Bells's Amendment to Medical Schemes Act; Botha Petition; Leon's Pardon Investigation Procedure Bill

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Meeting report

PRIVATE MEMBERS LEGISLATIVE PROPOSAL AND SPECIAL PETITIONS PORTFOLIO COMMITTEE
8 November 2002
BELLS'S AMENDMENT TO MEDICAL SCHEMES ACT; BOTHA PETITION; LEON'S PARDON INVESTIGATION PROCEDURE BILL

Chairperson:
Mr P Hendrickse (ANC)

Documents handed out:
Witbank Coalfields Medical Aid Scheme Presentation to Committee (see Appendix 1)
Petition of Mrs M Botha: Committee Report (Appendix 2)
Mr Tony Leon's Pardon Investigation Procedure Bill

SUMMARY
Bell's Amendment to the Medical Schemes Act
: Representatives from a coal mining industry medical aid scheme were present to explain why such an amendment was needed. This medical aid scheme continues to subsidise its members after they have retired. However, the 1998 Medical Schemes Act stipulated only one rate of contribution and this would seriously affect its retired and widow members. These members, who had been paying 50% of the full normal members' rate, would be forced to pay double their amount if the rate is not discounted after retirement. They requested that Section 29(1)(n) of the Act be amended to continue the practice of a reduced rate in retirement.

The Council for Medical Schemes held that this represented a further discounting as the young already subsidised the old in medical aid schemes. The Department of Health could see that the problem facing the retired members was of genuine concern. However it was decided that this was a labour relations issue and not a health issue. The Labour Department will be asked to provide input on the matter.

Botha petition: The Committee decided the amount of her pension.

Leon's Pardon Investigation Procedure Bill: This matter was deferred until next year

MINUTES
Bell's Amendment to the Medical Schemes Act
The Chairperson noted that the Committee had received input from the Registrar of the Council for Medical Schemes. However, in order to make an informed decision on this matter it had been decided to invite the Witbank Coalfields Medical Aid Scheme (WCMAS) to make a submission. The Department of Health (represented by the Council for Medical Schemes) had also been invited so it could state why it opposes the proposed amendment. Also present for input were representatives from Social Health Insurance and the Board of Health.

The Witbank Coalfields Medical Aid Scheme, per Mr Richard Weber, Chairman of the Witbank Coalfields Medical Aid Society and Mr H der Jager, General Manager of Mpumalanga Managed Health Care, made a presentation regarding the Medical Schemes Amendment Bill (see document)

Discussion
The Chair asked about the mechanism used by the Witbank Coalfields Medical Aid Scheme in order to ensure that its coffers are not exhausted while continuing to subsidise its 'continuation and widow members'.

Mr der Jager (WCMAS) explained that current members and their employer groups contribute to the Scheme in order to help the 'continuation and widow members' to enjoy a reduced rate.

Mr A Ainslie (ANC) asked if this mechanism as used by the Scheme contravenes any statutory provision.

Mr der Jager responded that the present mechanism as used by the Scheme is really in contravention of Section 29(1)(n) of the Medical Scheme Act of 1998. This is precisely the reason why they are requesting an amendment of that Act.

Mr S Mshudulu (ANC) asked how the Scheme is constituted and whether workers are democratically involved in the Scheme's structures and its running.

Mr der Jager replied that the Scheme is independently managed by trustees, who are in full control of the fund scheme. The Scheme is governed in terms of the Medical Scheme Act and all its members are fully represented in its structures. Therefore workers are fully represented through their employers groups.

The Board of Health representative asked whether the Scheme operates on a pre-funded mode or what?

Mr der Jager responded that the Scheme is not using a pre-funded mode but the one based on the pay-as-you-go model.

Mr L Kgwele (ANC) asked how the Scheme ensures that the workers are fully represented in terms of its multiple employers composition.

Mr der Jager responded that the Scheme fully represents all employees from major industries through their employers group structures.

