AFRICAN UNITY
H E A L T H• GP consultations and acute medication
• Emergency Dentistry • Optometry
• Basic Radiology and Pathology
• Chronic medication for specific medical conditions • Ambulance services by road
or by air
• Stabilisation in a private facility following an emergency It is intended to provide basic health cover to employer groups who have employees that cannot afford medical scheme memberships. It is based on reduced tariff from various PPO’s (Preferred Provider Organisations), making it an affordable and sensible choice for South African employers.
The product provides primary care in the form of:
* Holding Company: AIC Holdings Company (Pty) Ltd
Unity is a product of African Unity Health (Pty) Ltd (“African
Unity Health”), a new Financial Services Provider, created
to provide Primary Health Care insurance to the millions
of uninsured South Africans. It is a joint venture between
African Unity Insurance Limited and Ambledown Financial
Services. The underwriter to the Unity product is African
Unity Insurance, an authorised financial services provider
with FSP no. 8447.
African Unity Insurance operates within the long term
insurance industry in South Africa. The shareholding in the
African Unity structure is as follows:
INTRODUCTION
African Unity Insurance Limited 100% subsidiary of
AIC Holding Company (Pty) Ltd
African Unity Health (Pty) Ltd 50% subsidiary of AIC Holding Company (Pty) Ltd
16
%
49
%
PSG Private Equity Thembeka
35
%
Executive Directors* RISK | INVESTMENTS | HEALTH
THE NECESSITY FOR PRIVATE
PRIMARY HEALTH CARE
The solution is to simply provide Primary Health Care i.e. “access to medical services” that
are in nature primary health; this includes preventative measures by providing access to General Practitioners, emergency dentistry, the provision of essential drugs, which includes both acute and chronic medication, access to diagnostic services such as pathology and radiology and the inclusion of affordable optometry. In keeping with the spirit of the Constitution, it includes treatment for accidental injuries and emergency management. In the South African environment it must be considered as a social progress or value to social development and inclusion. Addressing the first Global Ministerial Conference on Healthy Lifestyles and Non-communicable Diseases in Moscow in April 2011, health minister Dr Aaron Motsoaledi stressed that South Africa’s model of healthcare delivery must now shift from being hospi-centric and become more preventative if the country is to win the fight against the burden of diseases it is faced with. The conference was attended by
health ministers across the world and, among others, by UN chief Ban Ki-Moon and WHO head Margaret Chan.
Since his appointment as health minister, Motsoaledi has always expressed concerns around the hospi-centric model of health delivery in South Africa, describing it as too expensive and not sustainable. During the Global Ministerial Conference on Healthy Lifestyles, the health minister said “Waiting for people to first get ill and then receive them in hospitals for treatment is not a correct model of health delivery”. Motsoaledi told the gathering that South Africa would be shifting focus to primary healthcare.
If such primary health care programs exist outside medical schemes, then it is of immense value to social transformation. The current public health system has become destructive,
unaffordable and unsustainable. We strongly believe that the provision for access to Primary Health Care services by the private sector must therefore be considered as the most valuable contribution in the form of a financial product to our ailing public health system.
Millions of formally employed South Africans have no
membership to a medical scheme, or any form of health
insurance. The reason is affordability; it is impossible
to insure the low wage earner due the high cost of the
hospitalisation, both in the public and private sectors.
