Carl Laubscher Financial Services

14/12/2023

NHI Update and Discovery’s approach

While the passing of the Bill by the National Council of Provinces (NCOP) last week was not unexpected, it was nevertheless a disappointing development, particularly given more than 100 detailed submissions provided by various parties and industry experts and the significant constitutional and economic concerns raised by a wide range of stakeholders, including Discovery.
Having said this, it is important to state that Discovery’s position regarding NHI remains clear and consistent: Universal Health Coverage is crucial and a workable NHI is central to achieving this. Discovery therefore supports NHI, but to make it workable requires collaboration with the private sector and additional funding. Discovery will continue to engage on this basis and remain optimistic that a constructive outcome can be achieved.
The next step in the legislative process; and the negligible impact on medical schemes for the foreseeable future
The next step in the legislative process is for the President to consider the constitutionality of the Bill, including what will likely be broad petitions from several stakeholders. He could then either: (1) sign the Bill, resulting in the Bill becoming law (with effective dates to be defined), and then likely face a range of lengthy constitutional challenges.; or (2) refer the Bill back to the National Assembly for reconsideration. If the latter occurs, and following reconsideration of the Bill, the President can still refer the Bill to the Constitutional Court to verify its constitutional muster.
Aside from the constitutional and legal hurdles that lie ahead, there are also significant operational challenges and financial realities that will need to be navigated. This is a massive structural change to South Africa’s health system and cannot be achieved overnight.
Full implementation of the NHI therefore remains a long way off – more than a decade at least. During this period, very little to nothing will change in relation to medical schemes and Discovery will remain steadfastly focused on delivering against its client commitments and strategic priorities. In parallel, Discovery will of course continue with the extensive work it has been doing to achieve a constructive NHI outcome.
A constructive NHI outcome requires collaboration with the private sector and additional funding, enabled by amendments to Section 33 in the Bill
The key constraint to increased funding options and greater involvement of the private sector relates to Section 33 of the NHI Bill. Section 33 effectively limits the role of medical schemes to providing only complementary cover to the NHI once the Bill is fully implemented, effectively crowding out medical scheme funding and greater private sector participation.
Additionally, the R200bn of additional tax funding required per annum to fund the NHI Bill, as estimated by the National Department of Health, is both insufficient and unrealistic. Collecting such a huge quantum of money would require either an increase of 31% to personal income tax, or a 6.5% increase in VAT (from 15% to 21.5%) or a 10x increase in payroll tax (current UIF contributions). In the context of the country’s macroeconomic environment, and a small tax base, the ability to raise an additional R200bn via taxation is simply not feasible.
Without amendments to Section 33, the funding requirements for the NHI are unachievable and the proposed funding model is constitutionally flawed. Conversely, small but important changes to Section 33 can create an enabling funding environment and support the NHI Bill in successfully achieving its objectives.
Alongside Business Unity South Africa (BUSA), Discovery has therefore proposed changes to Section 33 that would make it less restrictive and more enabling, allowing for greater collaboration and the role of medical schemes to form over time.
While Discovery is pressing hard for amendments to the Bill to make NHI workable through collaboration, if it is passed without amendment, the effect of section 33 will only manifest in a decade or more, and in our view the funding realities will ultimately prevail.
In the interim, Discovery remains fully committed to playing a constructive role in expanding access and quality of healthcare to more South Africans.

20/06/2023

A great deal still remains unknown about the proposed National Health Insurance Scheme. What is clear is that the impact will be profound, as medical schemes are fundamentally sidelined, writes Neil Kirby.

06/07/2022

Now is the time to remain invested

Please listen to explanation from Morningstar.

Herewith the link to share with investors:

For financial advisers and their clients. This presentation does not constitute investment, legal, tax or other advice and is supplied for information purposes…

10/05/2022

Please contact staff on numbers below, due to issues with Telkom line -
Carl 083 639 8800
Simone 083 257 4972
Gadija 065 812 8387
Donna 065 809 5234

22/04/2022

The South African Healthcare system has come under enormous strain following the Covid-19 pandemic, but plans are still in place to forge ahead with the National Health Insurance, Jolene Marriah speaks to two experts on their views as to whether it can work, while the Department of Health is optimis...

10/03/2022

Discovery annual price increase delayed to 1 October 2022.

Plan upgrades can be done effective 1 May and 1 October.

30/09/2021

Medical aid 2022

All the companies are now doing creative marketing announcements to show lower increases.

1. Bonitas – official increase is 4.8%. Most members will have increase around 7 to 8%.
2. Momentum – 6% increase from 1 September 2022.
3. Fedhealth – roughly 7.4% increase from 1 April 2022.
4. Discovery – 7.9% increase from 1 May 2022.

