National Health Insurance
Impact of Mandatory Insurance on the Price of Minimum Benifits
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In Figure 6 it was demonstrated that mandatory health insurance would substantially change the age and gender profile of current medical schemes, adding more children and more young working age people. Table 2 uses those age and gender profiles to illustrate the expected impact of the changes on the price of minimum benefits.
Table 2 : Impact of Phased Implementation of National Health Insurance on the Price of Minimum Benefits for 2009
The table shows that moving from the current voluntary environment to mandatory cover for the insurable families of all those earning above the tax threshold, the price of minimum benefits would fall to R281.90 per beneficiary per month (pbpm) or to 91.2% of the value expected in 2009 . If membership was mandatory from the LIMS threshold, then this would add younger working age members and children and the price would fall further to R274.82 pbpm. The price per head continues to fall with each added group until all those earning an income are covered, together with their insurable families. At this point, 51.1% of the population would be covered for health insurance and everyone earning any income would be a contributor (even if there were almost complete subsidies for the lowest income workers).
To add the remaining population to achieve universal coverage would effectively add many more children abut also a substantial number of elderly people. This would raise the price of healthcare from 82.2% to 86.0% of the current medical scheme community rate. This illustration has simplified the effects to consider only the impact of age and gender on the price of healthcare.
McLeod & Grobler 9 estimated the effect that the anti-selection by pregnant women and the ant-selection by those with serious chronic disease may have on the price of healthcare using 2007 data. While these estimates are more speculative, they argue that the price of minimum benefits for mandatory cover for all workers and their families might be 77.3% of the price in a voluntary environment, thus adding a further roughly 5% to the reduction in price. They conclude that “Another way to look at this phenomenon is that prices of minimum benefits in the voluntary environment are some 17% to 23% more expensive than they could be under this phasing of mandatory cover.”
The community rate published in the Preferred REF Contribution Tables for 2009 uses the most recently available age profile at that time, which was from mid-2008. In this policy brief, the age profile for 2009 has been estimated, taking into account growth reported in the quarterly reports from CMS. It is expected that growth is occurring in the children and working age years and not in those over age 65, hence the estimate that the community rate may have been R309.19 in Table 2 compared to R310.50 in the published tables.
There are many other factors that could have an impact on the actual price of minimum benefits. Estimates of the differences in disease burden between the currently covered population and those who would be added can be made but there is seldom strong evidence to use in the calculations. Factors that require considerable judgement in the pricing include the issue of greater demand from moral hazard due to easier access and the impact of removing limits or co-payments on benefits included in the minimum package.
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