the-healthcare-landscape-now-and-in-the-future The healthcare landscape: now and in the future

Following recent criticism against the Council for Medical Schemes regarding their slow progress in terms of creating a regulatory framework for Low Cost Benefit Options (LCBO) to be implemented, the industry body released its LCBO Framework draft for comment. The document outlines the possible future of health insurance products – either being stopped, accommodated within the insurance industry, or housed as low-cost options within the medical schemes environment. It makes for interesting reading and hopefully provides some regulatory certainty and an opportunity for a greater proportion of the South African population to have access to some form of private medical cover.

At a recent broker launch Kaelo, a leading South African healthcare player that is active in the primary care and gap cover markets, shared some interesting views on the current healthcare landscape and where they see it ideally going into the future, specifically referring to the opportunity to provide wider access to primary care health insurance products.

In the presentation shared by John Jutzen (Kaelo Chief Executive Officer), Nadine Walsh (Kaelo Chief Strategy Officer), Praval Sookal (Kaelo Risk Manager), Christoff Raath (Insight Actuaries & Consultants) and Faghry Prins (Med ClaimAssist), they first provided their view on the current numbers per category with access to healthcare services. As can be seen from the triangle below, 16.5% of the South African population have private medical cover.

Of this grouping, 18% (3% of the total population) have gap cover. Two percent make use of the demarcated primary care health insurance cover, 10.5% fund healthcare from their own pockets, and 71% rely on the public sector for their healthcare services. If this is compared to South African employment data, of the 24 million people formally employed (including their dependants), 13 million currently do not have any cover. If this section of formally employed people including their dependants, plus a further 6 million dependants in the informal sector who can afford primary care (according to Kaelo’s research), can be convinced to join primary care offerings, primary care insurance products could potentially provide cover to 20 million of the South African population. Combined with the medical scheme cover cohort, this may lead to the requirement for cover to be provided by the public sector to drop to 50%.

While there might be political reasons why Government may not favour this approach to increase access to better care and free up resources to be spread more equitably to those obtaining care from the state, it does demonstrate the opportunity for growth in this healthcare sector and is also aligned to the sentiments expressed in the LCBO Framework draft.

Simeka Health fully supports the continuation of primary care health insurance products, either within the insurance or the medical scheme environment.

We believe that the medical scheme environment is specifically suited for housing these products given the additional tax credit benefits to assist with affordability. We look forward to developments on this front and will keep clients informed of any updates in this regard.

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