27/05/2021

Financial Mail
Populism at it's very worst. Thievery at its best.
OPINION | EDITOR'S NOTE | PREMIUM ARTICLE
ROB ROSE: Discovery ‘won’t accept’ nationalising medical reserves
Will SA’s medical aid reserves be expropriated to fund the country’s bankrupt plan for a National Health Insurance (NHI)? Until a week ago, you’d imagine this to be a nuts conspiracy theory, cooked up by a sect in the basement of the Institute of Race Relations.
Then Prof Simon Nemutandani, president of the state-run Health Professions Council of SA (HPCSA), stood up in parliament last week to discuss the proposed NHI Bill, and threw a gr***de into the notion of private property rights.
"The NHI should be taking over from medical aid schemes, and all assets that sit under medical schemes must be transferred to NHI — that is the position of the HPCSA," he said.
It was a remarkable statement from a statutory body set up to regulate medical professionals and protect the public by setting and monitoring standards. Yet, even more remarkably, few of SA’s parliamentarians bothered to interrogate Nemutandani about the startling implications of what he had said.
What he was arguing, in other words, is that the R90bn which has been paid by medical aid members into reserves to cover unforeseen emergencies should simply be nationalised to fund the gaping chasm in funding for NHI.
As for the existing laws which would prevent this kind of thing like, you know, the constitution, Nemutandani was pretty clear on this point too: "Any section of the constitution that is against this view must be amended … [and] the NHI Act must repeal the Medical Schemes Act."
SA’s largest medical aid administrator, Discovery Health, is having none of it. Ryan Noach, CEO of Discovery Health, told the FM it’s a "preposterous proposal", akin to the idea of suddenly nationalising all private pension funds.
"We wouldn’t accept that, and society wouldn’t accept that. To simply nationalise medical aid members’ money, which they contributed on discretion, out of their after-tax income, would not only be unconstitutional, it would be tantamount to taking money out of their bank account," he says.
Discovery, like everyone, was blindsided. Noach says you won’t find any document from the National Treasury or the health department which talks about nationalising reserves.
Contacted by the FM afterwards, Nemutandani was frustratingly vague about how such a fundamental change could be made constitutionally. "We’re saying that if we want universal health care to happen, there will have to be changes to benefit the many, not the few," he said.
Asked if this amounted to nationalisation, the unintended consequences, and whether such a change would pass legal muster, Nemutandani would say only: "That is for the parliamentary committee to consider."
Though it appears to be an impractical and unconstitutional suggestion, it will doubtlessly resonate with those in pockets of government who haven’t got any clue how to finance NHI. The most conservative estimates, put together years ago by researchers Genesis Analytics, say NHI will cost more than R200bn a year. Research by Fitch put the cost of running NHI at more than R450bn a year.
The government clearly doesn’t have this, so the populist instinct is to filch this money from the private sector.
Craig Comrie, CEO of the Profmed Medical Scheme, says this is entirely unrealistic. "Policymakers speak about rerouting the R200bn paid to the private sector each year into NHI, but this is paid by people as part of their after-tax income to secure their health because of the state of government health care. People wouldn’t simply pay this out of their disposable income to the government," he says.
The only option left to fund NHI would be to raise taxes — but with the narrow tax base, the Treasury can’t afford to do this right now, says Comrie.
It doesn’t help that the government’s handling of Covid — pock-marked by theft of money set aside to fight the pandemic — has eroded the public’s confidence further. As Comrie asks, rhetorically: "Would you now give the government another R200bn to manage?"
Comrie, like Noach, sees Nemutandani’s proposal as "nationalisation in a way that should never happen". Besides, he says, even suggesting such a thing is reckless, since it could worsen the steady trickle of medical professionals out the country.
"Profmed’s 36,000 members are mostly doctors and health-care specialists, and of those professionals who resign from the scheme each year, about 20% are going overseas, partly because they’re getting poached by other countries," he says. "Anything that speaks about nationalising health care, and endangering these valuable assets, will only make that worse."
While the health department has provided about as much clarity over NHI as mud soup, health minister Zweli Mkhize isn’t backing down. Last week, Mkhize said NHI remained one of the government’s "main objectives", and R7.5bn had been allocated to the plan.
But this, as he knows, won’t even touch sides.
Nemutandani’s proposal is the bluntest and most populist solution to the conundrum of how to fund NHI. But coming up with a real pragmatic solution will take nuance, a deft policy touch and private-sector support.
Noach says it’s clear the country needs "structural reform" — the trick is to do this in such a way that it doesn’t destroy existing assets.
"The gap between the standard of private health care and the public sector is widening, and this isn’t acceptable. So something has to happen, and we as medical aids are willing to support a larger proportion of the country, and we need to find a way to do this efficiently."
But Nemutandani’s approach — seizing medical aid reserves — isn’t even close to being the answer.

09/09/2020

Download the COVID Alert SA app today

Now you can turn your cellphone into a life-saving device with the country’s first Bluetooth contact tracing app for COVID-19. Bluetooth-based contact tracing apps are being used worldwide. South Africa has just launched its version of this technology – the COVID Alert SA app.

This app brings digital support to the contact-tracing process and always preserves privacy and anonymity. COVID Alert SA quickly notifies an app user when their smartphone has been close to a smartphone of someone infected with COVID-19. This enables testing and isolation of an exposed individual to lessen the risk of COVID-19 spreading, and to flatten the pandemic curve. It also guides the app user on how to protect their health and to protect others from the disease.

The more South Africans download and use this app, the more effective it becomes in helping users keep their loved ones safe from COVID-19. Ultimately, the app becomes part of our individual efforts to help our country overcome the pandemic.

Learn more about contact tracing and the COVID Alert SA app or visit the National Department of Health’s COVID online portal.

You can download the COVID Alert SA app today and encourage your clients to do the same.

Why are COVID Alert SA app users South Africa’s new superheroes? They are building a powerful, life-saving network of anonymous people who are turning their smartphones into shields that help to protect everyone in the country from COVID-19.

12/08/2020

The National Coronavirus Command Council and Cabinet have been advised to lift the ban on the sale of ci******es and alcohol and move the country to Alert Level Two of the nationwide lockdown.