Healthcare Draft Regulations a “Death Spiral”

Business Day recently quoted Professor Alex van den Heever, chairperson of Social Security at Wits University as saying that the National Treasury’s latest proposals are “…poorly drafted and threaten to send the medical schemes industry into a death spiral.”

According to the report, Professor Alex van den Heever, chairperson of Social Security at Wits University, said the revised proposals were ‘unclear and open ended’ and represented ‘an unprecedented threat’ to the viability of the medical schemes system. In a submission on the draft regulations, he said the absence of a technical framework justifying the regulations suggested a ‘cavalier’ attitude towards medical schemes by the government. Medical schemes were wage earners’ sole source of protection against catastrophic health expenses, he said. He argued that the regulations created an exemption framework to the Medical Schemes Act, which would enable medical scheme administrators, brokers and insurance companies to design gaps in medical scheme benefits. These would then need to be ‘filled’ with additional insurance products that were not subject to the same regulatory oversight as medical schemes.

Young and healthy consumers were likely to buy down or quit medical schemes altogether, and to top up with health insurance products. This would undermine the cross-subsidisation element vital to the existence of medical schemes, he said.

The report notes that the deadline for public submissions on the regulations was extended to 31 July 2014.

Breaking news: We just received notice of a document, published on the government online website, which contains a list of frequently asked questions. Please click here to access the relevant document.

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