Government Employee Housing & Medical Schemes: progress, effectiveness, pricing; Public Service Commission Amendment Bill: deliberations

Public Service and Administration, Performance Monitoring and Evaluation

02 November 2016
Chairperson: Ms R Lesoma (ANC)
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Meeting Summary

The Committee was briefed by the Government Employee Housing Scheme (GEHS) and Government Employee Medical Scheme (GEMS) on their effectiveness, target markets, progress and financial affairs. Although a new housing allowance had been introduced in 2004 it had not translated into increased home ownership among public service employees, and so the GEHS had benchmarked with other employers, to try to come up with similar housing-assistance schemes. Housing schemes were intended to address barriers to home ownership and the GEHS sought to allow all government employees to have access to affordable housing opportunities. The housing allowance was currently R1 200 per month and a savings facility effectively compelled employees who did not own houses to save a portion of their housing allowance to use for future ownership. It also provided a profiling service, to help address specific needs, and it negotiated with banks to arrange access to subsidies and grant access to loans. Rental housing and facilities and housing supply were also covered. The Scheme was now consolidating, with project management support, and there was a strong focus on employees. Around 1.1 million employees could access housing allowances, and the GEHS had a partnership with the Public Investment Corporation. There was advocacy work ongoing and a Call Centre, and HR officials were being trained. Institutional arrangements were being finalised. Members asked how the Scheme would operate for a married couple who were in the public service, how it could detect fraud and one Member questioned how, with such high levels of fraud, the Department could continue with schemes such as this as they would beggar people with their own money.

The Government Employee Medical Scheme was about to run according to a new design that must still be approved by the Council for Medical Schemes. A task team had been appointed to renew the aged mandate. The GEMS operated within the Medical Schemes Act and must be governed by a board of trustees. It focused on affordability, to drop the percentage of healthcare spending, a good understanding of member profiles and need, promoting effective disease management, and partnerships to bring about innovative methods and practices. Increases in claims were currently above estimates because of higher numbers of hospital admissions. Members felt that the presentation was not focused on the areas that it wanted discussed, and given that the Committee was very short of time, it was suggested that a public hearing be arranged for early next year to compare pricing models. Members asked how the reported growth of the scheme was affected by the growth of fraud, asked about appointment of case managers, how it would address people signing up then rapidly de-registering, and asked that questions about both GEHS and GEMS be responded to in writing.

Members briefly discussed a proposal that clause 2 of the Public Service Commission Amendment Bill be changed, to create greater certainty around renewal of a Commissioner's appointment. The term “renewal” was in dispute. One Member pointed out that this very issues had been ongoing for around a year, and urged that a decision be made soon. It was decided that the Committee should discuss this with the Minister, and aim to reach finality on the issue and the Bill very shortly.
 

Meeting report

Government Employee Housing Scheme (GEHS) briefing
Mr Joseph Leshabane, Head: Government Employee Housing Scheme, said that he did not need to take Members through the first part of the presentation to explain more about what the public service did. The introduction of the new housing allowance in 2004 had not translated into increased home ownership among public service employees. The GEHS benchmarked with other employers to try and understand what they were doing to assist their employees with housing. The scheme that the GEHS designed is essentially no different to what other employers were doing to assist their staff with housing. Given the large number of public servants, they constituted the largest part of the gap group, and the whole rationale behind establishing the housing scheme was to address barriers and increase home ownership on a sustainable basis. The GEHS (also known as the Scheme) resulted from a collective agreement to establish an employee housing scheme. It was signed on 27 May 2015. There was a defined vision within the Scheme, to see all government employees having access to affordable housing opportunities. The Scheme is a comprehensive response to all housing related issues for government employees.

The first programme of the Scheme relates to the housing allowance which is currently R1 200 per month. A savings facility has been introduced, whereby those employees that do not own houses are compelled to save a portion of their housing allowance in order to assist them, in the future, to get access to home ownership. The Scheme empowered employees through education and housing advice.

The second programme provided a profiling service so that any employee who is interested in achieving home ownership is profiled in order to help address his or her specific needs. The third programme is to do with affordable housing finance. The Scheme negotiates with banks and arranges access to subsidies, makes payroll deductions to support employees and grants access to loans. The fourth programme relates to rental housing and the fifth programme is facilities and housing supply.

The next phase of the Scheme is consolidation, once the entity is in place. The Scheme provides benefits to employees, to the government as the employer, and the benefit of increased productivity and job satisfaction. There is a project management office dedicated to implementing the Scheme on an interim basis. The programmes that had already been implemented included the housing allowance, the savings facility and the customer support service. All human resource units in all departments across the country have been trained and orientated on the Scheme, which is focused on employees.

