CMS about-turn on LCBOs amounts to ‘Let them eat cake’
Patrick Masobe • February 12, 2020
Patrick Masobe, chief executive officer of Agility Health and former Registrar of the Council for Medical Schemes.
As recently as March 2019 the Council for Medical Schemes
released a discussion document seeking industry inputs on how best to go about implementing Low Cost Benefit Options (LCBOs), with the intention of introducing measures to provide the protection of healthcare cover on medical schemes for low-income households.
The project to introduce minimum benefits specially tailored for LCBOs was meant to be implemented as a measure to replace risk based health insurance products, which were until recently subject to an Exemption Framework. Just nine months later in December, as the holiday mood began to settle over our nation, the CMS announced that no further exemptions to the insurance products would be granted and the replacement LCBOs too would no longer be developed and rolled out – no exemptions, no exceptions, finished and klaar.
And what rationale was cited for this about-turn? Again, we are told, it is to protect the healthcare interests of low-income households – this time through aligning with national health policy in pursuit of the ever-elusive National Health Insurance. A key critique of the LCBO model cited is the potential that members on such plans could be largely reliant on public health facilities, and therefore such plans may not be helping to reduce pressure on State facilities. It should be noted, however, that not all products marketed for the low income segment are necessarily directing members to State health facilities. To the contrary, these very same products will ultimately serve to reduce pressure on Government hospitals as they are specifically designed to keep members healthy and productive.
Options provided in terms of health insurance products and even the Bargaining Council Medical Schemes established with certain exemptions to the Medical Schemes’ Act to provide cover for blue collar workers are to be similarly scrapped, again with the noble aim of aligning ‘with the broader health policy discussion that seeks to ensure adequate access to care, irrespective of the economic status of the population.
In the meantime, where does the Regulator’s decisions on LCBOs leave the majority of South Africans who cannot afford private healthcare? In a position where there are simply no options for access to private healthcare, and therefore they are back at square one – waiting in long queues for the overburdened State system to provide healthcare cover. And that will now extend to people currently on some form of cover on insurance or other exempted products.
The Demarcation Framework, which flowed from an agreement between the Ministers of Health and Finance in 2015, has been extended twice so far and recent developments beg the question, where do the Ministers stand on the Registrar’s recent pronouncements?
Prohibiting LCBOs at this point in the transition towards universal health coverage will have far-reaching and harmful effects, not least on the poor which these regulations claim to champion. In the absence of a workable alternative framework that could be implemented by the cut-off date in March 2021, it is unconscionable to expose those who may have had access to insurance products and other exempted products to the potential risks associated with having no cover and no safety net (which was what LCBOs were going to provide), including the threat of possible bankruptcy if faced with a catastrophic health event.
Fair administrative procedure should surely require that when regulatory changes on this scale are proposed, people who are likely to be adversely affected be afforded the opportunity to voice their concerns and be consulted on the timing of implementation. We have no indication that this has taken place, even though it has been estimated that as many as two million people may be stripped of access to private healthcare through the eradication of affected health insurance products without providing an alternative solution, through LCBOs or otherwise. Whether the State healthcare system has the resources and capacity to adequately provide for these additional patients is doubtful, to say the least.
Further to the above, the Prescribed Minimum Benefits review process to include aspects of primary healthcare cover will either impoverish the comprehensive basket of services currently provided or it threatens to drive up the costs associated with providing PMB cover to the point where even fewer South Africans can afford medical scheme membership, even though schemes operate on a not-for-profit basis.
The Health Market Inquiry report has recommended a number of targeted reforms that could achieve proper balance with regard to medical schemes regulations and puts forward a number of measures to address concerns around risk pooling, costs and efficiency.
As we move towards the implementation of National Health Insurance, expected to roll out by 2026, mere hope for a more inclusive healthcare system will not sustain those facing serious medical challenges.
There are many ways of achieving universal health coverage, however for the foreseeable future the most viable option for South Africa appears to be for the public health sector to operate alongside a properly regulated medical scheme sector. Micro-managing the healthcare funding sector stifles innovation, which could provide solutions in the short and medium term to deliver access to world-class healthcare to more South Africans.
There is no doubt that reform is needed as both the private and public healthcare sectors evolve to provide an effective, sustainable and well-governed health system that meets the healthcare needs of all South Africans. The drastic action of cutting off low-income households from the only available means of funding access to private healthcare without providing an alternative substitute model is surely not a necessary or logical step to achieving National Health Insurance.
Depriving lower income families of the option to access private healthcare, or even the opportunity to comment on the regulations directly impacting their lives, seems a strange way to go about broadening access. It is not only undemocratic – it amounts to the healthcare equivalent of declaring ‘Let them eat cake’.
About the author
Patrick Masobe (LLM, MSc Economics) is chief executive officer of Agility Health
and was the founding chief executive officer of the Council for Medical Schemes. He also served as chairman of the finance task team of the Health Ministry’s Advisory Committee in 2009, and as chairman of the Health Systems Trust’s Board of Trustees, between 2004 and 2006.
