Private healthcare could be cheaper but government dragging its feet

Government’s failure to implement the recommendations of the Competition Commission’s Health Market Inquiry which was completed in 2019, is driving up private healthcare costs.

The Competition Commission released the Health Market Inquiry report that contained key recommendations to bring down the cost of private healthcare in the country on 30 September 2019.

But five years later government has not implemented any of these recommendations, which means that healthcare costs have continued to escalate unnecessarily, making healthcare unaffordable for many citizens.

Due to the inaction of the Department of Health on the recommendations, the Board of Healthcare Funders (BHF) now wrote to the commissioner of the Competition Commission, calling for a formal response to the BHF’s application for an exemption from provisions of the Competition Act.

The BHF submitted the application in 2021 because the exemption would allow medical schemes to collectively negotiate tariffs with healthcare providers and make this information public, Katlego Mothudi, managing director of the BHF, says.

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This is what the exemption recommendation in the Health Market Inquiry would mean

“The exemption was one of the recommendations and if it is implemented, it would ensure greater transparency around the cost of private healthcare, which will contribute to making healthcare more affordable over time and potentially lead to lower medical scheme contributions for members”

Mothudi says it would also mean that more South Africans can afford medical scheme cover, which in turn would lessen the burden on the public health system.

“Despite these clear benefits to consumers, the department failed to implement the recommendations to set up a negotiating forum between private sector role players. It also failed to establish a supply-side regulator for health who would be tasked with ensuring pricing is determined transparently moving forward.”

He says it is curious that government, despite its stated intention to make healthcare accessible and affordable to all, has failed to act on this recommendation. “Government’s inaction is against the very reason the Health Market Inquiry was set up, which was to promote competition in the private healthcare system while ensuring the fundamental right of access to healthcare services for all South Africans.”

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Pricing gap between what medical schemes pay and what service providers charge

As a result, a pricing gap exists between what medical schemes pay and the actual tariffs or prices hospitals or practitioners charge and therefore members are forced to make high out-of-pocket co-payments. It also means that consumers cannot determine whether they are being overcharged for a healthcare treatment or service, Mothudi says.

“It is worth pointing out that, despite a perception fuelled by government, medical scheme members come from diverse backgrounds. Figures released by Statistics South Africa on the medical scheme population reveal that 50.4% of medical scheme beneficiaries are black, 9.8% are coloured and 7.6% are Indian or Asian. This means that 68% of all medical scheme members in the country are from previously disadvantaged groups.

“With no indication that the department plans to implement the tariff recommendations, the BHF has written to the Commission requesting it to urgently approve its application for exemption. Granting the exemption will be beneficial for the healthcare ecosystem, including medical scheme members, while we wait for the department to establish a negotiation chamber.”

When the Commission recently appeared before Parliament’s Portfolio Committee on Health, it reiterated the urgent requirement to establish a bargaining forum to determine tariffs. However, Mothudi says, instead of exercising its own legislative authority by granting the BHF’s exemption application, it continues to put the onus on the Department of Health to address the current pricing vacuum.

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Four pending exemption requests

The Commission told the Health Portfolio Committee that it received four exemption applications and was considering a block exemption that would still have to be managed by the Department of Health.

“The BHF has indicated to the Commission that if its application was approved, it would be happy to include a third-party observer in negotiations to ensure pricing was determined fairly and transparently.”

However, while the department is yet to act on the recommendations, Mothudi says there is a strong possibility that similar delays could arise if the Commission moves forward with a block exemption.

“South African households have been under extreme financial pressure over the past few years and the failure to implement the recommendations on pricing and tariffs exacerbated the situation. Ensuring that good quality, private healthcare is within reach for more South Africans would reduce the number of patients at public healthcare facilities, improving service delivery overall.”

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Granting exemption also a way to achieve universal health coverage

He says it would also contribute towards achieving universal health coverage in the country and the BHF is committed to playing its part in realising this global agenda, to ensure that no one is left behind.

“The minister and Department of Health have consistently cited the high cost of healthcare as one of the reasons why the National Health Insurance (NHI) is necessary. Yet, presented with an opportunity to make a tangible difference, they have not even attempted to get out of the starting blocks.”

Mothudi says the BHF therefore calls on the Commission to urgently review and decide on its exemption application, which it is legally empowered to do without the involvement or approval of the Department of Health.