STAKEHOLDER ANALYSIS REPORT

Transcription

1 STAKEHOLDER ANALYSIS REPORT AN ANALYSIS OF PERCEPTIONS AND NEEDS OF STAKEHOLDERS IN RELATION TO STRATEGIC OBJECTIVES AND POLICY OPTIONS OF THE COUNCIL FOR MEDICAL SCHEMES

2 COUNCIL FOR MEDICAL SCHEMES ADDRESSES Physical Address: 1267 Pretorius Street Hadefields Block E Hatfield PRETORIA Postal Address: Private Bag X34 HATFIELD 0028 Telephone: +27 (0) Telefax: +27 (0) Internet: This report is also available in electronic format on: JULY 2001 ii

3 FOREWORD Last year saw the full implementation of the Medical Schemes Act, 131, of The Act ushered in a new era in the regulation of the medical schemes environment as a number of changes where brought to bear on the industry. In the ensuing months, several initiatives intended to evaluate the impact of the Act and to improve the regulatory environment were introduced. This is the first industry specific assessment of the perceptions and needs of national and international stakeholders with direct and indirect impact on the activities of the Council. This study aims to provide the Council with a detailed evaluation of stakeholders with an influence on the implementation of the policy options and strategic objectives of the Council, particularly now that the Act is in full operation. The main findings of the stakeholder analysis are outlined in the report and provide a useful insight into the perceptions and needs of the various stakeholders that participated in this project. The study affords the Council the opportunity to understand their views with regard to the Act, and provides the opportunity for the formation of strategic liaisons with those with appropriate expertise and/or resources. This report forms part of the Council s broader strategy of forming partnership with stakeholders in areas that would impact on the smooth regulation of the medical scheme industry in respect of such issues as the review of Prescribed Minimum Benefits, provision of guidance and support to the industry, close monitoring and implementation of the Act, development of remedial strategies for non-compliance and a host of other technically oriented issues. Conducting a study of this magnitude was a challenging task. The Council for Medical Schemes would like to thank all those who gave their time and effort to make this exercise a success. T.PATRICK MASOBE Chief Executive & Registrar Council for Medical Schemes i

4 ACKNOWLEDGMENTS The Council for Medical Schemes would like to extend its sincere thanks and appreciation to MarkData (Pty) Ltd for having successfully carried out and completed this project. The many stakeholders who willingly gave of their time to participate in interviews also deserve a vote of thanks. Our thanks also go to Ms Brenda Khunoane of the Department of Health, for her contribution to the finalisation of the questionnaire for this study. ii

5 TABLE OF CONTENT Page EXECUTIVE SUMMARY xi 1. BACKGROUND, OBJECTIVES AND METHODOLOGY OF THE PROJECT The objectives of the study Methodology 2 2. A SOCIO-ECONOMIC PROFILE OF BENEFICIARIES AND NON-BENEFICIARIES The relative size of membership Socio -economic characteristics Medical scheme patterns and subscription The potential for new subscribers THE BENEFICIARIES REACTIONS TO THE LEGISLATION, THE COUNCIL AND ITS OBJECTIVES Awareness of the new Act Effects of the Council on beneficiaries Overall reactions: positive or negative Reactions to medical schemes in general Avenues for complaints The major role beneficiaries would like the Council to perform Perceptions of the present performance of the Council How the Council can improve its service according to beneficiaries Levels of endorsement of objectives of Council Attitudes of support to public health providers Reactions to state intervention Perceptions of influence on, contributions to and focus of interest in the work of the Council Major choices in service Final opinions of beneficiaries OTHER LOCAL STAKEHOLDERS Awareness of new Act Significant Provisions of the Medical Schemes Act 32 iii

6 4.3 Effects of Act on Work or Profession Ways in which the work of the Council for Medical Schemes will affect Stakeholder groups Extent to which medical schemes serve the interests of, and protect their beneficiaries Channels for gaining information or lodging complaints Perceptions of major roles and responsibilities of the Council for Medical Schemes Extent to which Council for Medical Schemes is performing its functions well Suggested improvements for service or approach of Council for Medical Schemes Possible goals and approaches that the Council could pursue Specific aspects of interest regarding medical schemes or the work of Council Ability to influence the Council and its work Possible contributions to the work of the Council Policy positions taken by the Council for Medical Schemes Recognition of principal member s dependants Inclusion of other beneficiaries Exclusions from list of dependants Opinions of feasibility for medical schemes to cover PMB s for beneficiaries in private hospitals when necessary Distance to public hospitals considered reasonable for access to Prescribed Minimum Benefits Possible further approaches for consideration regarding role and function of brokers Perceived problems with regulations imposed on options offered to beneficiaries by medical schemes Improvements for information: types- quality- media Perceived problems regarding implementation and compliance with the Act Perceived contributing factors to spiralling costs in private medical schemes 99 iv

7 4.23 Possible role for Council in containing costs Support for a move away from fee-for-service model Level of confidence in management and administration of medical schemes Possible issues of focus for containment of inappropriate expenditure Types of financial information for other local stakeholders and the public Threatened insolvency: possible steps for protection of beneficiaries Risk factors currently affecting future viability of medical schemes Possible action to facilitate improved risk-management by medical schemes, administrators and other agencies Ratings for possible approaches for sound and acceptable governance Criteria for improvement of governance of medical schemes Wider application of principal of pre-authorisation Possible ways for Council to ensure greater availability of services in public hospitals Level of support for possible low-cost medical scheme with restricted benefits Reasons for low-cost medical scheme not emerging Mechanisms and options for establishment of low cost schemes CONCLUSION ON REACTIONS TO STRATEGIC OBJECTIVES GENERAL CONCLUSIONS The quality of the research output Overall reactions and attitudes to the new legislation and the responsibilities of the Council INTERNATIONAL STAKEHOLDERS. 131 v

