill aims to give access to free, universal, high-quality healthcare for all, by creating a single national health insurance fund; and would centralise procurement of State medical supplies.

The NHI Fund

One of the key features of the NHI Bill, is the establishment of the National Health Insurance Fund (NHI Fund). Membership of this fund will be mandatory for all South African citizens. Although not expressly stated in the NHI Bill, it has been suggested that everyone that can afford to do so (in theory, current taxpayers), will be liable to contribute towards the NHI Fund (in addition to paying medical aid scheme premiums, if they should choose to remain members of a private scheme as well). Thereafter, all healthcare would then be accessed free of charge though the NHI Fund. President Cyril Ramaphosa was reportedly quoted as saying that the envisaged universal healthcare coverage meant that the financially fit must help subsidise those who are not, and that this was the trend across the world.

The NHI Fund will purchase comprehensive healthcare services on behalf of its registered users (SA citizens and permanent residents ) from certified and accredited private and public health care service providers. As services are bought by the NHI Fund on behalf of its members, patients will not be able to approach specialists or hospitals directly and will have to follow the referral route of the NHI Fund for the relevant medical costs to be covered by the Fund.

Further, in order to put an end to corruption in the healthcare sector, the purchasing power of provincial health departments would be removed and the procurement of medical supplies on behalf of the State will be the prerogative of a central procurement office.

Pricing

One of the most controversial aspects of the NHI Bill, is the annual recommendation by a health benefits pricing committee (reporting to the NHI Fund board and the Minister of Health) (Pricing Committee), of the rates to be paid to private healthcare service providers when contracting with the NHI Fund. Given its substantial purchasing power, this is likely to lead to a one-sided price negotiation between the Fund and healthcare service providers. It also shows a clear desire to move towards price regulation in the healthcare industry and may be subject to challenge.

Closely related, is the Competition Commission’s provisional report on its Market Inquiry into the Private Healthcare Sector.

This report has been anticipated for some time, with the delay in its publication (and the inquiry itself) resulting from the complexities and sensitivities surrounding the nature of the information that the inquiry had to process to conduct the assessment. It is anticipated that the report (now due for publication on 5 July 2018), will deal with the issue of price regulation of public and private healthcare, which was triggered by the above inflation increase in private healthcare costs. Prices in the private healthcare sector were previously semi-regulated by the reference price list, which ensured that the cost of private healthcare was kept at a reasonable level and in line with industry standards.

However, the reference price list was abolished by the Competition Commission several years ago on the basis that it constituted price fixing. There is thus some irony in the fact that the Pricing Committee may now be allowed to propose price regulation to protect end consumers in the private healthcare market.

Funding

It is unclear how NHI will be paid for. The Minister of Health has suggested that it would be the responsibility of the National Treasury to find a solution, but that it is likely that the NHI Fund will be funded by taxpayers. This begs the question whether South African tax payers can afford the highly aspirational fund.

Medical Schemes Amendment Bill

Other expected major reforms to the healthcare industry would follow from the introduction, also on 21 June 2018, of the draft Medical Schemes Amendment Bill. Noteworthy changes would include the abolishment of co-payments, requiring medical aid schemes to make full payment of the patient's bill, and the removal of brokers. If these amendments are passed into law, it should see immediate benefits for all medical aid scheme members who have raised concerns about above inflationary premium increases, and about exposure to co-payments. Again, these proposed changes raise questions on the financial viability of the draft Bills, as it may cause medical schemes to raise member contributions to cover its increased obligations.

The Bills are open for public comment for a period of 3 months from date of publication. Whilst a substantial amount of detail is still to be worked out in the yet to be produced regulations to the proposed new legislation, implementation of NHI is currently targeted for 2025.

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