Mind the gap.

It seems that Gap Cover is here to stay. In a decision which would have been welcomed by the insurance industry and received with rather more reservations by the medical schemes, the Treasury is now proposing that companies be allowed to continue selling gap cover and hospital cash plans under certain conditions.

It has been a long 18 months since the scrapping of gap cover was first proposed, and watching the objections and counter objections has been a bit like attending a tennis match.

For me, in an opinion I expressed here, the bigger issue is the shortfalls in the healthcare system that result in the tremendous popularity of gap products.

At the core of the problem is the pricing of PMBs (prescribed minimum benefits) at cost with no constraints. Medical schemes are regulated but pricing is unregulated, in a market which is designed to work in a social rather than a commercial sphere.

The big problem is that there is no real correlation between the cost of healthcare and outcomes.

What is charged is not related to what the cost is of delivering that care, but more on what the market (medical schemes) can bear. The result, as we see happening, is that private healthcare is becoming unaffordable, as the demands for universal health coverage for more of our people grow. This goal is not possible with unregulated pricing or, as in the past, a scale of benefits. I believe the first step is to fix the pricing mechanisms.

I was interested, however to see this from Tamar Kahn in the Business Day: “The Treasury said the new regulations were expected to take effect at the end of next year. However, according to the Helen Suzman Foundation and Wits health economist Alex van den Heever, the Treasury’s timeline might be thrown off course as the bill cannot be processed in its current form. Van den Heever explained that the bill had been incorrectly tagged as a section 75 bill, which would require approval only from the National Assembly. He said it should in fact be a section 76 bill, as it contained provisions relating to healthcare services, which were a provincial competence, requiring approval from both the National Council of Provinces as well as the National Assembly.”

So watch this space… it seems this is not over yet.


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