8 TABLES Page TABLE 2.1 SOCIO-ECONOMIC PROFILES OF BENEFICIARIES AND NON-BENEFICIARIES 7 TABLE 2.2 DOMESTIC ECONOMIC INDICATORS: EXISTING BENEFICIARIES COMPARED WITH POTENTIAL BENEFICIARIES 11 TABLE 3.1 MOST SIGNIFICANT PERCEIVED PROVISIONS AND IMPLICATIONS OF NEW LEGISLATION AS SEEN BY BENEFICIARIES WITH SOME KNOWLEDGE OF THE LEGISLATION 14 TABLE 3.2 OVERALL EVALUATION OF THE NEW LEGISLATION AND COUNCIL 16 TABLE 3.3 HOW WELL DO MEDICAL SCHEMES SERVE THE INTERESTS OF BENEFICIARIES AND PROTECT THEM? 17 TABLE 3.4 AVENUE FOR COMPLAINT OR QUERY: MEDICAL SCHEME BENEFICIARIES ONLY 19 TABLE 3.5 WAYS IN WHICH THE COUNCIL CAN IMPROVE ITS SERVICE 22 TABLE 3.6 PERCENTAGES OF BENEFICIARIES ASSIGNING VERY HIGH IMPORTANCE TO THE DIFFERENT OBJECTIVES OF COUNCIL 23 TABLE 3.7 ISSUES OF GREATEST INTEREST TO BENEFICIARIES 26 TABLE 3.8 REACTIONS TO PUBLIC HEALTH CARE 27 TABLE 3.9 PREFERRED MODES OF SERVICE DELIVERY 27 TABLE 3.10 SPECIFIC TYPES OF SERVICE BENEFICIARIES REQUIRE vi

9 FROM MEDICAL SCHEMES 28 TABLE 4.1 HAD HEARD OF NEW ACT 30 TABLE 4.2 KNOWLEDGE OF ACT 31 TABLE 4.3 EXTENT TO WHICH NEW ACT AND COUNCIL AFFECTS WORK OR PROFESSION 33 TABLE 4.4 WAYS AFFECTED 34 TABLE 4.5 OVERALL RESPONSE TO THE NEW SYSTEM 36 TABLE 4.6 EXTENT TO WHICH MEDICAL SCHEMES SERVE THE INTERESTS OF, AND PROTECT THEIR BENEFICIARIES 39 TABLE 4.7 ENSURING FINANCIAL STABILITY AND VIABILITY OF MEDICAL SCHEMES 45 TABLE 4.8 RECEIVING AND ACTING ON COMPLAINTS RECEIVED FROM BENEFICIARIES 47 TABLE 4.9 ENSURING PROMPT PAYMENT OF CLAIMS 48 TABLE 4.10 BROADENING ACCESS TO GROUPS PREVIOUSLY EXCLUDED 49 TABLE 4.11 REDUCING POWER OF ADMINISTRATORS WHILE INCREASING INFLUENCE OF BENEFICIARIES TABLE 4.12 CONTROLLING THE CONDUCT AND REMUNERATION OF BROKERS 51 TABLE 4.13 POOLING CONTRIBUTIONS SO THAT THE HEALTHY CONTRIBUTE TO THE BENEFITS OF PEOPLE IN HIGHER RISK CATEGORIES 52 vii

10 TABLE 4.14 REGULATING INVESTMENTS TO ENSURE FINANCIAL STABILITY OR AVOID FINANCIAL RISK 53 TABLE 4.15 ENSURING MANAGERIAL AND ADMINISTRATIVE EFFICIENCY AMONG MEDICAL SCHEME ADMINISTRATORS 54 TABLE 4.16 ENSURING THAT BENEFICIARIES ARE NOT EXCLUDED ON BASIS OF AGE OR MEDICAL CONDITION 55 TABLE 4.17 ENSURING ASSISTANCE TO PEOPLE WITH CHRONIC LONG-TERM ILLNESSES 56 TABLE 4.18 PROTECTING BENEFICIARIES FROM ARBITRARY REDUCTION OF BENEFITS 57 TABLE 4.19 PROVIDING THE PUBLIC WITH INFORMATION ON HEALTH CARE MATTERS 58 TABLE 4.20 CONTROLLING THE COST OF PRINCIPAL MEMBERS CONTRIBUTIONS 59 TABLE 4.21 HELPING TO CONTROL THE COST OF HEALTH, MEDICAL AND HOSPITAL SERVICES AMONG PRIVATE PROVIDERS 60 TABLE 4.22 HELPING TO ENSURE THAT HIV/AIDS SUFFERERS RECEIVE THE FULL CARE THEY NEED 61 TABLE 4.23 DEVELOPING LOW COST MEDICAL SCHEMES WITH RESTRICTED BENEFITS BUT LOWER CONTRIBUTIONS 62 TABLE 4.24 ESTABLISHING A RISK-EQUALISATION FUND TO WHICH ALL MEDICAL SCHEMES CONTRIBUTE 63 TABLE 4.25 PROVIDING BENEFICIARIES WITH EDUCATION AND INFORMATION TO ENABLE THEM TO MAKE APPROPRIATE viii

