Insurance

South Africa remains one of only two countries in the world to offer life policies for people with HIV/AIDS, the Life Offices' Association (LOA) said on Wednesday. Three of South Africa's biggest life-insurance companies were the first to introduce life policies for people with HIV/AIDS in 2001, with The Netherlands following suit only last year, a statement said.

In what has been hailed as a major victory for South Africans living with HIV and AIDS, the life insurance industry will no longer deny death and disability benefit claims in respect of people who die from AIDS.

The poor who fall sick may no longer be more sick, or the poorer for it. A Mexican model is at hand to lift them out of medical troubles.

12 October 2005, Indaba Hotel, Johannesburg, South Africa

The cabinet has agreed to the creation of a risk equalisation fund to ensure access to health care for all South Africans, President Thabo Mbeki said yesterday.

Gain First Hand Knowledge On The Current Implementation Status And Future Of Social Health Insurance. The conference will be held at the Glenhove Conferencing, Houghton, Johannesburg.

There are fewer beneficiaries of medical schemes than a year ago, according to the latest annual report from the Council for Medical Schemes. The report, which puts into perspective the state of the industry for the financial year 2002, also said the total gross contribution income for all medical schemes increased 16.6% from 2001 to R43-billion in 2002. The number of principal members edged up 0.97%, but this comes along with a 1.8% decline in the number of dependants. The average solvency margins increased to 23.1%, higher than the required phasing-in level set at 17.5% for 2002. High solvency margins are intended to protect members and ensure coverage. The report says this represents a concerted effort to improve the financial soundness of medical schemes. Administration costs rose 15.7% from the previous year to R4.1-billion. These were far higher in restricted schemes, which rose 23.9% to R899-million, compared with open schemes, which rose 14.3% to R3.2-billion. Managed-care costs went down from R986-million in 2001 to R966-million in 2002. Fees paid to healthcare brokers rose 22.5% to R354-million, which the council attributes to members moving from scheme to scheme. New regulations on brokers came into effect at the beginning of 2003, and we are optimistic that this situation will be reversed, the report said. New legislation has reduced the rampant losses attributable to inappropriate reinsurance, said the report. Overall reinsurance losses were R297-million during the year, down 11% from 2001. It is believed that out of 50 applications for reinsurance from the registrar of medical schemes, none has been approved. Riding says there are instances where reinsurance is justified, especially for small schemes. Contributions rose 17.9% in 2002, while claims per beneficiary increased by 15.9%. Medical schemes continued to show a surplus from operations. Operating surpluses increased to R1.1-billion, the second successive year schemes enjoyed operating profits. (Source: The Business Times, 14 September 2003). Full report: http://www.medicalschemes.com/ https://www.medscheme.co.za/medschemeonline/homepage.aspx

How can developing countries implement health systems that are both equitable and sustainable? Is social health insurance (SHI) a valid healthcare finance mechanism for these countries? This article examines the lessons that can be drawn from the South African experience of adapting and implementing SHI. Researchers have studied the implementation of SHI in South Africa. SHI has a long tradition in the developed world but was only revived as a potentially useful model for low and middle-income countries in the 1980s. This revival was because: * it was thought that SHI could increase the equity and efficiency of health resources * it was believed that SHI could generate resources at times when government funding in healthcare was in decline. These views were held by many policy-makers in South Africa in the late 1980s. Their stance was strengthened at the time by the existence of an unequal health system that spent its resources on a relatively small minority and did not provide care to those most in need. SHI was seen as the best funding model to deal with these problems. Its introduction was announced in the National Health Plan by ANC in 1994. The initial idea is that the state collects funds from different sources and uses them to buy health services that can then be distributed to the population according to need. It was estimated that at least half of the South African population would benefit from the scheme. In the event, only a limited version of this idea is now being proposed. Researchers found that: The introduction of SHI in South Africa in its currently proposed form would not address the challenges of equality of provision faced by the system. This was partly because only those above a certain income were asked to contribute to financing, and would benefit from, the system. * The model of SHI introduced only covered hospital services and not the entire range of healthcare services. * The system increased inequalities in access to healthcare, with the rich accessing services through private insurance and the state covering low-income and high-risk groups. The paper illustrates how SHI design can be affected by concessions that have to be made to key stakeholders and how these can affect the core objectives of SHI. Lessons for future policy development and implementation include: * The design of SHI has to be geared to achieving key policy objectives such as equality and sustainability. * In order to avoid inequalities of access and ensure the long-term sustainability of the system, it is necessary that the SHI and existing private insurers contribute to the same funding ‘pot’. * For SHI to work its implementation has to take place at the same time as organisational and other financial reforms. * Pre-determined objectives need to be stuck to in order to protect the integrity of the policy. * It is necessary to take into account that powerful actors such as private insurers or high-income groups can have a negative effect on the implementation of SHI. Contributor(s): Di McIntyre, Jane Doherty and Lucy Gilson Source(s): 'A tale of two visions: the changing fortunes of social health insurance in South Africa', Health Policy and Planning 18(1): 47-58, by D. McIntyre et al, 2003.( Source: http://www.id21.org/health/h1dm1g3.html 29 July, 2003).

