Medical aid schemes are in talks over a pricing arrangement for Covid-19 vaccines that would ensure surplus money could be used to buy vaccines for people who do not have medical aid.
After what it calls a “considered approach” by the Ministerial Advisory Committee (MAC) on Covid-19 vaccines, the Council for Medical Schemes (CMS) ruled that funding for the vaccine must be a prescribed minimum benefit for medical scheme members.
The ruling was formally published in an amendment to the Medical Schemes Act PMB legislation and signed by the health minister on January 4.
After discussions between the CMS and various medical aid schemes over pricing arrangements, the schemes also agreed that any surplus generated from buying vaccines might be used to cross-subsidise vaccine acquisitions on a one-for-one basis for non-medical scheme members, said Dr Ronald Whelan, chief commercial officer at Discovery Health.
“For each vaccine procured for a medical scheme member, sufficient surplus is generated through procurement arrangements for the vaccine to subsidise the vaccination of one non-medical scheme member,” said Whelan, adding this pricing approach was not unusual, as many medicines were sold at a higher price to the private healthcare sector than to the public health sector.
This is less than 2% of annual premium contributions and therefore affordable for medical schemes.
— Dr Ronald Whelan, Discovery Health chief commercial officer
Whelan said the medical schemes had recognised the urgent need to vaccinate at-risk population groups as well as to ensure herd immunity through broad vaccination while making sure there was enough money to buy vaccines.
“This is undoubtedly a moment in time where solidarity in the healthcare sector is of paramount importance to the country and is warmly welcomed and supported by both the public and private sectors,” he said.
Vaccine prices range from about R75 to R540 a dose.
The department of health has indicated it has procured the initial batch of 1.5 million doses from Serum Institute India at R77.90 a dose.
The institute is manufacturing AstraZeneca’s Covid-19 vaccine under licence.
As the AstraZeneca vaccine is a two-dose regime, the supply will be enough to vaccinate some 650,000 of SA’s 1.25 million healthcare workers.
Whelan estimated the cost of procuring vaccines for SA’s 7.1 million medical scheme members together with the medical scheme cross-subsidy for procuring vaccine for a further 7.1 million people at about R7bn.
“This is less than 2% of annual premium contributions and therefore affordable for medical schemes,” he said.
Final costing would, however, depend on prices agreed with manufacturers, the mix of different vaccines procured, logistics costs and currency exchange rates.
Fedhealth principal member Jeremy Yatt sounded a note of caution over the proposal plan to cross-subsidise vaccine procurement.
A medical aid works on the same basis as a mutual fund and is a not-for-profit organisation.
— Jeremy Yatt, Fedhealth principal member
While noting that discussions were ongoing between the Board of Healthcare Funders (BHF) and the Health Funders’ Association – the medical aid representative bodies – and CMS and government over the legality and feasibility of the proposal, Yatt said the issue was “problematic” for medical aids.
“A medical aid works on the same basis as a mutual fund and is a not-for-profit organisation,” he said.
“The funds therefore belong to the members who contribute every month through their contributions. The scheme will therefore not be able to utilise members’ money to fund vaccines for non-members without approval from members.”
Yatt noted that medical aids fulfilled a vital role in SA by reducing the burden on government to fund the healthcare costs of its members as well as providing a livelihood for many doctors and specialists.
“People need to be clear that medical aids aren’t some cash cow for government, but well-run entities that are designed for the benefit of their members,” he said.
Schemes also needed to honour their “normal” obligations to members, as other illnesses and diseases were still present.
People need to be clear that medical aids aren’t some cash cow for government.
Medical aid schemes were also awaiting clarity on the Treasury’s proposed “vaccination tax”.
On Sunday, Treasury director-general Dondo Mogajane said the department was exploring various mechanisms to acquire Covid-19 vaccines, including raising taxes, widening the budget deficit and reprioritising government spending.
Mogajane said in an interview with Business Day that government was committed to financing the vaccine rollout with or without support from the private sector and medical schemes. “SA will not take us seriously if I can find money for SAA but not for vaccines,” he told the paper.
Government Employees Medical Scheme (GEMS) principal officer, Dr Stan Moloabi, said the scheme supported government on its vaccine rollout plans.
"GEMS is of the view that to achieve the 67% herd immunity, it is important that funding is made available," he said.
Moloabi added that the scheme was engaging with the sector on how the schemes could assist.
Treasury did not respond to requests for comment.
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