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SOCIAL SERVICES SELECT COMMITTEE; FINANCE SELECT COMMITTEE: JOINT MEETING
7 November 2000
COUNCIL FOR MEDICAL SCHEMES LEVIES BILL: DELIBERATIONS AND VOTING
Chairpersons: Ms L Jacobus (Social Services); Ms D Mahlangu (Finance)
The committees raised questions on the issue of the imposition of interest on the late payment of levies and who would bear this burden as well as how much the rate of interest would be.
The Council for Medical Schemes Levies Bill is a Section 77 Money Bill and currently parliamentary committees do not have jurisdiction to make amendments to such Bills. The committees agreed to accept the Bill in principle and it was adopted.
Mr John Kruger (National Treasury) took the committees through the Bill explaining the contents of each clause [see Appendix 1 for presentation document].
A question was raised if medical schemes and medical aid schemes are the same.
Mr Kruger stated that the question is not relevant to this Bill but that one should rather refer to the Medical Schemes Act for specifics on the distinction between the two.
Ms Fubbs (ANC, Gauteng) asked the following questions:
(a) What is medical insurance?
Mr Kruger stated that medical insurance pays out a specific amount on the happening of a specific event. He stressed that the definition is very narrow. He stated that, for example, if a person gets a heart-attack he would be paid out an amount of R100 000.
(b) Ms Fubbs stated that medical schemes pay levies out of funds from members' contributions. She asked whether the interest for late payment of levies is also payable from members' contributions. Ms Fubbs felt this is placing an undue burden on members.
Mr Kruger stated that the imposition of interest for late payment is a necessary provision.
He added that he envisages very few situations of late payment of levies unless there is gross mismanagement of the scheme.
(c) Is the interest charged on the levies at a market-related rate?
Mr Kruger stated that market rates are taken into account.
Ms Jacobus (Chair) stated that no amendments would be made to the Bill. She explained that it is a Section 77 Bill (Money Bill) and therefore parlaqimentary committees lack jurisdiction to amend it. Ms Jacobus put the Bill before both committees and it was accepted.
COUNCIL FOR MEDICAL SCHEMES LEVY BILL 2000
Presentation by National Treasury
Need for the Levy Bill
· Medical Schemes Act 1998
- Need for increased oversight over medical schemes
- Establishes strengthened Council for Medical Schemes with Registrar as executive officer
- Requires capacity to regulate large and complex industry
- Agreement that levy financing appropriate, rather than on budget
- Industry/consumers carry cost of regulation
- Increased autonomy and flexibility of Council
Considerations with levy financing
· Spate of independent agencies and levy financing as bodies strive for guaranteed income stream and freedom from Government strictures and control:
- Compromises government control and fiscal oversight
- Fragments and complicates tax system
- Impacts on the integrity of budget process, government ability to prioritise and parliamentary oversight
· Need to balance requirement of fiscal oversight with demand for autonomy of regulatory bodies
· As a result the notion of a Money Bill to be introduced by Minister of Finance
· Continuous development of framework to deal with levies to ensure appropriate oversight
The Levies Bill
- Provides mechanism for financing through levies
- Build in checks: periodic review of appropriateness of levy financing and levels of levies
· Section 1:
· Section 2:
- Council power to impose levies, vary, determine interest payable through notice in Gazette
- Procedures and requirements for:
* notification and motivation
* consultation with industry and members
* consultation with Minister of Health
* seeking concurrence with Minister of Finance
· Section 3:
- Use of funds: Section 18 of Medical Schemes Act
- Approval of budgets
· Section 4:
- Procedures in case of non-payment of levies
· Section 5:
- "Sunset clause": lapsing after 5 years, with ministerial power to re-impose based on assessment of performance
· Section 6:
- performance assessment every five years or when cogent reasons exist
- definition of "performance" to be evaluated:
* efficiency and effectiveness
* benefits to industry & consumers
* other agreed matters
· In summary:
- Establishes effective way of financing Council for enhanced regulation of the sector in interests of members and the country
- Establishes sufficient mechanisms for Government oversight
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