THE UNITY PRODUCT
PRODUCT SPECIFICATIONSBenefit Plan A Plan B Plan C
GP Visits 3 visits per person per
annum (Limited to a Designated Doctor)
5 visits per person per annum (Limited to a Designated Doctor)
7 visits per person per annum (Limited to a Designated Doctor) Acute prescribed
medication R500 per annum (Limited to
medication dispensed /
prescribed during the 3 GP visits)
R500 per annum (Limited to medication dispensed /
prescribed during the 5 GP visits) R1,000 per annum (Limited to medication dispensed / prescribed during the 7 GP visits)
Chronic medication Chronic medication
programme (6 Listed “high impact” Conditions) AIDS /HIV included
Chronic medication programme
(6 Listed “high impact” Conditions) AIDS /HIV included
Chronic medication programme
(26 Listed Chronic Conditions) AIDS /HIV included
Emergency Dentistry
treatment Up to R1,000 per incident, max
R2,000 in 24 months, double the benefit on accidental injury (Limited to a Designated Dentist) Up to R1,000 per incident, max R2,000 in 24 months, double the benefit on accidental injury (Limited to a Designated Dentist) Up to R2,000 per incident, max R3,000 in 24 months, double the benefit on accidental injury (Limited to a Designated Dentist)
Optometry 1 set of mono/bifocal
standard frame and lenses per 24 months
1 set of mono/bifocal standard frame and lenses per 24 months
1 set of mono/bifocal standard frame and lenses per 24 months
Pathology Unlimited (Designated provider) Unlimited (Designated provider) Unlimited (Designated provider)
Radiology (Limited to Black and
white X-rays) (Designated provider)
(Limited to Black and white X-rays)
(Designated provider)
(Limited to Black and white X-rays)
(Designated provider)
Maternity No Benefit 2 Gynaecologists
visits, 2 ultrasound scans
2 Gynaecologists visits, 2 ultrasound scans
Benefit Plan A Plan B Plan C
Ambulance services Unlimited Unlimited Unlimited
Hospitalisation:
Overall Annual Limit Limited to R7,500 Limited to R100,000 Limited to R100,000
Hospitalisation: Hospital Indemnity (stabilisation following an emergency)
No Benefit Limited to R15,000 Limited to R15,000
Hospital Casualty Unit
(Outpatient) Limited to R2,500 Limited to R5,000 Limited to R5,000
Hospital Indemnity (Accidental injury only)
No Benefit Limited to R100,000
per insured per annum
Limited to R100,000 per insured per annum
Benefit Structure (Primary Care)
PREMIUM RATES
Beneficiary Plan A Plan B Plan C
Principal R 150.00 R 200.00 R 250.00 Spouse R 100.00 R 150.00 R 184.00 Child
dependant R 55.00 R 60.00 R 80.00 The following rates are a good indication as to what the product will cost.
Gross Premium Payable:
Employer Groups (Family benefit)
These rates will reduce dramatically for extremely large employer groups, or members of large bargaining councils with a suitable membership profile. The rates may also be loaded if the employee profile requires it.
Commissions will be paid for non-insurance services and Long-term commissions will be paid for the remainder of the premium.
Premium Rates will be provided based on
an employer’s employee profile, industry
and the number of employees.
Figure 1: Graphic representation of Unity Health’s primary care network
Please note: The illustration includes the General Practitioners, Dentists and Optometrists
as well as the Mediclinic Casualty Centres. It excludes pharmacies, pathologists, radiologists and ambulance centres that form part of our network.
THE REAL CHALLENGE
1. We established a network of General Practitioners, Dentists, Pharmacies, Pathologists, Radiologists and Optometrists with reduced tariffs to make the product affordable. During the period May to March 2014, we negotiated with over 11,800 General Practitioners and entered into agreement with numerous IPOs and providers with a national footprint. 2. We will continue to maintain a team dedicated to expand the provider
network, ensuring that it meets the members’ needs in terms of real access to a service provider. To keep our provider network compatible with our membership base, we designed software that identifies
geographical areas where we need to enhance our presence. 3. We have partnered with ER24, undoubtedly one of South Africa’s top
providers of emergency evacuation services. This includes a 24 hour call centre to deal with emergencies, one call will trigger the medical operators to guide a person through a medical crisis situation involving the member by providing emergency advice, or by organising for the member to receive the support required, utilising the 24 hour Contact Centre Doctor. The 24 hour call centre includes referrals to crisis lines that includes a life line, a suicide hotline, a poison hotline, trauma and bereavement counselling and HIV counselling.
4. We kept our admin fee at a minimum, a fraction of what medical scheme administrators charge to ensure that the product remains affordable. We achieved this without compromising our service levels.
Designing and pricing a simple set of primary care
benefits is an uncomplicated task. Delivering a real
service is far more demanding
THE TARGET MARKET
1. The current labour force is 17,4 million, of which 9,2 million are employed in the formal sector (other than agriculture); 3,9 million are employed in the informal sector . The population of the formally employed covered by a medical scheme is 36% (3,3 million) and 300,000 in the informal sector (roughly 8%).
2. The remainder of Medical Schemes Membership (approximately 240,000) are pensioners.
3. The potential target market is almost certainly those employed by the formal sector and not insured by a medical scheme. This is a total of 5,9 million individuals under the age of 65.
4. 51% of the population employed by the formal sector is either married or are living with a partner as husband and wife. 40% have never been married and 7% are either divorced, separated or widowed.
