Medical scheme reserves could easily fund SA's Covid-19 vaccines - here's how
Spending by medical schemes has dropped by billions over the last year as Covid-19 fears led to fewer patients showing up for scheduled medical procedures and check-ups.
New data released by the Council for Medical Schemes shows that, up until September 2020, medical schemes spent over R10 billion less than they had in the previous year.
Business Insider South Africa reports that the additional reserves collected by South Africa's medical schemes are enough to fund the entire estimated cost of vaccinating the country's population against Covid-19.
The publication's associate editor Phillip de Wet says the money is held in trust for almost 9 million beneficiaries of medical aid schemes.
There are talks about finding various legal mechanisms for medical schemes to subsidise vaccines for non-members.
One possible legal option, De Wet explains, is for the government to implement a single exit price (SEP) policy on Covid-19 vaccines.
The SEP would allow the government to create the ceiling price for each vaccine bought by medical aid schemes.
The government could implement an inflated SEP on vaccines and use the money paid by medical schemes to cover the rest of the population, De Wet argues.
However, it's unclear how this proposal will be received by administrators.
At the same time, Treasury is looking at a number of available options to raise money to pay for South Africa's Covid-19 vaccines, including a possible tax hike
If we do want them to pay for it, there are a couple of legal mechanisms. The smartest one that I think has been raised is to simply charge medical schemes a hell of a lot of money for vaccines.Phillip de Wet, Associate Editor - Business Insider Inc
We have a mechanism called the single exit pricing where the government basically sets the price of medicine. The government can say, we're charing 10, 20 or 50 times the value of the actual vaccines and by overcharging medical schemes we can pull that money into government and pay for everyone elses vacccines.Phillip de Wet, Associate Editor - Business Insider Inc
Overall, for the year 2020, up to September, there's about R 10 billion that normally would have been spent by medical schemes that simply wasn't paid out.Phillip de Wet, Associate Editor - Business Insider Inc
If you look at the graph, it just plummets down in terms of the spending that they have refunded to people.Phillip de Wet, Associate Editor - Business Insider Inc
The Council for Medical Schemes publishes aggregated data across all the schemes on a quarterly basis.Phillip de Wet, Associate Editor - Business Insider Inc
Listen to the discussion on Today with Kieno Kammies:
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