The minister pointed out that unregulated private healthcare prices are causing high increases in medical aid scheme premiums and can push up inflation.
Private healthcare is too expensive and unregulated, with no legislation passed to regulate healthcare services which means that there are no structured tariffs, leading to many different tariffs that change over time.
Minister Aaron Motsoaledi, Minister of Health, held a joint media briefing on Monday morning with minister Parks Tau, Minister of Trade, Industry and Competition to provide more information on the progress made with the implementation of the recommendations of the Health Market Inquiry into the private healthcare sector.
The Health Market Inquiry, conducted by the Competition Commission and chaired by former Chief Justice Sandile Ngcobo, identified a number of factors that hinder competition in the private healthcare sector, including an unregulated supply side in the provision of services, lack of transparency in pricing, exclusive contracts and anticompetitive practices or barriers to entry for new providers.
The Health Market Inquiry recommended a number of interventions to improve competition in the sector. One of these was a block exemption, a legislative tool to facilitate and enable coordination or cooperation in an industry or sector that would otherwise constitute a contravention of the Competition Act for public interest purposes.
The exemption would allow medical schemes to collectively negotiate tariffs with healthcare providers and make this information public. As a result, private healthcare would be more affordable.
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Inefficiencies make private healthcare too expensive – minister
While Tau gave a quick summary of the draft exemption before he had to leave for Cape Town to attend the special cabinet meeting about Budget 2025, Motsoaledi spoke about the inefficiencies in the private healthcare sector, saying that it has become an “uncontrollable expense”.
“Private health care was never structurally planned, and no act of parliament was ever passed to establish it. It just evolved on its own as time went on. Only later a statute was passed but it only controlled one aspect of private health, including the financing of health but not the provisioning of healthcare.”
He said only the Medical Schemes Act was passed in 1967 and amended in 1998 to establish the Council for Medical Schemes, while medical schemes set up the Representative Association of Medical Schemes (RAMS) out of necessity to negotiate service tariffs.
Motsoaledi said that the then Medical Association of South Africa (MASA), now called the South African Medical Association (SAMA), introduced the Doctors’ Billing Manual, competing with the RAMS prices and exceeding the RAMS guideline prices.
Schemes decided to pay any amount they considered appropriate, leaving patients to pay the difference between the reimbursed amount and the price charged, he said. “At the same time, the Hospital Association of South Africa (HASA), representing private hospitals, received permission from the competition authorities to publish a Benchmark Guide to Fees for Medical Services.”
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Collusion in how prices were agreed on was found in 2004
However, he pointed out that the Competition Commission found collusion in how prices were agreed on in 2004 and passed a ruling prohibiting any collective negotiation of prices.
“The commission was of the view that fee guidelines, including the scale of benefits, used by the Board of Healthcare Funders (BHF), the fee guideline of HASA and the SAMA Tariff Book respectively fixed the prices of medical aid reimbursements, hospitals and doctors.”
Motsoaledi also pointed out that the health department published regulations in December 2006 about the process of determining RPL for comment, but disagreements with the private healthcare sector’s submissions used incorrect cost data submitted by practitioners, including private hospitals unwilling to share detailed cost information.
He said that is why the department of health and the Competition Commission decided to set up a Health Market Inquiry to investigate price setting and competition in the private healthcare sector, which found that the private healthcare market is subject to distortions that adversely affect competition and is characterised by high and increasing expenditure.
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Block exemption needed as NHI implementation will take longer
Pointing out that the phased-in implementation of National Health Insurance (NHI) will take longer, while the department needs an interim solution to relieve the financial pressure on people seeking healthcare, Motsoaledi recommended the establishment of a series of totally new entities to regulate the healthcare sector.
This includes a licensing establishment and a temporary stop-gap measure that will be progressively upgraded to the envisaged levels.
Although the Health Market Inquiry published its final report in September 2019, the government was criticised for not implementing the recommendations. Motsoaledi said on Monday that the implementation was constrained by the Covid-19 epidemic and budget shortfalls.