5. Considering statistics of the marital status of the employed by the formal sector, the percentage of those formally employed that are insured, the number of medical scheme members as provided by the Council for Medical schemes, the expected number of lives not covered by a medical scheme where at least one person in a household is formally employed is estimated to be 15,2 million, of which 5,9 million are formally employed, 1,9 million are spouses of the formally employed that are either unemployed or employed in the informal sector and 7,4 million are dependant children.
a) The above is based on the assumption that 40% of the formally employed who are married (either legally, or by common law, or living as husband and wife) are also formally employed; and b) That the average number of children for those who are formally
employed is 2.1; and
c) That 5% of the unmarried or widowed have a child.
6. Gauteng, Western Cape and Kwazulu-Natal represent almost two-thirds of the formally employed.
Figures provided by Stats SA - Quarterly Labour Force Survey, Quarter 1, 2012 Figures based on the statistics provided by the CMS Annual Report 2011-2012.
(Pensioner ratio of 6.6%)
CURRENT MARKET ANALYSIS
1. Many employer groups have a real need to provide some form of healthcare to their employees. However, the cost of medical schemes does not allow for either a complete subsidy by the employer, a deduction from the employee’s salary, or a combination of the two. In most instances, the individual employee would rather make use of public facilities than contribute to a medical scheme, because the drop in income would be intolerable. It is a sad reality that even the most chronically ill cannot afford medical scheme membership; they depend on an over-burdened public sector. 2. The author’s opinion is that
the CMS missed a golden
opportunity in 2001 to reduce the burden of disease and to create a more equitable society when they were tasked to create a Low Income Medical Schemes (LIMS) programme and failed to do so. To be completely frank, I view it as a failure to accept the responsibility of the State in terms of the Health provisions in the Bill of Rights (Section 27).
3. Instead they injected into society a new luxury item which is membership of a medical scheme. One cannot undermine the value in the simple provision of primary care in private facilities.
4. South Africans are now
segregated into 3 groups. 10% are the fortunate few who can afford the luxury of medical scheme membership, 5%
are those that are employed by Government and quasi-government institutions who cannot afford medical scheme membership, but who are granted a 100% subsidy, and then the rest, the 85% who have to rely on the State for primary and tertiary care.
5. So we all wait for NHI with a price tag of R125 billion according to the Green Paper published in 2011, and estimated to cost as much as R250 billion in 2025. What is unclear, is whether the R125 billion is part of the current DoH expenditure. In a recent interview with the Oxford Business Group, Prof. McIntyre (Health Economics Professor at UCT) stated that it is not additional funding that is necessary, that the only additional funding was the balance between the current health expenditure and the cost of NHI. I completely disagree; it is clear that the current health expenditure is already similar to that of what the Green Paper on NHI reported, and it is evidently insufficient to keep up with the current demands, which are worlds apart from what was envisioned as NHI.
6. In fact the NHI is expected to take 14 years to implement, meaning that it should be complete by 2025, although sceptics, pointing out the substantial cost and administrative complexity of putting such a vast scheme in place predict that 2030 is more realistic.
QUESTION ANSWER
How does a member access a primary care provider?
The member calls the Unity call centre (during office hours) Monday to Friday and Saturdays to 12:30 AM, who provides a list of providers in the area the member lives or works.
The member selects one of the providers proposed and an appointment is made by the Unity call centre agent. How does a member
access emergency services?
The member calls 084 124 (ER24). The ER24 call centre will be able to: Provide medical telephonic advice; or
Send an ambulance, by road or air, whichever is most appropriate.
If a member is taken to hospital by a family member or friend, they must call ER24 for a guarantee of payment to be issued to the hospital.
How does a member access ongoing chronic medication treatment?
The network General Practitioner will assist the member. No paperwork from the member is required.
Will Unity apply waiting periods and exclude pre-existing conditions?
No. Such underwriting practices are used by insurers to protect themselves against those who select against them.
The product is intended at employer groups who elect cover on a Compulsory participation basis, therefore eliminating selection against the Insurer.
What are the notable
exclusions of the policy? 1. Investigations, treatment, surgery for cosmetic purposes. 2. Suicide, attempted suicide or intentional self-injury. 3. The taking of any drug or narcotic unless prescribed
by and taken in accordance with the instructions of a registered medical practitioner.
4. Drug addiction.
5. An event directly attributable to the Insured Person where the alcohol content in the blood exceeds the legal level permitted by law.
