Critics of private health care in SA argue that the private sector does not do enough, that it dumps patients on the public sector and is only interested in "money first". Sonderup, Spearman and Geffen recently argued in the Business Day article, When the private sector falls short, 3 Oct. 2011, that medical schemes are evil because they "do not cover the treatment of many diseases causing many patients to fall into the void between the public and private sectors" (see here).

That "it is then ironic that treatments for chronic viral hepatitis are available in the public sector, but access in the private sector is more difficult where chronic viral hepatitis is not a prescribed minimum benefit (PMB)". However, just because a condition is not a PMB, does not mean medical aids do not cover it. In fact, any legitimate treatment will be covered subject to the rules of the scheme. The only difference is that, if the condition is not a PMB, the scheme is not obliged to pay the doctors in full regardless of what they charge for their services. 

Sonderup, Spearman and Geffen then suggest that "The Council for Medical Schemes must take steps to ensure that treatment for chronic viral hepatitis becomes a PMB". The fact that two of the critics in this case happen to be hepatologists and are arguing that chronic viral hepatitis should be covered as a PMB is equally ironic. They are surely arguing in their own self-interest and wish to have viral hepatitis declared a PMB to enhance their own incomes. It is government that determines which conditions are included in the list of PMBs, not medical schemes, and certainly no one individual scheme.

And herein lies an important point. When benefits are determined politically rather than by medical schemes responding to what individuals want, the benefit packages expand and their costs increase. The consequence is that low cost medical schemes that cover the basic needs of low-income people can no longer be efficiently designed and the unfortunate low income earners are denied cover. It is then that they are driven into "the void between the public and private sector".

Medical schemes are not charities; they are obliged by economic realities and the interests of the members of their schemes to take great care in managing available resources. If scheme managers were to recklessly pay claims that are not included in the agreements with scheme members they would be guilty of dereliction of duty and would threaten the solvency and continued existence of the schemes they are managing. They have to stick to the rules and ensure that they do not bankrupt the schemes.

Eminent economists have declared that because people's health, or lack of it, lies largely and increasingly within their own - and earlier their parents' - control, many, if not most health risks are actually uninsurable. Risk pooling and intense actuarial and managerial effort is employed in an attempt to overcome the innate problems that are consequently bound to face private medical scheme managers.  Theirs is an almost impossible task and regulatory interventions make their task even more difficult, very often to the detriment of the majority of medical scheme members.

Jasson Urbach is a director of the Health Policy Unit, a division of the Free Market Foundation. The views expressed in the article are the author's and are not necessarily shared by the members of the Foundation.

Additional note by the author, October 13 2011:

Does the private health sector fall short - apology

In my article last week I suggested that it was ironic that Drs Sonderup and Spearman were arguing for the inclusion of viral hepatitis treatment on the list of prescribed minimum benefits (PMB) because they stand to gain financially. However, Drs Sonderup and Spearman are fully employed by the public sector and do not conduct any private sector work and thus cannot receive money from treating private patients. They do not stand to gain financially by lobbying for the inclusion of the treatment of viral hepatitis on the list of PMBs and I apologise for suggesting this.

Jasson Urbach
Director - Health Policy Unit

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