11 DECISIONS 64 TABLE 4.26 HELPING TO ENSURE THE QUALITY OF HEALTH CARE RENDERED TO BENEFICIARIES 65 TABLE 4.27 ACCEPTABILITY FOR MEDICAL SCHEMES TO ASSIST MAKING PUBLIC HOSPITALS MORE ACCEPTABLE TO BENEFICIARIES 66 TABLE 4.28 OPINIONS REGARDING INTERVENTION BY COUNCIL IN THE AFFAIRS OF PRIVATE MEDICAL SCHEMES 67 TABLE 4.29 RATING OF AVERAGE RISK OF COMMUNITY OF BENEFICIARIES RATHER THAN INDIVIDUALS IN CALCULATING CONTRIBUTIONS AND BENEFITS 71 TABLE 4.30 ACCEPTANCE OF ANY APPLICANT WHO CAN PAY AVERAGE CONTRIBUTION FOR MEMBERSHIP GROUP 73 TABLE 4.31 INTRODUCTION OF WAITING PERIOD 76 TABLE 4.32 POLICY OF LATE JOINER PENALTIES 78 TABLE 4.33 ADHERENCE BY ALL MEDICAL SCHEMES TO A SET OF PRESCRIBED MINIMUM BENEFITS 79 TABLE 4.34 REGULATION BY COUNCIL OF INSURANCE PRODUCTS COVERING MEDICAL EXPENSES 82 TABLE 4.35 ACCREDITATION OF BROKERS AND REGULATION OF BROKER REMUNERATION 84 TABLE 4.36 REQUIREMENTS FOR GOVERNANCE: BOARD OF TRUSTEES 86 TABLE 4.37 OPINIONS IN RESPECT OF REQUIREMENTS FOR RE-INSURANCE 88 TABLE 4.38 REGULATIONS IN RESPECT OF INVESTMENTS BY MEDICAL ix

12 SCHEMES 89 TABLE 4.39 SOLVENCY CRITERIA SET UP BY COUNCIL 90 TABLE 4.40 ACCREDITATION AND REGISTRATION OF ALL MANAGED CARE ORGANISATIONS AND ADMINISTRATORS 92 TABLE 4.41 REQUIREMENTS IN RESPECT OF MEDICAL SAVINGS ACCOUNTS 93 TABLE 4.42 AREA/S OF CONCERN AMONGST LOCAL STAKEHOLDERS 95 TABLE 4.43 PERFORMANCE OF COUNCIL IN PROVIDING INFORMATION TO THE INDUSTRY AND TO BENEFICIARIES 97 TABLE 4.44 BEST WAY OF CONTAINING COSTS 101 TABLE 4.45 MOVE AWAY FROM FEE-FOR-SERVICE MODEL 102 TABLE 4.46 LEVEL OF CONFIDENCE IN THE MANAGEMENT AND ADMINISTRATION OF MEDICAL SCHEMES 104 TABLE 4.47 PROFESSIONAL CEOs IN SUPERVISORY ROLE 108 TABLE 4.48 PROFESSIONAL TRUSTEES 109 TABLE 4.49 EXCLUSION OF BROKERS AND OTHERS WITH CONFLICT OF INTEREST PROFESSIONAL TRUSTEES 109 TABLE 4. ATTITUDES TO THE PRINCIPLE OF PRE-AUTHORISATION OF TREATMENT AS A CONDITION FOR CLAIMS 111 APPENDIX 1 Stakeholder information APPENDIX 2 Graphs x

13 EXECUTIVE SUMMARY This study describes and compares the perceptions and needs of members of the public (medical scheme beneficiaries and non-beneficiaries) and other stakeholders (including, for example: employers, trade unions, consumer bodies, media organisations, funders, brokers, Council members, universities, service providers, research bodies and some international regulatory authorities), on policy options and the strategic objectives of the Council for Medical Schemes ( the Council ). Generally, the Council s policy options and strategic objectives have been well received by most of the participants. At the same time, the majority of stakeholders would like to see the Council enforce the Act firmly, transparently and in an even-handed manner. There was strong general support among beneficiaries for the Council s objectives on financial stability of medical schemes, cross subsidisation, and improving access to the previously excluded. Respondents rated particularly highly the goal of the Council in helping to improve the quality of health care rendered to beneficiaries. Overall, awareness and knowledge of provisions of the Medical Schemes Act were low among beneficiaries of medical schemes and the general public when compared with other stakeholders who had a direct or indirect influence on the industry. The Council was rated poorly in terms of communication with the industry and members of public. The stakeholders suggested a multimedia strategy for information dissemination which includes regular information bulletins and newsletters that are user friendly and multilingual. The informational needs of the stakeholders were varied. Industry stakeholders preferred information on solvency of schemes, industry changes, industry statistics, and details of activities within the medical and health areas. The general public on the other hand preferred more educational information that includes explanations about the role of the Council, various medical scheme options and the do s and don ts of members. xi

