As the Council of Medical Schemes’ (CMS) Registrar, Dr Sipho Kabane prepares to  brief the medical schemes industry on the regulator’s bombshell announcement last month that it intends to scrap low-cost benefit options (LCBOs) and products based on the Demarcation Exemption Framework, the Free Market Foundation (FMU) has again warned that the move could have catastrophic consequences.

Kabane told Business Day that today’s (23 January) briefing in Pretoria is aimed at “unpacking and deliberating” on the decision that will make these products illegal by 31 March next year. Further meetings with industry associations and other stakeholders will also be held in Cape Town at a later stage.

In a statment, FMU director, Jasson Urbach said the banning of the health insurance options and discontinuing plans  to introduce affordable medical scheme cover demonstrates a flagrant disregard for individuals’ rights to enter into voluntary private contracts to protect themselves from unforeseen out-of-pocket payments when catastrophe strikes”.

He said the move that will strip thousands of people of medical cover will increase the burden on an already over-stretched public healthcare sector, precisely at a time when the country is in fiscal crisis. Poor and middle-income South Africans cannot afford this form of social engineering and will be denied their constitutional rights of freedom of association, access to quality healthcare, and protection of their private property, Urbach said.

Michael Settas, a member of the FMF’s Health Policy Unit, questioned the motive behind the shock move, given the fact that the CMS and the private sector have been working together to develop the LCBO for the past 5 years.

“It targets some of the most vulnerable members of society who, for a brief time, have had an opportunity to better their lives with access to affordable, quality private healthcare. The decision to do away with LCBOs and health insurance products, without saying what will replace them and how much it will cost, is without doubt a violation of the constitutional rights of the affected citizens,” he said.

Explaining the rationale behind its move to ban the products in a circular issued in December, Kabane said “it was aimed at aligning the products with the broader health policy discussion that seeks to ensure adequate access to care, irrespective of the economic status of the population as entailed in government’s policy to introduce National Health Insurance. He said the concept of a Low-Cost Benefit Option was intended to increase the affordability of medical schemes and membership through the development of a product targeted to a specific group of the population, mainly low-income households. However, the Council says it had observed that products targeted at lower-income earners present an opportunity for inferior benefits.

“Mainly, such products potentially use the state as a Designated Service Provider (DSP) without entering into the necessary agreements with the State and lack prescribed minimum benefits (PMB).”