There are about 1.1 million employees who can access housing allowance by virtue of being between salary level 1 and level 10. The Scheme arranges financing for employees. One of the major steps taken was to enter into a partnership with the Public Investment Corporation, which invested just over R11 billion to assist in enabling delivery of affordable housing finance. That facility came into effect in February 2016.Employees had been able to access home loans through the home loan facility, and some had already been approved. Employees would be able to get access to their savings only when they wanted to achieve home ownership. There had been mixed feelings about access to the savings, but most employees are pleased to receive a payslip which reflects how much money has been saved for housing.

The Call Centre has also been activated and is running at full capacity so that employees can register. Scheme employees were going around the country to talk to government employees and had already covered 22 national departments and 23 provincial departments. It was also training officials dealing with HR in the various departments. There had been over 51 training sessions, including just under 2 000 HR practitioners. It was vital to involve the practitioners, because the Scheme is an employee benefit scheme and HR was an important service delivery agent.

The Scheme is new and is implemented incrementally, and there will be a continuous outreach to employees. There is large demand for the Scheme officials to go out and explain the benefits. When the housing allowance was implemented, there was a requirement for employees to provide proof that they are home owners which was sometimes problematic. Work was currently under way between the Department of Public Service and Administration (DPSA) and the Department of Human Settlement (DHS) and National Treasury (NT), following an instruction from Cabinet, to finalize the institutional arrangements and once that has been finalized the resourcing of the work will be resolved.

The Acting Chairperson thanked Mr Leshabane, clarifying that various people had raised some problems that they were having with the Scheme so it was important to get a briefing, which did seem to show progress.

Discussion
Mr A van der Westhuizen (DA) asked how the Scheme helps married public servants who are looking into owning a home

Mr F Marais (DA) asked how the GEHS detects fraud.

Ms Z Dlamini-Dubazana (ANC) expressed her anger and annoyance that the Department of Public Service and Administration (DPSA) continued to “do its own thing” even after meeting with this Committee. Government departments were making beggars out of public servants, with their own money. The  initial intention was to come up with a subsidized programme that is going to uplift public servants and to make sure that there is an enhanced People’s Housing Programme that was responsive to the needs of public servants in particular. However, DPSA had failed to do that. She asked where the DPSA received the money that the employees are saving, and how the savings will be allocated to the employees. She also asked if there was a policy that guides the allocation of the savings. She disagreed with the Acting Chairperson and said that she could not see any improvement.

Mr M Ntombela (ANC) mentioned that the presentation highlighted the benefits of the scheme. The good was usually matched with the bad, and it was often the negative issues highlighted that cajoled departments into coming up with innovations that would improve the scheme.  and whenever there are good things, there must naturally be bad things and it the negative issue that will cajole the Department into coming up with innovations that will help improve the scheme. He asked what were the chances of an employee taking advantage of the private arrangements that he or she does with the owner of the house, and having money split between the tenant and the owner. Were there any strategies designed to address such problems?

Ms W Newhoudt-Druchem (DA) asked for clarity on how exactly the home loans worked, and who covered the cost of the legal fees during the process of trying to buy a house and getting a bond approved.

The Acting Chairperson agreed with Ms Dlamini-Dubazana that this had huge impact on public servants, and asked what would happen if the public servant were to lose his or her job, and whether the scheme would then discount the individual.

Mr Leshabane explained that the design of the Scheme was a  joint working between the DPSA, Department of Human Settlements, National Treasury, National Housing Finance Corporation (NHFC) and Department of Public Works (DPW). During the initial phases of the Scheme the office proposed that the structure of the housing allowance be changed to offer a sliding scale, so that the higher-paid public servants would receive little housing allowance, but that had not been approved. The final decision was the outcome of the bargaining with other departments and entities during the collective initial discussions. If a married couple worked for the state only one would be entitled to receive the housing allowance, but if one of the partners lived in a different district then both spouses would receive the funding allowance. The portion of the money that had been saved applied only to those employees who did not own their own properties, but were tenants, and the saving option was intended to assist them in accumulating assets for the particular purpose of housing. This funding could assist them to pay their attorneys, evaluation and initiation fees, and would not necessarily have to be used for a deposit. The money is automatically deducted from the payroll of the employee.

Mr S Motau (DA) asked if it was possible for an employee to save R1 200 every month.

The Chairperson noted that, in view of the shortage of time, further responses could be sent to the Committee in writing, by Friday 4 November 2016.

Government Employee Medical Scheme (GEMS)
Ms Nontobeko Ntsinde, Chairperson, Government Employee Medical Scheme, noted that she would be able to speak to the benefit design for 2017, although it had not yet approved by the Council for Medical Schemes (CMS) so that the information must be treated with sensitivity and confidentiality.