Mr Mshudulu noted that the way in which the Scheme is structured is a call for concern, since in many cases the employers and the employees do not belong in the same scheme due to their wage differences. He called on all politicians to show support whenever a high earning group and a low earning one benefit on the same level. He requested the Department to conduct its own research before the matter is finalised.

Mr der Jager noted that the Scheme is totally independent and does not differentiate between its members on the basis of their incomes. He further noted that the Scheme ensures that the presently-working members subside those members who have since retired.

The Board of Health, Council for Medical Schemes and the Social Health Insurance representatives acknowledged the genuine seriousness of the issue raised by the Scheme. However, they noted that the Department does not view this issue as falling within the ambit of the Act since it is a labour relations matter.

Mr P Matshidze (Senior Research Analyst: Council for Medical Schemes) held that the concern raised by the Scheme is a very genuine one. However, one must not opt for a short cut in addressing an issue and the best way to address an issue is to adopt a global attitude. Medical Aid schemes have already been discounted by the Act since the younger generation is required to pay more while claiming less and the elders pays less while claiming more. To request any further discounting would therefore be inappropriate.

Mr Ainslie asked why the Council for Medical Schemes does not act against the Scheme - if it views the Scheme as contravening the Act.

Mr Matshidze acknowledged that after the Act had come into effect there were many discrepancies that the Council had to deal with. Even though the Council views the Scheme as contravening the provisions of the Act, this was not part of its first priorities in the list.

The Chairperson requested the Council to present the Committee with its list of priorities and held that the Committee would await for such list.

Mr M da Camara (DP) noted that the amendment to the Act would have serious consequences as it would unfairly disempower those people who had previously benefited in the process. How can these people be protected against the strict application of the Act and would the Act have a retrospective application?

A Board of Health representative noted that this is an equity issue and thus based on the fact that the medical schemes are of a shorter duration, they are therefore not the relevant institutions to address this matter. She held that - due to the fact that it is a labour relations matter - it should be addressed within the labour environment. The Department of Labour remains the most appropriate institution in all fairness.

The Chairperson noted that all parties agree on the importance of the concern raised by the Scheme, but the contention relates to the principle and the process of addressing the matter. The Committee should therefore decide whether this is an Act-related issue or one relating to the labour relations between the employer and the employee.


Mr Mshudulu also noted that while the Committee sympathises with the Scheme in this regard, it should also not lose sight of the fact that the Department works within prescribed rules set by Parliament. It becomes therefore imperative for the Committee to discuss the ways and means of addressing the problem at hand taking into account the contradictions involved in this matter.

The Chairperson held that the input of the Department of Labour is required in order for the Committee to finalise this matter.

Mr P Gerber (ANC) asked the overall percentage of the pensioners presently registered with the Scheme.

Mr de Jager replied that out of 100% membership of the Scheme, 20% consist of retired members. To illustrate the fact that the Scheme is not a profit-making scheme, its admission fee rates at 3,5%.

Mr T Rakoloti (Deputy-Director: Social Health Insurance) said that the Department of Health is willing to assist as long as this issue would be explored in terms of the labour relations between the employer and the employee.

The Committee agreed that the Department of Labour should be invited to make its submission on this issue.

Mr B Bell (DP) thanked the Committee for giving him the opportunity to bring the Scheme's representatives so that they could be able to make their own representation. He requested the Department not to be too hard on the Scheme but to allow it to continue, bearing in mind the fact that it has been in existence for 67 years.

Pardon Investigation Procedure Bill
The Chairperson noted that Mr Delport has been requested by Mr Tony Leon to make presentation on his behalf. He further noted that Mr Leon's proposal would be deferred until next year.

Mrs Botha's Petition
The Chairperson noted that the Committee had previously agreed to support Mrs Botha's petition. However, the Committee still needs to discuss what pension amount Mrs Botha should receive.

The Committee agreed that Mrs Botha should receive a pension amounting to R2353.48 per month, starting from 1 December 2002. However, it decided to delete the last part of the petition namely "in addition to the pension she receives at present.".

The meeting was adjourned.

