Litigation: Battle over low-cost medical scheme options

The medical schemes industry has taken its regulator to court for stalling cheaper, simpler benefit packages designed for low-income earners, says a Business Day report. In papers filed in the Gauteng High Court (Pretoria), the Board of Healthcare Funds (BHF) claimed the Council for Medical Schemes (CMS) is preventing millions of people from accessing affordable cover and accuses it of being driven by political motives rather than by its obligation to protect members’ interests. It has been more than seven years since the council began to develop a legal framework to enable medical schemes to offer low-cost benefit options (LCBOs) exempt from providing the full, costly suite of benefits stipulated by the Medical Schemes Act. But the council still has not decided how to do this. In the interim, it has refused to consider applications from medical schemes seeking exemption from the Act, yet it allowed a closed group of health insurers to go on selling primary healthcare cover products that effectively do the same thing. ‘The overwhelming inference is the reason LCBOs have not been developed and implemented is either because of a lack of political will or another political agenda .... It does not suit the (Health) department tasked with implementing NHI (National Health Insurance) to have increased membership of medical schemes, or for the private sector to deliver a viable low-cost product at the same time as it tries to sell NHI,’ said BHF’s Charlton Murove in his founding affidavit.

The most plausible explanation for lack of progress was that the CMS was intentionally delaying the LCBOs to facilitate the implementation of NHI, according to an affidavit by Insight Actuaries & Consultants joint-CEO Christoff Raath. ‘The delays first started to manifest approximately two months prior to the release of the NHI White Paper in late 2015,’ said Raath. According to Business Day, Raath said that medical scheme membership remained unaffordable for many working people because of the inaction of the CMS and the Health Minister, who must approve any regulatory changes put forward by the council. No plausible explanation has been offered by the CMS for the delays in devising an LCBO framework, which denied 10m people access to affordable medical cover, he said. The BHF named the CMS, its registrar and the Health Minister as respondents. It has asked the court to declare the respondents’ failure to develop and implement an LCBO framework to be irrational, unreasonable, and unlawful in terms of section six of the Promotion of Administrative Justice Act and in terms of section 1(c) of the Constitution.