What s on the Menu? DR JOHN JUTZEN SAPA Legislative History on Health Policy. Our Disease Burden. Can the State Deliver NHI?

What s on the Menu? Legislative History on Health Policy DR JOHN JUTZEN SAPA 2017 Our Disease Burden Can the State Deliver NHI? Existing Private Sector & Options for the Future What is the impact on companies and their employees?

What s on the Menu? Legislative History on Health Policy Our Disease Burden Can the State Deliver NHI? Existing Private Sector & Options for the Future What is the impact on companies and their employees?

Health Policy Time Line 1992 Amended Medical Schemes Act 1995 ANC Health Policy Paper (SHI) POLITICAL CHANGE 1994 1998 Medical Schemes Act, 131 2002 Taylor Committee: SHI Proposal 2008 2011 2015 NHI replaces SHI NHI Green Paper NHI White Paper v1 POLITICAL CHANGE 2007 PAYROLL TAX Public Sector 22 Years No Change 2016 2017 2017 Demarcation Regulations Gazetted Exemption Framework Low Cost Insurance LCBO Development - Medical Schemes 2017 NHI White Paper v2 PAYROLL TAX POLITICAL CHANGE 2019

Globally Burden of Disease DALY per 1,000 lives (Disability Adjusted Life Year) 515 SA 624 165 280 215 295 190 SA 462 Global Average 230 W Pacific SE Asia Europe E Mediterranean Americas Africa Source: WHO; Econex

Disease Burden by Age High Income Countries Low-Mid Income Countries 60+ yrs, 35% 0-4 yrs, 5% 5-14 yrs; 4% 60+ yrs; 13% 0-4 yrs; 31% 15-59 yrs; 56% 15-59 yrs; 48% 5-14 yrs; 8% Source: WHO

NHI Figures Funding Single Payer Fund R200 bn Funding Shortfall - Econex, June 16 2017 Budget Treasury - R28bn 2015/16 Tax Revenue = R1.07 tn Providers NHI Pilot Sites (10) 19% of Posts Filled - 2015

Availability of Providers Citizens Per 1 Provider State Private Dentist @ Patient 16 years GP 3 254 1.7 x 1 906 Specialists 9 233 4.5 x 2 049 Dentists 48 671 8.9 x 5 485 Pharmacists 12 268 2.8 x 4 447 Psychologists 69 333 11.6 x 5 956 Source: Persal, Econex, van den Heever 10

INCOME National Health Structures 1 2 3 Complementary Private Health Cover - Only for services not covered by Statutory Health Insurance Supplementary Private Health Cover - In Addition to Statutory Health Insurance Substitutive Private Health Cover - Instead of Statutory Health Insurance

NHI White Paper Proposals April 2017 July 2017 Jan 2018 April 2019? 2025 Medical Schemes Act Demarcation Regulations (Gap Cover) Exemption Framework PHC PMB Revision Amendment to an Act (5 years) LCBO 14 Acts to be Amended Policy Contradiction Medical Schemes 1 Benefit Option National Health Insurance Constitutional Challenge Financial Reality Change in Political Power

NHI Challenges Funding Problem Provider Shortage Massive Disease Burden Bureaucracy Will NHI survive 2019 Elections?

Tax Relief on Medical Schemes R64bn 2012 REDUCED DEDUCTION: R12,765 PA Current ± R20bn R15bn 2013 Sources: 2013 SARS Annual Report

Employer Subsidy on Medical Schemes 70% 60% 55% 60% 58% 50% 45% 50% 48% 44% 44% 46% 40% 30% 32% 20% 10% 0% 2011 2012 2013 2014 2015 % Of All Members Excl Gems Sources: 2014 and 2016 SARS Annual Reports

Payroll Integration Registered tax payers, 2016/2017 Taxable bracket Number Percentage Registered individuals with taxable income below the income-tax threshold R0 - R70 001 6,619,854 (48% of total 13.7mil individuals registered) R70 001 - R150 000 2,583,046 36% R150 001 - R250 000 1,733,463 24% R250 001 - R350 000 1,071,798 15% R350 001 - R500 000 800,990 11% R500 001 -R 750 000 497,722 7% Medically insured population estimated 4.5 million R750 001 - R1 000 000 197,813 3% R1 000 001 - R1 500 000 136,782 2% R1 500 001+ 94,578 1% Total 7,116,192 100% Grand total 13,736,046 Source: National Treasury

Annual contribution R160 000 R140 000 Income and affordability based on 10% of income R120 000 R100 000 R80 000 R60 000 R40 000 R20 000 R- R0-R70 001 R70001-R150 000 R150 001-R250 000 R250 001-R350 000 R350 001-R500 000 R500 001-R750 000 R750 001-R1 000 000 R1 000 001-R1 500 000 R1 500 001+ Contribution range Annual Income band Afforadble range