Appendix 1:
WITBANK COALFIELDS MEDICAL AID SCHEME W.C.M.A.S.

PRESENTATION TO STANDING COMMITTEE ON PRIVATE MEMBERS' LEGISLATIVE PROPOSALS

SUBJECT: Medical Schemes Amendment Bill (Proposed by Mr B G Bell, MP Democratic Alliance Mpumalanga Constituency)

INTRODUCTION:

Witbank Coalfields Medical Aid Scheme is a restricted membership Scheme registered in terms of the Medical Schemes Act.

The Scheme was formed in 1935 and has served its members and employer groups, mainly in the coal mining industry, for more than 67 years.

The Scheme has a sound financial record and is widely regarded as one of the most innovative and cost effective Schemes with excellent member and employer group support over the years.

Currently members contributions are subsidized by 50% by their employers during their working lives.

From the outset, the Rules of the Scheme allowed for members and their families with sufficient service to continue membership of the Scheme after retirement or as a widow/widower at a monthly contribution rate equal to their contribution before retirement without the employer's 50% subsidy.

AMENDED MEDICAL SCHEMES ACT

In 1998 the Medical Schemes Act was amended to regulate Medical Schemes in a more equitable manner and to make membership of Medical Schemes more accessible.

The New Act further calls for only one rate of contributions for all members of a Scheme which may only be varied according to income and number of dependants.

Although it was not the intention of the New Act to harm CAWMS (continuation and widow members) in any way, the restriction on a lesser rate will have a devastating effect on those pensioners and widow members who have up to now been paying contributions at 50% of the full normal members' rate.

For WCMAS, CAWMS contributions would double up, forcing a large number of these members of long standing to terminate their membership of the Scheme and become dependant on the State for their medical needs.

WCMAS member's and their employer groups, have always, contributed towards a reduced rate for members who have completed their period of normal membership and become a CAWM.

PROPOSAL:

The Board of Trustees of the WCMAS, on behalf of its membership, request that Section 29(1)(n) of the Medical Schemes Act 1998 (Act No 131 of 1998) be amended to enable Medical Schemes and participating employer groups who have offered their CAWMS and Ex-employees the privilege of a reduced rate in retirement, to continue the practice.

PROPOSED AMENDMENT TO SECTION 29(1)(n) OF THE MEDICAL SCHEMES ACT 1998

29(1)(n) The terms and conditions applicable to the admission of a person as a member and his dependants, which in terms and conditions shall provide for the determination of contributions on the basis of income or the number of dependants or both the income and the number of dependants, and shall not provide for any other grounds, unless conditions under Rule 29 (1)(v) applies, including age, sex, past or present state of health, of the applicant or one or more of the applicant's dependants, the frequency of rendering health services to an applicant or one or more of the applicant's dependants other than for the provisions provided.

29(1)(v) The terms and conditions of a member who after a period, as required in the rules of the scheme, retires from the employment of a member employer due to reaching retirement age or ill-health may include the scheme offering the member a reduced rate for membership. On the death of such member his spouse may continue to enjoy the reduced rate as set out in the rules of the scheme.

Appendix 2:
Report of the Standing Committee on Private Members' Legislative Proposals and Special Petitions on the petition of Mrs M Botha, dated 8 November 2002:

The Standing Committee on Private Members' Legislative Proposals and Special Petitions, having considered the petition of Mrs M Botha referred to it, reports as follows:

That Mrs M Botha be granted - (1) a pension of [R2353.48] per month, in addition to the
pension she receives at present
.

Report to be considered.

From: Melvyn Hendriske <melvynh@meb.co.za>

To: Tracy Parenzee <tparenzee@parliament.gov.za>

Date: 4 November 2002

Subject: Inflation adjusted payments

CC: Peter Hendriske <phendrickse@padiament.gov.za>

Your query re adjusted inflation payment:
Payment commencement date: 1 June 1997
Amount per month: R1678.00
Based on an average inflation rate of 7% to June 2002 - monthly payment: R2353.48
Based on year on year All Items CPI index - monthly payment: R2293.93

 

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