14 There were a significant number of stakeholders with a range of specialist knowledge and expertise who were willing to contribute to the work of the Council through meetings and workshops by rendering advice on issues of interest. OMNIBUS SURVEY Beneficiaries of medical schemes constituted 21% of the overall members of the public in the survey. 26% of beneficiaries were aware of the existence of the Medical Schemes Act, 1998, with only 17% having some knowledge of the content of the Act. Awareness was higher among beneficiaries who were better educated and more affluent. Only 7% of non-beneficiaries were aware of the existence of the Act. Medical scheme members paid on average 11% of their net household income towards medical scheme contributions. Almost a third of hospital insurance subscribers rated the medical schemes poorly compared with only 12% of medical scheme beneficiaries. The reasons were varied and included escalating premiums, exclusions of chronic benefits and delay in payment of claims among others. The majority of beneficiaries (74%) prefer to contact the scheme first to lodge their complaints. As a last resort in the event of an unresolved complaint, almost equal numbers would cancel membership (18%), take legal action (16%) or approach the Council for Medical Schemes (17%). Beneficiaries supported the idea that their medical schemes should make public hospitals more acceptable for use by them with only 13% of the beneficiaries objecting. While beneficiaries saw merit in a public health service, they emphasised that it should be low cost and of adequate standard. xii

15 More than half of the beneficiaries supported close intervention by the Council in the affairs of the medical scheme. Issues of greatest interest to members included: equality of access; lower fees; prompt payment of claims; and information on medical schemes, changes in the industry, and activities of the Council. Beneficiaries tend to rate the following as important services to be covered by medical schemes: major hospitalisation, prescribed medicines, chronic benefits, GP consultations and HIV/AIDS treatment. Beneficiaries emphasise the following as among the important issues to be addressed in the industry: low cost medical schemes for the poor, improvement of services by medical schemes, regulation of medical scheme governance and cost reduction. INTERVIEWS WITH SPECIFIC STAKEHOLDERS This group was diverse and could broadly be categorised into direct and indirect stakeholders as determined by their level of involvement in the medical schemes industry. The level of awareness of the Act was generally high among all the stakeholders (on average, 67%) while knowledge of the Act was considerably higher only among those directly involved in the medical schemes industry. Generally there was support for most of the provisions of the Act, including: community rating, open enrolment, prescribed minimum benefits and the revised definition of dependants. At the same time there was concern that some might have negative financial implications for the schemes. xiii

16 Provisions of the Medical Schemes Act Community rating Support was mixed with some groups supportive of the impact this would have on broadening access to private health while others were concerned about the financial implications thereof. Open enrolment There was support for the goal of the Council to broaden access to groups previously excluded from the private health environment. Levels of support varied from 31% for administrators to 88% for Council members. Overall, more than half of the respondents supported this policy position. Broadening of the definition of a dependant There was some opposition to the broadening of the definition of the dependant beyond what is currently required in terms of the Medical Schemes Act. However there were a few respondents who wanted the definition to be expanded to include extended families in line with customary practices in the country. Waiting periods The industry strongly supported this policy option as offering protection against antiselection whilst discouraging scheme hopping. Industry would have preferred for the waiting periods to be longer a position opposed by others who felt the waiting periods were already too long. Late joiner penalties Late joiner penalties were strongly supported by the industry as a measure of protection for schemes that would also improve cross subsidisation. Opponents regard this as being in contravention of the spirit of the Act and discriminatory. xiv

17 Prescribed minimum benefits Whilst the majority of stakeholders were supportive of the introduction of prescribed minimum benefits, trustees, managed care organisations and administrators were not as supportive. The latter group were concerned about the administrative difficulties in implementation and the financial implications. There was also opposition to the provision of prescribed minimum benefits in the private sector as these would be too onerous on schemes and would not be cost effective. Regulation of insurance products Insurance companies, managed care organisations and consumer groups were strongly opposed to the regulation of insurance products by the Council. Accreditation and remuneration of brokers Generally, there was strong support for the accreditation and regulation of broker s remuneration by all the stakeholders except the brokers themselves. There were suggestions of a broker examination for entrance to the market for the protection of members as existing standards were viewed as not being high enough. Requirements for governance: Boards of Trustees All the stakeholders strongly agreed with this requirement of member participation in governance structures, as they felt it would dilute the domination of intermediaries, and ensure more transparency. In addition, it is believed that members are more likely to have the interest of the scheme at heart. Requirements for reinsurance Stakeholders generally supported the Council s position on reinsurance suggesting that more strict measures should be put in place and these arrangements closely monitored. There was however a sense that reinsurance had a place in the industry if applied appropriately. xv

18 Regulation of investments Overall, two thirds of the stakeholders supported the notion that the Council should regulate investments by medical schemes to ensure financial stability or avoid financial risk. There were, however, mixed feelings on this issue amongst brokers, trustees, administrators and research bodies. Solvency criteria There was a significant degree of approval for the solvency criteria set up by Council. An opinion was expressed that a reserve fund to guarantee the security of consumers was necessary. Accreditation and registration of managed care organisations and administrators Stakeholders responded positively to the Council accrediting and registering managed care organisations and administrators. It was believed that the regulations would ensure transparency, protect beneficiaries and keep premiums downs. Medical savings accounts There was less support for the Council s requirements in respect of medical savings accounts. Stakeholders would generally prefer that the current limit of 25% be increased to allow members more control of their medical expenditure. Financial stability and viability of medical schemes There was overwhelming support for the Council to ensure the financial stability and viability of medical schemes (88%) and to receive and act on complaints (79%). Prompt payment of claims There was mixed support for the goal of the Council of ensuring prompt payment of claims. This goal received unanimous support among service providers. xvi

