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National Health Act, 2003 (Act No. 61 of 2003)


National Health Insurance Policy towards Universal Health Coverage

Chapter 8 : Purchasing of Health Services

8.7 The future role of Medical Schemes


305. Making progress towards universal health coverage requires transformation and reconfiguration of institutions for pooling of funds and purchasing of services to achieve income and risk cross-subsidisation whilst improving the efficiency in purchasing of personal health services. NHI funding will be mobilised through mandatory prepayment. Individuals will not be allowed opt out of making the mandatory prepayment towards NHI, though they may choose not to utilise NHI healthcare services.


306. One of the core objectives of NHI is to optimise the utilisation of available resources, including financial and human resources. To this effect, it is important that mechanisms are put into place to streamline healthcare services to ensure value for money and to eliminate duplicative cover and double dipping.


307. Medical schemes currently operate as voluntary prepayment health financing intermediaries, offering private medical insurance cover to those that can afford it and are employed. Medical schemes are funded from the contributions of employees and employers in various permutations. The State makes contributions to medical schemes on behalf of its employees, mainly in the form of subsidy contributions and tax credits administered via the tax system. In many instances, medical scheme benefits for many individuals and households ends with the termination of a person’s employment, such as upon retirement or retrenchment, which means that such individuals and households will then fall back onto the State for the healthcare they need.


308. With the implementation of NHI, the role of medical schemes in the health system will change and once NHI is fully implemented medical schemes will offer complementary cover to fill gaps in the service coverage offered by the NHI. A key step in leading to this change is the consolidation of Government funding on medical schemes. The State will identify all the funding for medical scheme contribution subsidies and tax credits paid to various medical schemes (such as the Government Employees Medical Scheme, the Police Medical Scheme, Parliamentary Medical Scheme, Municipal Workers Union Medical Scheme, State-owned entity medical schemes e.g. Transmed as well as various private medical schemes to which State employees belong) and consolidate these into the NHI funding arrangement.


309. Government recognises that there is existing expertise residing in the medical schemes industry. Where necessary and relevant, this expertise may be drawn upon to support the implementation activities for the establishment of a single payer, publicly-administered NHI Fund to build in-house capacity.