Civil society groups concerned by draft regulations

In March, the Treasury published draft regulations for the Long-Term Insurance and Short-Term Insurance Acts, seeking to draw a clear distinction between medical schemes and health insurance policies.

The draft regulations proposed scrapping most gap-cover products, but would allow health insurance for loss of income, travel, emergency travel, HIV/AIDS and frail care. Gap cover providers have flourished because many medical schemes will not pay bills in their entirety, leaving consumers to pay the balance.

Companies selling health insurance products have also targeted consumers who cannot afford even the most basic medical scheme package but want some protection should they fall ill or be injured.

The draft regulations, which were open for public comment for six weeks, elicited strong criticism from companies selling gap cover products, which would be scrapped if the proposed regulations became law.

Gap cover policies have long been a bugbear of the Council of Medical Schemes, as it believes they are doing the business of medical schemes without the regulations medical schemes are subjected to.

Now civil society groups have raised concerns about both the details in the regulations and the way the government has conducted its public consultation process. Not enough time was granted for public input and the government's explanation of the need for the regulations was superficial, said the Helen Suzman Foundation, rights group Section 27, and Wits social security Professor Alex van den Heever in an open letter sent to the ministers.

"Given the complexity of the insurance markets and their interactions with medical schemes, government is obliged to ensure there is informed engagement with all affected parties. However, to date, this has not occurred," they said.

The organisations said the proposed legislation could destabilise the medical schemes sector, as it allowed exemptions to be made to the Medical Schemes Act "irrespective of the harm that may be caused to medical schemes". They also expressed concern that oversight of health insurance products would lie with the registrars of insurance who, they said, lacked the necessary understanding of the medical schemes sector.

Helen Suzman Foundation researcher Kate Francis said civil society was concerned about possible collusion in the market, as medical schemes and their administrators deliberately created holes in their products that could be filled by their chosen providers of gap cover.

Unlike medical schemes, which are obliged to accept anyone and must charge everyone the same rate regardless of age or health, insurers can turn people away and are allowed to charge premiums based on a client's risk profile.

Section 27 senior researcher Shaista Goga said civil society groups wanted the opportunity to raise concerns with the ministers in the same way that other interest groups had been able to do.

The spokesman for the health ministry Joe Maila, said the minister believed the issues raised by civil society were "a matter of extreme public interest" and he was prepared to meet with them.

"He will also be discussing it with the Minister of Finance," said Maila.

The spokesman for the finance ministry, Jabulani Sikhakhane was not available for comment.

Source: Business Day via I-Net Bridge