19 Other factors Problems regarding implementation and compliance with the Act There was a general feeling that the majority of medical schemes were adhering to the Act with a few that were not and needed to be brought in line. Factors contributing to spiralling costs Stakeholders cited many causal factors to the spiralling medical costs categorised broadly as follows: regulations, inflation, managerial inefficiencies, fraudulent behaviour by members and service providers, HIV/AIDS and new technology. Role of Council in containing costs Most stakeholders believe the Council could help contain medical costs by enforcing compliance with the Act, by influencing the government on drugs costs and fees charged by service providers. Others prefer to leave the control of medical costs to market forces as opposed to regulatory intervention and support was also expressed for a move away from a fee for service payment structure. Management of medical schemes Stakeholders reported having little confidence in the management of medical schemes as it currently stands. Containment of inappropriate expenditure by medical schemes Stakeholders felt the foundation in terms of regulations and legislation has been laid for the protection of members and that this would allow for the monitoring of investments and re-insurance, curbing fraud, malpractice, over servicing and overutilisation, increase in medical savings account limits, education of the public and training of trustees. xvii

20 Support for low cost medical schemes Most respondents (63%) supported the development of low cost medical schemes with restricted benefits but lower contributions to cover low income earners who would prefer affordable private health cover. Assistance to people with long-term chronic illness Most respondents (76%) supported the view that the Council should ensure assistance to people with chronic long-term illnesses; while almost two thirds (64%) rated highly the protection of consumers from arbitrary reduction of benefits. HIV and AIDS There was little support among medical scheme and administrator representatives for the notion that regulations should help to ensure that HIV/AIDS sufferers receive the full care they need, with mixed responses from other stakeholders. Escalation of premiums There was limited support for the view that the Council should control the cost of contributions by members. There was however, support for the Council to help to control the cost of health, medical and hospital services among private providers. Risk equalisation fund There was limited support for the Council to get involved in the establishment of a risk equalisation fund to which all medical schemes should contribute. Public Private Partnerships There was also support for public private partnerships in upgrading the public health system. xviii

21 1. BACKGROUND, OBJECTIVES AND METHODOLOGY OF THE PROJECT The Council for Medical Schemes has the statutory role of administering and ensuring compliance to the Medical Schemes Act of This involves multiple and onerous responsibilities in a very complex field of service provision. This role is performed fundamentally on behalf of the current and potential future beneficiaries of medical schemes, but the activities associated with this role involve various levels of direct and indirect interaction with a variety of stakeholders who are relevant to the Council and for whom the activity of the Council has varying degrees of relevance. The Council, quite appropriately, considers that its approach to the performance of its tasks requires that it should take full account of the perceptions, needs and general attitudes of stakeholders and beneficiaries of medical schemes and of the extent to which they might facilitate or influence its approach. Accordingly it has commissioned a multi-facetted study among beneficiaries and stakeholders to inform its work and decisions. The study has been undertaken and this report is as brief and succinct an account of the findings as is possible without sacrificing useful detail. 1.1 The objectives of the study As defined by the project brief, the objectives are to identify and evaluate, among all key stakeholders as defined in consultation with the Council, the attitudes and needs of stakeholders and beneficiaries, and their significance and practical importance for the strategic and operational plan of the Council, in respect of the following: Their interests and attitudes, both overt and covert, in regard to all twelve strategic objectives of the Council, as well as the major reasons for such reactions The manner in which, and the extent to which, each category of stakeholders could affect the viability of 1

22 the operational and strategic plan, in both positive and negative ways The most suitable ways in which each category of stakeholders could participate in and contribute to, the carrying out of the strategic and operational plan The resources among each category of stakeholders that could be drawn upon by the Council Any conflicts of interest and contradictory attitudes between categories of stakeholders and how they might affect the operational plan The extent of convergence of interests between categories of stakeholders that could be developed into coalitions of support for the Council and its plan In general, for each category of stakeholders, their relative influence and leverage in respect of the plan and its successful implementation 1.2 Methodology The interview schedules: Stakeholders of a service-providing industry like that of medical schemes are by their very nature a diverse population of role -players. Some are close to or involved in the industry while others have a very partial involvement. Similarly among the beneficiaries of medical schemes at large there are those who take a close and technical interest in their service while others sometimes do not even recall the name of the medical scheme they subscribe to. In a study such as this it is necessary to reflect the effects of differential knowledge of and involvement in the enterprise. 2

23 This made it necessary to adopt a less-structured approach to the consultations (interviews) with stakeholders. Had we adopted a structured approach of presenting fixed-answer alternative choices of response the variations in depth of knowledge and concern would have been disguised by the appearance of firm reactions to issues raised. In adopting a mixed approach with a great deal of qualitative content in the form of open-ended enquiries we were able to more adequately reflect the vagueness of reactions that is often a reality in the interactions between medical schemes and their clients and stakeholders. The disadvantage of an open-ended approach is that with many stakeholders it is not always possible to obtain results that are closely focused on the detail of the project objectives. Some of the objectives above require a level of knowledge that far exceeds that of many of the people consulted. Hence if the results on some objectives for some categories of respondents appear to be thin and partial, or even non-existent, it is no more or less than a reflection of the reality of their interactions with the issues canvassed unfortunate but a valid reality. The interview schedules were prepared in consultation with the Council and its specialised personnel, in the following way. The twelve strategic objectives of the Council were taken as a starting point in formulating systematic sets of topics to be covered. Background material, the legislation and operational documentation were also consulted. The interview schedules used are attached in the Fieldwork/Technical reports. Assembling a list of key other local and international stakeholders: A preliminary list of stakeholders was furnished by the staff of the Council, containing some 53 categories or individuals. The list was both amplified and reduced in consultation with the Council, as follows: 3