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With Rare Disease Day on the 28th of February 2025, the Rare Diseases Access Initiative (RDAI) is driving an evolution of the country’s healthcare, through innovative strategies to better care for over 4.2million people living with an estimated 7000 rare diseases. “As our healthcare system faces significant changes in the years ahead, it is vital that we also advocate for people living with rare diseases in South Africa, especially those with limited healthcare access,” said Kelly du Plessis, CEO of Rare Diseases South Africa (RDSA), a member of RDAI. “As part of our ongoing research and awareness efforts, RDAI has conducted an initial analysis of the incidence and prevalence of rare diseases within the country.” This research will assist in improving access to healthcare, policy development, and patient advocacy, while giving critical insight into the challenges faced by patients. “According to research, some rare diseases affect fewer than 1 in a million people, while others, such as Down syndrome, cystic fibrosis, and haemophilia, have a more recognisable prevalence,” says Dr. Helen Malherbe, RDAI lead researcher on rare disease prevalence data. “Many conditions are undetected, underdiagnosed or misdiagnosed, with too many having no information available about them at all.” The RDAI was formed in 2019 to promote a more favourable environment for those impacted by rare diseases in South Africa. Participants include Ampath, the Board of Healthcare Funders (BHF), Discovery Health, Genetic Counsellors South Africa (SASHG), the Government Employees Medical Scheme (GEMS), Health Funders Association (HFA), Medihelp, Medscheme, North-West University (NWU), Rare Diseases South Africa (RDSA), the South African Medical Association (SAMA) and The South African Medical Technology Industry Association (SAMED). The Council for Medical Schemes (CMS) participates as an observer. In the same year, Rare Disease International signed a memorandum of understanding with the World Health Organisation leading to an international rare disease policy framework. In 2021, the United Nations General Assembly moved to adopt a resolution recognising 300 million people living with rare diseases worldwide. “A general lack of awareness and delayed diagnosis remain major hurdles for those affected by rare diseases. Policymakers and healthcare stakeholders need to prioritise access to treatment, diagnosis, and support for rare disease patients,” says Bada Pharasi, CEO of IPASA, “Through this initiative, working collaboratively with stakeholders at every level of the healthcare supply chain, we can bring real and meaningful change to those affected, including family members and care givers, through smart and efficient strategies.” The globally agreed definition of a rare disease is any medical condition with a specific pattern of clinical signs, symptoms, and findings that affects fewer than or equal to 1 in 2000 persons in a population. “Most are genetic, and some are inherited and passed down in families,” Malherbe says. “Some affect only the patient’s genetic recipe, while others may be acquired during life due to infection, trauma, or environmental effects. For many, the cause is still unknown. “These conditions mainly affect children, as they are largely incurable and many are life-threatening. Some require specialised and co-ordinated care, some have limited and expensive treatment options, while others have no information or effective treatments at all,” she adds. The RDAI is calling for a patient-centred care model built on equitable access, transparency and efficiency. Naturally, this model calls for the open participation of patients, the healthcare industry, health professionals, and the Government. “The most critical elements are robust diagnosis standards, improved access to treatment, data collection and management, co-ordination of care, measurement of outcomes and ongoing collaborative research,” du Plessis says. “We need to establish rare disease advisory committees, map gaps and opportunities, establish system requirements, create a roadmap and plan a phased implementation with clear timelines.” The RDAI states that these policy development steps would be a start in quantifying the disease burden and defining standards of care. This would be followed by building and strengthening the capacity to facilitate appropriate diagnosis, treatment, continuity and data monitoring. Thoneshan Naidoo, Chief Executive Officer of the Health Funders Association noted that, “We appreciate the unique opportunity provided by RDAI which enables stakeholders across the industry to work together and identify strategies that improve equitable access to the appropriate diagnosis, treatment and healthcare services for rare disease patients, in an affordable and sustainable manner, taking account of the other pressing needs across the healthcare system.” “True innovation in healthcare is only possible through partnerships and joint advocacy efforts that raise awareness and improve access to treatment. Our long-term goal is the development of a rare diseases policy framework and guidelines for coordinated care,” says Pharasi. “Our members are united in the commitment to unlocking improved patient outcomes and improving access to services and robust health needs assessment facilities.” he concludes. About RDAI The Rare Diseases Access Initiative (RDAI) is dedicated to advocating for improved healthcare access, policy development, and patient support for those affected by rare diseases in South Africa. The initiative brings together key healthcare stakeholders, including pharmaceutical associations, funders, genetic specialists, and patient advocacy groups, to drive impactful change. About RDSA Founded in 2013, Rare Diseases South Africa (RDSA) is a non-profit organisation advocating to ensure that people living with rare diseases and congenital disorders experience greater recognition, support, improved health service and better overall quality of life. Started out of personal need following the diagnosis of organisation founder, Kelly du Plessis' son, it became evident that there was a lack of awareness and support for rare diseases in general in South Africa. About IPASA The Innovative Pharmaceutical Association South Africa (IPASA) is a voluntary trade association representing 24 leading pharmaceutical companies committed to research, development, and innovation. Our mission is to drive healthcare advancement by advocating for policies that improve patient access to safe, high-quality, and affordable medicines.
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