Medical complications ahead – the NHI Bill and the reshaping of health insurance and schemes

May 14, 2024 | News

The signing of the National Health Insurance (NHI) Bill by President Cyril Ramaphosa, is expected this Wednesday at the Union Buildings in Pretoria, marking a significant moment in South Africa’s healthcare landscape.

This legislative act propels the country towards universal health coverage, aiming to establish a unified health system that offers care that is free at the point of delivery across both public and private sectors.

The NHI Bill introduces a government controlled NHI Fund, set to be the sole purchaser of healthcare services under the scheme. Despite its noble intentions for comprehensive health coverage, the bill has sparked considerable debate and controversy, particularly regarding its funding and impact on existing healthcare structures.

One of the bill’s most contentious points is the restriction placed on medical schemes, prohibiting them from covering any health benefits that the NHI provides. This could potentially reshape the landscape of healthcare financing in South Africa and impact the operational viability of these schemes.

Impact on Insurers and Medical Schemes

The NHI Bill, in its current form, does not fully explain how it will affect the complex ecosystem of medical schemes and the insurance industry in South Africa. However, Clause 33 of the Bill indicates a significant shift: once the NHI is fully implemented, medical schemes will be limited to offering coverage only for services not reimbursed by the NHI. This restriction poses a direct challenge to the existing business models of medical schemes and is likely to Constitutional challenges based on rights to healthcare access, property rights, and freedom of trade.

For insurers, the distinction between medical schemes and medical insurance provided under the Insurance Act becomes crucial. Medical insurance, as defined by the Insurance Act, covers health events not included in the medical scheme benefits. The existing Demarcation Regulations, which delineate between insurance business and medical schemes business, will play a vital role in determining how products are classified moving forward.

Additionally, the introduction of the NHI is likely to disrupt the current exemption framework under which insurers operate certain health products. These changes necessitate a thorough review and possibly, strategic adjustments within the insurance sector to align with the new healthcare financing model envisioned by the NHI Bill.

Legal and Business Challenges Ahead

Various and differing legal challenges are anticipated, notably from trade unions and healthcare industry stakeholders who argue that the bill could destabilise the medical scheme industry and reduce access to care for beneficiaries. Industry analysts predict a series of Constitutional challenges and vigorous debates over the coming years.

From a business perspective, the reconfiguration of healthcare financing and insurance coverage necessitates that insurers and medical scheme administrators closely monitor the implementation phases of the NHI and engage proactively with policymakers to safeguard their business interests and compliance. Additionally, we may well expect litigation from taxpayers themselves when the cost implications of the NHI are fully realised.

It is crucial for stakeholders in the healthcare and insurance industries to prepare for a landscape marked by significant regulatory changes. The transition to an NHI-funded healthcare system will require robust dialogue, strategic planning, and adaptive measures from all involved parties.

Fairbridges Wertheim Becker, with its substantial expertise in the healthcare sector, stands ready to assist clients in navigating these changes. We will continue to provide insights and guidance on how businesses can adjust to this new regulatory environment and ensure that the rights and interests of all stakeholders are adequately protected.

While the NHI Bill sets a visionary path towards universal health coverage, its implementation will be a complex and contested journey, requiring careful consideration and strategic adaptations by insurers and medical schemes. As always, our team is here to help our clients manage these challenges effectively and sustainably.

ByJulia Penn | Director