24 Internet searches, media reviews and reviews of relevant literature were undertaken to identify further individuals and categories of relevance Exploratory and informal telephonic interviews were conducted among local stakeholders to identify additional persons or groups in their networks that might be relevant as local stakeholders a snowball technique During the course of the main enquiry, a few additional local stakeholders of importance that emerged were included In some categories, however, there were sufficiently large initial numbers of local stakeholders to enable us to reduce coverage by random elimination in order to remain within the limits of the budget. The fieldwork among other stakeholders: Initially it was intended to conduct full focused but probing interviews with keynote stakeholders, both telephonically and on a face-to-face basis as well as Focus Group Interviews with more homogeneous categories of stakeholders. After the numbers in the initial selection were reduced, however, a more suitable procedure of conducting focused face-to-face interviews with all stakeholders was adopted, which provided more consistent results. All told 217 local stakeholders were interviewed and the list, with details of organisation and occupational position, is appended as Appendix 1. The responses of the international respondents to the amended questions are included at the end of the report. The coverage of beneficiaries of medical schemes: The category of beneficiaries was covered by the inclusion of a shorter but comprehensive range of questions in a nation-wide sample of adult South Africans. This vehicle, a syndicated product, is known as the MarkData Omnibus Survey, and it runs quarterly on the basis of a stratified probability sample of 2200 households. The use of the Omnibus involves no loss of quality but it effects a significant costsaving. It provided the benefit that the beneficiaries included were 4

25 identified within a representative sample of the whole country, and as such they themselves constituted a fully representative sub-sample. This approach contained the additional benefit that the responses of beneficiaries on selected issues could be compared with those of nonbeneficiaries and a category of persons who indicated that they would like to become beneficiaries possible potential beneficiaries a relevant stakeholder category. The full sample of beneficiaries amounted to 601 interviews. With the inclusion of non-beneficiaries and potential beneficiaries there were 2201 interviews. Details of the methodology and coverage of the Omnibus Sample Survey are provided in the Fieldwork Report. Please note that the sample sizes in sections 2 and 3 are unweighted. The analysis and documentation: Data-capture and recording: the data from all forms of enquiry was captured and coded in a systematic form in code lists covering the major topics of enquiry, including reactions to the twelve strategic objectives of the Council, where the level of knowledge allowed. It was then computerised but some of the individual responses of other local stakeholders on open questions were summarised and recorded in data-spreadsheets for content analysis. The framework for the analysis was broadly the twelve strategic objectives, and specific tabulations of results in this respect are provided. General conclusions are also drawn in respect of the attitudes, needs and orientations of the beneficiaries and other local stakeholders. Tabulated data is also provided for both local stakeholders and beneficiaries of medical schemes. Graphs of all the tables in the report are appended as Appendix 2. 5

26 2. A SOCIO-ECONOMIC PROFILE OF BENEFICIARIES AND NON- BENEFICIARIES 2.1 The relative size of membership The design of the sample allowed for the estimation of the relative size, within the adult population, of the total membership of medical schemes, including adult dependants. This may or may not correspond to the full tally of the membership records of medical schemes because there is a possibility that not all dependants recorded themselves in the survey. There is also a possibility that some lapsed beneficiaries recorded themselves as beneficiaries without acknowledging their status out of embarrassment. The numbers emerging from the survey results are as follows: N (Unweighted) Persons with only hospital plans 14 (25) Potential beneficiaries people who say they intend or would like to subscribe to a medical scheme 777 (858) Other non -beneficiaries 952 (717) Principal members 319 (404) Dependants of members 139 (197) Total membership 2201 Firstly, it was noted from the figures above that the representative sample of all South African adults suggest that after combining principal members and dependants, some 21% claimed to be beneficiaries of private medical schemes. This is a fairly high figure for a developing economy and reflects in the main the presence of the substantial old middle class in South Africa, substantially based on the white and Asian population groups. It also, however, reflects a high degree of labour organisation, which has drawn more working class beneficiaries into medical schemes than would have been the case otherwise. 6

27 2.2 Socio-economic characteristics In the schedule of results that follows we present socio-economic breakdowns without comment until the end, because the features are self-explanatory. TABLE 2.1 SOCIO-ECONOMIC PROFILES OF BENEFICIARIES AND NON- BENEFICIARIES Total sample Members of medical schemes Dependants of members Insured: Hospital plan Potential Beneficiaries Other nonbeneficiaries Population Group: % N % N % N % N % N % N - Black Coloured Asian White Age: Gender: - Male Female Education level: - < Grade Post Matric Gross Household income per month: - < R R R R R8 330 R R Answers do not sum to 100 Non-response omitted Employment Status: Unemployed Economically inactive Employed Note: Other background features may be seen in the Appendix of Tables 7

