Low cost medical benefit options – CMS now engages industry

Towards the end of last year, the Council for Medical Schemes (CMS) published two circulars announcing its plans for Low Cost Benefit Options (LCBO) and the Demarcation Exemption Framework, going forward. Basically, the CMS prohibits South African medical aids from offering LCBOs to low-income market segments and also indicated that no products based on the Demarcation Exemption Framework and/or the MS Act, i.e. health insurance products, will be allowed beyond 2021.

This week, the Registrar of the CMS commenced with engagement sessions in both Cape Town and Pretoria to unpack and deliberate on these decisions.

But what are the views of medical insurers?

The main message that medical insurers have for the CMS is that low-cost benefit options should be fixed not banned.

“By doing away with low-cost health solutions, which are showing massive traction and uptake in corporate businesses in South Africa, hundreds of thousands of employed SA citizens will be robbed of their private healthcare benefits,” Momentum Health Solutions’ executive head of marketing, Damian McHugh shares with FIN24. According to McHugh the move was inconsistent with the direction the country wanted to take towards universal health coverage through National Health Insurance.

According to Michael Settas, a member of the FMF’s Health Policy Unit, their research has shown that about 10 million employed people in SA rely on the public health system because they cannot afford medical scheme contributions. “Insurance companies moved in to close this gap with these low-cost benefit options, as some cost as little as under R300 a month. But insurance companies can afford to keep their premiums low, because unlike medical schemes, which charge everyone on the same option the same amount, insurers price according to each person’s risk profile. Older and sicker people pay more,” he shares.

In another report, Jasson Urbach, director of the Free Market Foundation, mentions that if the content of the CMS circulars becomes a reality, it will push thousands of people to the state’s healthcare facilities, a facility that is already struggling to deliver quality care, especially in a time of economic pressures.

Click here to view the engagement session schedule.

Click here to read a FIN24 article where the CMS explains why they are stopping low-cost benefit options.

Click here to read the Moonstone article about the “debarring” of Low-cost and health insurance products.

Click on the hyperlinks to download CMS Circular 80 and 82.

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