Scenario 1 Current NHI Policy Remains in Place Medical Brain Drain Limited Investment into Healthcare Constitutional Challenge Financial Constraints Very High Time Line - 20+ Years Current NHI Policy

Scenario 2 Revised Current NHI Policy Policy Remains - Supplementary in Place Medical Brain Drain Schemes Act remains Unchanged Exemption Constitutional Framework Challenge Extended beyond 2019 No Financial Constitutional Constraints Challenge Single Time Line NHI -Fund 20+ Years Financial Constraints are Lower Inefficiency of Single Fund Current Revised NHI Policy

Scenario 3 Remove Revised NHI Policy - Supplementary Private LCBO - Private Sector remains Cover extends Unchanged to Employed Sector No Public Constitutional Sector Strengthed Challenge DHA (No Single Fund) Financial No Constitutional Constraints Challenge are Lowered Time Financial Line Constraints 10-15 Years are Lowest Time Line 2-5 years Remove Revised NHI Expand NHI Private Policy

Our Landscape Range of Benefit Coverage 30% 70% Meeting the needs of all stakeholders ExecHealth Fusion (X) MyHealth Plus MyHealth Core MyHealth Vital Medical Aid MyClinic High AskNelson & Empowered Health Screenings ------------------------------------------------------------- Income ------------------------------------------------------------ Low

Fusion ExecHealth MyClinic Gap Cover Executive Wellness Programme On-site Healthcare Services Empowered AskNelson MyHealth Training Academy Employee Assistance Programme Primary Healthcare

Lives Under Management A B C Fusion Gap Cover AskNelson Employee Assistance Programme MyHealth Primary Healthcare 157 532 lives 581 368 lives 59 217 lives

MyHealth Comprehensive Provider Network: Radiologists and Pathologists Nationwide Psychologists & Social Workers Pharmacies 1 653 887 Dentists 1 631 Optometrists 1 270 General Practitioners 2 995

WORKFORCE = 1,000 HIV Chronic Psychosocial Total Days Lost 5,500 days 6,500 days 6,400 days 18,400 days AVERAGE SALARY = R7,000 8% of Payroll R6 million pa R560 per employee

Actual Experience in our Clients Absenteeism Productivity 8% 7% 6% 5% 55% Reduction in absenteeism 4% 140 120 100 80 Group Life Insurance Premiums 45% Reduction in HIV death rates 3% 2% 1% 0% Pre EAP Post EAP 260 Families did not lose a loved one 60 40 20 0 2007 2008 2009 2010 2011 2012 2013 2014

Total Direct Financial Savings (2014) = R22 million Total spent on managing HIV (2014) = R5 million R 25 000 000 R 20 000 000 Group Life Savings Disability Savings Employee replacement savings Total saving Total Saving = R17 million R250 pepm R 15 000 000 R 10 000 000 R 5 000 000 R 0 2008 2009 2010 2011 2012 2013 2014 Source: Annual Report

MyHealth Results Proactive Product Education Nominated a GP Wellness Days Chronic Disease of members trained on the product 62% of members have nominated at least 1 GP Screening 70% of members under patient management are compliant 98% 92% 2 in 3 members know their HIV status Average Member Service Scoring: 9.8/10

Developing Economies Global Health Expenditure (US$ trillion) 14 33% 12 10 21% 8 6 4 2 10% Developing Economies Developed Economies 0 Source: World Economic Forum, 2014 1995 2012 2022

Brazil World s 2nd Largest Private Healthcare Market 50 million lives 150 million lives World s Largest Public Healthcare System

Annual contribution Income and affordability based on 10% of income R160 000 R140 000 R120 000 R100 000 R80 000 R60 000 R40 000 R20 000 R- R0-R70 001 R70001-R150 000 R150 001-R250 000 R250 001-R350 000 R350 001-R500 000 R500 001-R750 000 R750 001-R1 000 000 R1 000 001-R1 500 000 R1 500 001+ Contribution range Annual Income band Afforadble range

MEMBER-CENTRIC Key Considerations for Primary Healthcare Access 1 Doctor Access = REAL Recognition by Provider = Prime Cure on membership card Acute Medication = Doctor Dispensed Chronic Medication = Courier or Pharmacy Pharmacy Network Social Challenges 2 Union Engagement = Buy-In Understand Social Challenges = Health Outcomes = ROI Chronic Patient Compliance > 92% Financial Limitations No Out-of-Pocket Payments

CLIENT-CENTRIC Key Considerations for Primary Healthcare Hard Integration 3 Own the Value-Chain = Improved ROI Remove Cost Duplication Governance and Compliance OHS Regulatory Adherence Psychosocial Risk (EAP) Sustainability 4 Network Costs & Delivery - 30% Lower on GP costs Contract is with each Provider not IPAs Quality 98% First Time Access to Care and Treatment Measurable Outcomes