28 Broadly one notes from the statistics presented that although beneficiaries and medical insurance holders are fairly diverse groups, their modal socio-economic levels are far higher than non-beneficiaries and potential beneficiaries. Potential beneficiaries are slightly but consistently in a better position than other non-beneficiaries. Beneficiaries of medical schemes have a very high rate of employment as opposed to other categories. It is very important to note, however, that some 40% of beneficiaries are what we may term working class or poor with gross household incomes of below roughly R 4000 per month. This is definitely not a uniformly privileged category of South Africans, and the financial constraints facing many of the beneficiaries are evident in the reactions that will be described in the next section. 2.3 Medical scheme patterns and subscription Beneficiaries subscribed to some 100 or more medical schemes and hospital insurance beneficiaries to 12 or more insurance products. Some 21% of the medical scheme beneficiaries could not recal the names of their medical schemes (Principal members 23% and Dependants 18%). In our results the largest medical schemes were Bonitas (12%), Discovery (8%), Fedsure (4%), Transmed (3%), Sizwe (2%) and Bankmed (2%). Medic Alert and Liberty were the la rgest insurance providers. Medical schemes contributions, largely including employer contributions, averaged (median) R per month following a roughly normal curve from under R per month to R or more. Low contributions of around R per month are those of medical schemes of Industrial Councils. The median contribution of employers was slightly under % of total contributions. 8

29 The median claimed expenditure on health care for themselves and their dependants among beneficiaries was R per month. If the employer contributions are included, it amounts to a median of around R per month. When compared with the total medical scheme contributions of R per month, it would seem that medical scheme beneficiaries pay just over R per month on medical costs in addition to their contributions. It was noted, however, that the estimates above are approximate due to the fact that very many people do not know exactly what they pay or what their employers pay. Given the numerous mentions in this study of cost-pressures, beneficiaries were asked what absolute maximum they could pay out of their own pockets for medical scheme cover. The median amount quoted was R per month, less than the median amount that they claim to currently pay for medical scheme (excluding employer contributions). These estimates are far from precise and offer only the very roughest of insights into domestic health care constraints, but it would appear that current health care contributions may be slightly above what the sample of beneficiaries feel that they can afford. In response to a question on whether or not they find that they are not able to pay all their accounts each month - accounts of all types - 21% of beneficiaries acknowledged regularly missing payments and an additional 26% claimed to miss an occasional payment. Only 53% of beneficiaries stated that they were able to pay all their accounts and subscriptions every month. 9

30 An allowance for a degree of exaggeration of their financial pressures was made, half or more of the beneficiaries of medical schemes, on average, do seem to be under financial pressure. Hence their complaints about the costs of medical cover seem to be well founded. As a matter of fact, as other results show, one may expect a proportion of current beneficiaries of private medical schemes to opt out of their membership if a lower-cost state medical scheme were to be established. 2.4 The potential for new subscribers Among the category of non-beneficiaries there were respondents who indicated a desire or intention to join a private medical scheme. We tentatively labelled these people potential beneficiaries, and they may be a source of new recruits into the private industry. Some of the questions we have asked allow us to assess this possibility. 10

31 In the data-presentation below, a comparison is made between potential beneficiaries with existing beneficiaries in terms of various financial indicators. TABLE 2.2 DOMESTIC ECONOMIC INDICATORS: CURRENT BENEFICIARIES COMPARED WITH POTENTIAL BENEFICIARIES Indicators Current Beneficiaries Potential Beneficiaries N N Median net Household income R R Percentage below R580 per month 7,5% 27 33,0% 202 Percentage below R1 2 per month 17,0% 68 59,3% 382 Percentage above R2 0 per month net 46,6%+* ,5% 113 *Could be somewhat higher due to non-response +* Employed, formal sector 55% % 317 Proportion desiring private medical care 56% % 166 Proportion choosing private medical schemes above 49% % 101 other options Sees the need to make regular payments to cover 66% % 181 medical expenses and can afford it Median monthly expenditure on health care for self R448 p.m. 601 R and dependants p.m. Proportion spending R2 p.m. + on medical care 64% % 12 Maximum able to afford for medical and subscriptions R313 p.m. 571 R (median) p.m. Able to afford a maximum of R125 p.m. or more 66% % 130 Pay all accounts and subscriptions every month 53% % 228 Medical scheme beneficiaries, on average, pay 11% of their net household income on their own share of medical scheme contributions. Applied to potential beneficiaries this proportion would amount to R92.00 per month on average, but at lower levels of income the potentials could afford less than 11%. In fact, they think that they could afford, on average, a maximum of R35.00 per month too low on average to join a private medical scheme. Inspecting the other estimates in the data set above would suggest, roughly, that at most, around 10% to 15% of the non-member potential would like to and could afford to join a private medical 11

32 scheme. If, say, 10% joined, it would increase membership of private medical schemes from our estimate of 21% currently to some 24% - a small but significant increase. It was noted, however, that at most 10% to 15% of potentials would like to and could afford to join private medical schemes. This is a rough theoretical figure and should be treated with caution. It is most likely to be valid under conditions of sound economic growth and job creation. Tentatively, it could be concluded that under current economic conditions, private medical scheme membership is fairly close to its maximum already, and growth from now on will be sluggish. We may also conclude that there is a market for a low-cost state medical scheme, but that the level of subscriptions should be kept at very modest levels. It is important to note, however, that the assessment just given has been based on an interpretative scan of relevant indicators. In order to draw firmer conclusions various inter-correlations would have to be performed. 12

33 3. THE BENEFICIARIES REACTIONS TO THE LEGISLATION, THE COUNCIL AND ITS OBJECTIVES 3.1 Awareness of the new Act Some 26% of beneficiaries of medical schemes had heard of the new legislation, as compared with 36% of subscribers to hospital insurance policies. Although the awareness is low among beneficiaries at large, it is far higher than among non-beneficiaries of any medical cover, namely 7%. Only some 2% of beneficiaries claim to know the provisions of the Act very well, some 6% know them fairly well and 9% know them slightly. Two-thirds of beneficiaries know nothing of the new dispensation, but this rises to nearly 90% among non-beneficiaries. As one would expect, knowledge of the new legislation is higher among beneficiaries who are better educated and more affluent. Compared with the 17% of all beneficiaries who know the provisions slightly or more, 25% of people with post-school qualifications, and around 40% of executives have the minimum level of knowledge. 13

