Health and medical scheme reform is critical to enabling South Africa’s growth.

Health and medical scheme reform is critical to enabling South Africa’s growth

Damian McHugh, Executive, Momentum Health Solutions

South Africa’s healthcare system, and its medical schemes, have been in the eye of a storm in the last few years. A global pandemic, combined with industry and socio-economic challenges, has meant that both the national health system and the 76 medical schemes covering nearly nine million South Africans have taken strain.

A shortage of resources and skilled healthcare professionals is being made worse by the ongoing loss of expertise in the public and private sectors of the health system. Medical schemes are facing the same challenge, but also their own unique hurdles: scheme growth in the country is nearly flat, with little to no material change in membership numbers for several years.

This is compounded by an ageing profile on medical schemes: on average, the proportion of older members is getting higher, so the burden of disease is worsening – which in turn makes membership and hospital admission for treatment more expensive. This makes it difficult for medical schemes to be relevant and affordable for a younger, uncovered population.

Health Squared is an example of this. The medical scheme recently applied for voluntary liquidation, and the regulator – the Council for Medical Schemes (CMS) – pinpointed its high proportion of elderly members as the reason for its financial woes. Its pensioner ratio was 25.9%, notably higher than the 2021 open schemes industry average of 11%. A knock-on effect of this is higher hospital admission rates and higher costs when individuals are admitted.

It’s clear that action needs to be taken. The regulator has an important role to play to ensure that schemes are able to cater to younger, uncovered individuals. However, the legislation needed to facilitate and drive the ability to achieve this aim needs to be updated.

Embracing collaboration and new ways of thinking

The Medical Schemes Act, passed in 1998, needs to be refreshed in order to ensure that it is meeting modern demands and addressing key challenges. This includes how and why products are designed and structured, and cross-subsidisation to ensure a sustainable rise in contributions.

Driving the change needed within the sector will require collective action and collaboration, as well as fresh thinking to relook existing models, policies and processes and adapt what is no longer working. The first step to take is collaboration between the public and private sectors to find new solutions and ways of working. A strong private sector is essential for a sustainable public sector, equipped to provide the care people in South Africa need and are entitled to.

There are opportunities for the sectors to help each other move towards the common goal of delivering more healthcare to more South Africans for less. The public sector, for instance, can amend legislation that will enable the private sector to cover and care for more people – helping to relieve the burden on the state. The private sector can, in turn, contribute expertise and resources and show real intent and willingness to collaborate and find solutions.

The pandemic has illustrated that the public and private sectors are able to work together and achieve results. The use of digital health solutions such as telehealth, which is remote access to and management of health typically through video or telephonic consultations, showed how technology can make care more accessible and reach more people. It also highlighted the success of embracing new ways of thinking to provide healthcare to the people who need it.

Embracing innovative thinking and solutions unlocks the opportunity to transform healthcare in South Africa – but this needs to be underpinned by public private partnerships that encourage and enable change at scale. When the private and public sectors truly begin to collaborate and innovate, this will translate into better healthcare for all South Africans.

Published: 12 September 2022