6. Participation in any form of mechanical race or speed test.
7. The Insured person’s failure to comply with the
Conditions of the Policy i.e. The failure to make use of a Designated Service Provider. This exclusion does not apply to emergency treatment where the medical assistance was necessary for the preservation of life. 8. Investigations, treatment or surgery for artificial
insemination or hormone treatment for infertility. Which are the 6 Chronic
Conditions on Plan A & B? 1. Chronic obstructive pulmonary disease (COPD)2. Diabetes mellitus type 1 & 2 3. Epilepsy
4. Hyperlipidaemia 5. Hypertension 6. HIV / AIDS
QUESTION ANSWER
Which are the 26 Chronic
Conditions on Plan C? 1. Addison’s Disease2. Asthma 3. Bi-polar Mood Disorder 4. Bronchiectasis
5. Cardiac Failure
6. Cardiomyopathy Disease 7. Chronic Renal Disease 8. Coronary Artery Disease 9. Crohn’s Disease
10. Chronic Obstructive Pulmonary Disorder 11. Diabetes Insipidus
12. Diabetes Mellitus Type 1 & 2 13. Dysrhythmias 14. Epilepsy 15. Glaucoma 16. Haemophilia 17. HIV / AIDS 18. Hyperlipidaemia 19. Hypertension 20. Hypothyroidism 21. Multiple Sclerosis 22. Parkinson’s Disease 23. Rheumatoid Arthritis 24. Schizophrenia
25. Systemic Lupus Erythematosis 26. Ulcerative Colitis
Can the Unity Product be used to Augment cover for those who belong to a registered Medical Scheme?
No, it is a condition on Unity that members cannot be covered by a medical scheme.
How does my client cancel
the Cover? 30 days written notice must be given to African Unity Health via email to: [email protected] of faxed to (011) 463 1600 Are my policy premium
payments paid to Unity tax deductible?
No. Section 18 (1) of the Income Tax Act allows a deduction for contributions to a Medical Scheme registered in terms of the Medical Schemes Act of 1998. The Unity Policy is defined as a health product in the Long-Term Insurance Act
Will the policy premium be adjusted, and how frequently will it be adjusted?
Unity is rated annually with adjustments taking effect on 1 January every year. Adjustments are based on various factors, including but not limited to, medical inflation, provider disposition (the likelihood of a medical practitioner to increase charges) as well as a study of the various benefit components and any necessity to improve or change the benefit structure. We do reserve the right to adjust the premium with 30 days written notice
QUESTION ANSWER
What happens if the employer does not pay premium on time?
The responsibility vests with the employer to ensure that the premium is paid. Should the employer fail to pay premiums in two consecutive months , no attempts will be made to collect arrear premiums and the policy will be effectively cancelled
How and when do I submit
a claim? Most claims are paid directly to the Network provider. If a member visited a network provider and paid directly then a form can be obtained from your broker or our website.
It must be completed in full and e-mailed to ([email protected]) with all supporting
documentation within 6 months of the day of treatment. If I wish to dispute the
claims assessment, what procedures do I need to follow and within what timeframe?
A claim may be disputed by :
1. Making representation to the Insurer indicated in the Disclosure Notice attached to the policy wording within 90 days of receipt of the benefit letter / rejection letter. The insurer is obliged to provide you with feedback within 45 days
2. You may also contact the Financial Services Ombud indicated in the Disclosure Notice attached to the policy wording should you not be satisfied with the response of the Insurer
i) The FAIS Ombud may also be contacted for any complaints against your broker.