The department of health has urged the medical aid sector to explore ways of ensuring that the risk-equalisation fund becomes an important instrument for sustaining members' contributions. In terms of the risk-equalisation system, a central fund will receive contributions from schemes with below-average risk, thus creating a much larger risk pool. Instead of schemes competing on the basis of risk selection, they would compete on the basis of cost and the quality of healthcare services purchased. Ayanda Ntsaluba, the Department of Health's director-general, told a media briefing yesterday: The international literature we have examined suggests risk-equalisation is a complex exercise to undertake. He said the department believed social health insurance contributions should be based on income, to ensure that income cross-subsidies were entrenched. The tax subsidy on medical schemes contribution, currently estimated at R7.8 billion, is an important reflection of government commitment to encourage people to provide for their own healthcare, Ntsaluba said. We need to ask uncomfortable questions about whether it is appropriate for the government to allocate more than R1 000 per capita on medical scheme beneficiaries who spend R5 000 per year on healthcare, while only allocating R800 per capita on public sector users. Brenda Khunoane, social health insurance director, said R2 billion had been invested so far in a programme aimed at improving the planning, management and physical state of our public hospitals. (Source: Business Report, 10 July, 2003).

The provision of healthcare needs to change drastically or fewer South Africans will be able to afford medical cover, says Prime Cure CEO Professor Gerard Slabbert. Even as more service providers try to broaden the stagnant pool of insured lives from six - seven million by coming up with low-cost options, a growing number of medical aid members are being forced out of the system by high drug and private treatment costs. Medical inflation has outpaced consumer inflation for 10 years and people now spend 14%-16% of their income on health cover. Medical aid premiums overtook pension fund contributions in 1996 and now constitute an employer's biggest expense after actual salaries. Managed care also has not helped to bring costs down much, says Slabbert. It simply added another layer to costs while benefits were cut back. More partnerships between individuals or organisations and the medical profession are needed, with a view to health education, says Slabbert. These worked well for Prime Cure, which has focused on the low-income market for the past seven years, he says. Contracted doctors (about 700) are paid a fixed monthly sum to provide patients with quality healthcare. This encourages the use of preventative medicine because it's much cheaper than treating sick people. Service providers are increasingly coming out in support of risk-sharing to curb costs, says Discovery Health MD Barry Swartzberg. Providers and networks that form such partnerships are motivated to provide effective services, which ultimately improve margins and restrict over-servicing, he says. Also, in line with trends overseas, we are seeing a shift to generic medicine in SA, says Swartzberg. Medscheme set the ball rolling early this year with the implementation of its value-for-money medical price list (MPL), which boosted usage of generic medicine and resulted in a general unit cost-saving of R5 per item in the first month. It remains to be seen to what extent these measures will stem the tide of fee increases and make healthcare more accessible and affordable.(Source:Wilma de Bruin: Finance Week, 22 November 2002)