34 Given the relatively low levels of awareness and knowledge, perceptions of the specific implications of the new legislation are rather thin. Among these with minimum knowledge (slight or more) the most significant provisions effects are seen as the following: TABLE 3.1 MOST SIGNIFICANT PERCEIVED PROVISIONS AND IMPLICATIONS OF NEW LEGISLATION AS SEEN BY BENEFICIARIES WITH SOME KNOWLEDGE OF THE LEGISLATION % N Non-discrimination: race and gender Non-discrimination: age 9 13 Non discrimination, coupled with the perception of rising costs or financial pressures on medical schemes 9 13 Sound administration of medical schemes Curbing corruption and miss-management 2 6 Minimum benefits Regulation of fees 6 16 Redistribution of benefits to poor 6 9 Cover for HIV/Aids 5 4 Cover for chronic disease 3 6 Rapid payment of claims 3 4 Full coverage of claims 3 5 Subsidising state services from medical schemes 2 4 Others <2 22 By and large the perceptions of these who know enough about the new dispensation to respond, have favourable attitudes to the new regime and the vast majority of informed beneficiaries are quite spontaneously in alignment with the objectives of the Council. 3.2 Effects of the Council on beneficiaries General questions were followed with an enquiry into the extent to which the new Act and Council would affect beneficiaries personally or occupationally. Some 10% of beneficiaries felt that it would affect them very greatly and another 19% felt that it would affect them to some extent a 14

35 total of nearly 30%. Among these non-beneficiaries who subscribe to hospital insurance schemes the perceived effect was greater, at 26% (but the sample size is small and the comparison is tentative). The major effects were perceived to be personal, affecting the respondents as beneficiaries of the medical scheme (59%) or as potential beneficiaries of a medical scheme (13%) (presumably a different medical scheme to that currently subscribed to). Beneficiaries would be affected in their professional or occupational level where their activities are relevant to issues addressed by the medical schemes. These effects are at a low level of around 7% to 10% of all beneficiaries in total. The most significant fear or negative perception was that costs would be raised, but in the context of this particular question it was at a low level of around 2%. Among non-beneficiaries, by way of comparison, some 12% of people felt that the new legislation would affect them to some extent at least, mainly because around 40% of non-beneficiaries aspire to or intend to become beneficiaries of medical schemes. 3.3 Overall reactions: positive or negative As one might predict from the previous awareness, positive reactions to the new dispensation prevail over negative reactions and fears. In response to a direct question on such overall reactions, the pattern of response was as follows: 15

36 TABLE 3.2 OVERALL EVALUATION OF THE NEW LEGISLATION AND COUNCIL Medical scheme beneficiaries Hospital Insurance Nonbeneficiaries % N % N % N Very positive Fairly positive Mixed Fairly negative Very negative Cannot say/no info It is significant to note that only 11% of beneficiaries are clearly negative in their perceptions. Only 30% of beneficiaries have mixed or negative feelings. This is a little higher than the earlier responses would have led us to expect but it is still low. The same applies among people who have hospital insurance. Even more surprising, however, is the roughly 20% of non-beneficiaries who have a negative image of the new dispensation. In their case, although they do not admit it, the negative image is based on an extremely low level of knowledge. In this connection it should be noted that the most frequent single response was that insufficient knowledge made an overall evaluation impossible 31% among beneficiaries rising to 52% among nonbeneficiaries. This is a measure of the communication task that the new Council faces. When we consider the reasons for the evaluations given it is difficult to discern a clear pattern. In some cases the negative reactions are because of the very problems that the Council is attempting to address poor management and corruption in medical schemes being the most frequent. Specific accusations of the actual objectives of the new Act were rather rare among beneficiaries. For example, only 3% rejected cross-subsidisation and one percent rejected state intervention. Most of the dissatisfaction was about high costs, among both beneficiaries and non-beneficiaries an issue that is hardly due 16

37 to the new Act. Much smaller proportions of people, 1 2 % at most, feared that the intervention of the Council would increase already high costs. 3.4 Reactions to medical schemes in general A broad evaluative question was asked about medical schemes as such to what extent they are perceived to serve and protect beneficiaries. The overall responses were as follows: TABLE 3.3 HOW WELL DO MEDICAL SCHEMES SERVE THE INTERESTS OF BENEFICIARIES AND PROTECT THEM? Beneficiaries Hospital insurance Nonbeneficiaries % N % N % N Very well in general Fairly well Some do, some do not Poorly Very poorly Don t know It is interesting that admiration of medical schemes (serve beneficiaries very well) is slightly higher among non-beneficiaries than among beneficiaries. Negative reactions to medical schemes, however, are lower among beneficiaries than non-beneficiaries, hence we may accept that most beneficiaries (some 55%) are at least fairly satisfied. It is interesting that over 30% of subscribers to hospital insurance have negative attitudes to medical schemes, as compared with around half that level among beneficiaries. It may be that many of the former are dissatisfied. The reasons for the reactions to medical schemes are detailed and difficult to classify. The most clear-cut reason is that of high fees: 8% among beneficiaries and 7% among non-beneficiaries. One might 17