ii) The Ombud for Long-Term Insurance may also be contacted for any complaints against the insurer You may also constitute legal action should the matter not be resolved by either the insurer or the relevant Ombud. The claim will prescribe 6 months after the expiry of the 90 day period indicated above (no further claims will be payable for the specific claim)
Who is the ideal target
market? 1. Gross monthly income needs to be below: a. R8,500 for a single person b. R10,500 for a single person plus children c. R12,500 for families
2. Can’t be a member of a medical aid
3. Needs to be below 65 years old for Compulsory Groups and 55 years old for Voluntary Groups 4. Minimum group size of 20
The demarcation debate
1. The reference to the word “demarcation” is a decade-old debate over a theoretical requirement to delineate what constitutes insurance business that is, “accident and health policies” and “health policies” in the Short-term and Long-term Insurance Acts, and what constitutes the “business of a medical scheme” in the Medical Schemes Act. It is denied by the author that any uncertainty or ambiguity in the current legislative framework exists. 2. It is granted that the Minister of Finance has publically stated that
“A clear demarcation between accident and health policies and medical schemes is necessary to support and enhance the objectives and purpose of the Medical Schemes Act (MSA)”. 3. In Guardrisk Insurance Limited v Registrar of Medical Schemes
[2008] 3 All SA 431 (SCA), the court was called on to decide on the interpretation of the definition of “business of a medical scheme” in Section 1 of the MSA and the definition of “accident and health policy” in the definitions in the Short-Term Insurance Act (STIA). 4. In the result the Supreme Court of Appeals (SCA) held that
subsections (a) and (b) of the definition of “business of a medical scheme” are to be read conjunctively with subsection (c), unless subsection (c) is not applicable as it is introduced by the words “where applicable”. The result of a conjunctive interpretation is that any business which undertakes liability in return for a premium or contribution for all the elements of (a) and (b) and (c), where applicable, carries on the business of a medical scheme and is subject to the provisions of the MS Act.
5. The SCA held that when the relevant definitions of “accident and health policy” and “business of a medical scheme” in the STIA and the MSA are read conjunctively in terms of the ordinary, literal sense of the words “and” and “or”, there is no conflict between them. The definition of “accident and health policy” lists some exclusions in subsections (d) and (e). A contract that falls within the ambit of subsection (d) or within the ambit of subsection (e) would fall within the exclusion provided for. Between subsections (d)(ii) and (d)(iii) the word “and” is used. The differentiation in the use of “and” and “or” within the same definition suggests the ordinary, literal meaning of the words and therefore that the subsections should be interpreted conjunctively. That usage has the effect that only a contract which contains all the elements in sub-paragraphs (i), (ii) and (iii) of subsection (d) will be excluded from the ambit of a short term policy.
6. In other words before a contract of insurance is excluded from the definition of accident and health policy, the contemplated policy benefits in such a policy must be something other than a stated sum of money and provided upon a person having incurred, and to defray, expenditure in respect of any health service obtained as a result of the health event concerned; and provided to any provider of a health service in return for the provision of such service.
7. While the legislature has always until now permitted the marketing of health insurance products, this marketing for a long time
has taken place against the background of a “battle for turf” launched by the CMS. For want of a better word this may be the so-called “demarcation campaign”.
8. On a reading of the MSA and section 7 thereof in particular, it is not difficult to understand that the primary function of the CMS is to protect the interests of medical schemes registered under section 24 (1) of the MSA. The CMS has a vested interest in protecting what it perceives to be the best interests of medical schemes. It is submitted that its vested interest has served to fundamentally compromise its impartiality.
9. The CMS’s vested interest requires assessment from a constitutional perspective. Given that the Constitution is both the supreme law of the Republic and that the Constitution provides that everyone has the right to have access to health care services and the state must take reasonable measures, within its available resources to achieve the progressive realisation of this right, the question is whether the state, guided by the vested interests of the CMS with respect to its “demarcation campaign”, has achieved what public policy and the Constitution demands? No!
10. According to the Constitutional Court the key to the justiciability of socioeconomic rights in the Constitution is the standard of reasonableness.
11. Section 27(1) of the Constitution provides that “everyone has the right to have access to (a) health care services”. Section 27(2) of the Constitution provides that “the state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights”. 12. In a nation in which there is a large disadvantaged and
unemployed section of the population, medical schemes are for those employed by the State and those who are privileged enough to afford medical scheme membership. Cognisance must be taken that medical schemes do not enjoy any particular claims to Constitutional fortification.
13. It would therefore be unreasonable for the CMS to outlaw such a socially balanced provision for primary health to those who cannot afford the most basic of medical scheme benefit options. It would certainly test whether the MSA is indeed an instrument that prevents the individual’s Constitutional right to have access to health care services as provided in section 27 of the Constitution. 14. It is the author’s view that any insurance product that is structured
in a manner that falls within the definition of a Health and Accident Policy would be legal. In fact, National Treasury has in the past described the provision for a health event as a typical benefit intended for micro-insurance companies.
AFRICAN UNITY
H E A L T H
African Unity Health (Pty) Ltd. Registration Number: 2007/030617/07.
An Authorised Financial Services Provider (FSP 43066). Tel: +27 (0)11 321 1330.
E-mail: [email protected] | Web: www.auhealth.co.za Directors: L.R. Bester, T.S. de Carvalho, H.N. Lombard