Ms Z Dlamini-Dubazana (ANC) raised the point that the Committee was not alone in the meeting, and that the media and public were also present, and suggested that sensitive information should not be revealed during this meeting.

Ms Ntsinde took the point. She noted that GEMS had been advised to review its mandate since it is now ten years into existence and a task team has been appointed for this specific task of reviewing the mandate.

Dr Gunvant Goolab, Principal Officer, GEMS, noted that GEMS operates within the Medical Schemes Act, 1998. Any Scheme under this Act must be governed by a board of trustees. The employer, ,who in the case of GEMS is the Minister of Public Service and Administration, appoints 50% of the trustees, and six trustees are elected by members. The mandate of GEMS is to ensure that there is adequate provision of healthcare coverage to public service employees, which will be efficient, cost-effective and equitable, and to provide further options for those who wish to purchase more extensive cover.  The scheme focuses on four key areas, namely:

  • Affordability: Aimed at making healthcare spending a progressively smaller portion of household income, while minimising member out-of-pocket spending on healthcare for government employees from all income groups
  • Understanding members' profiles and needs: promoting healthy behaviours through well incentivised loyalty programmes that encourage members to lead healthier lives, minimising their risk of developing lifestyle related diseases
  • Healthier members: Promoting effective disease management of members and improving the clinical outcomes so that they remain healthy and productive members of the public service
  • Partner to Organs of State: Working together with government body leading industry players, both local and international, to bring about innovative methods and leading practices in healthcare for the ultimate benefit of society.

A review of claims in the fourth quarter of 2015 and first quarter of 2016 showed that GEMS had a negative experience which adversely impacted on the  2016 projections. The increase in claims is currently above the budget estimates and is primarily driven by a high incidence of hospital admission.

The Chairperson interrupted at this point and asked that the GEMS focus on the guidelines of the Chairperson and address the specific areas that the GEMS was asked to cover.

Mr Christof Raath, Insight Actuaries, had been requested to accompany GEMS to the meeting because the agenda referenced the pricing model of GEMS. It was noted that the Medical Schemes Act is based on the principle of social solidarity. There are a host of regulatory requirements surrounding medical scheme premiums, most of them being guided by the Council of Medical Schemes.

The Chairperson interjected that the presentation was not really addressing the fundamental issues that GEMS had been asked to address. She proposed that a public hearing should be held at the beginning of 2017, and that other medical schemes be invited, in order to compare pricing models. .

Discussion

Mr M Ntombela (ANC) said that some employees could not get insurance cover for certain illnesses. He asked how many employees had seen this, and what effect it had on their well-being and effectiveness as employees. The GEMS is said to be particularly badly affected by fast-growing fraud, and he wondered how to reconcile the concept that the Scheme had fraud, and the idea that it was a thriving scheme, as the presenters seemed to suggest. Furthermore, he wondered how the fraud cases were dealt with.

Ms Dlamini-Dubazana (ANC) mentioned that there was a problem with case managers, which was affecting the fibre of the sector. She wondered who appointed them. 

Mr A van der Westhuizen (DA) asked what it the GEMS planned to do about members who signed up for the scheme, claimed and then deregistered shortly after having claimed. This was an abuse of the Scheme.

The Chairperson did not think that GEMS was doing much to promote awareness. She asked where it positioned itself with the National Health Insurance.

She requested that GEMS should respond to the questions in writing since the Committee was pressed for time. She asked that Mr Raath make some brief comments.

Mr Raath mentioned that Insight Actuaries, an independent company, had designed a model that assessed the value of money of any medical scheme. The company had taken a sample of 100 000 families and real claims and had simulated claims across all medical schemes in South Africa,  to see which claims would be paid and which claims would be rejected.

Public Service Commission (PSC) Amendment Bill
Ms Noluthando Mpikashe, Parliamentary Legal Advisor, reported that she had received only one submission from Members on the Amendments. This was in relation to clause 2, amending section 4 of the PSC Act.  mentioned that she only received one submission from the Committee members regarding issues raised by members and the contribution from the Committee which is in clause 2 of the Bill and Amends Section 4 of the Act.

The Member felt that the way that the clause currently read was not clear enough and did not prevent the President from renewing the employment of the Commissioner.

The Chairperson said that in fact other Members had also made submissions, because they discussed other aspects of the Amendment Bill during the last meeting. There seemed to be confusion on the meaning and definition of the word “renewal”, which, as far as she knows, did not have any special legal definition.

Mr M Dirks (ANC) remembered discussing the Bill about a year ago, before he left the Committee, and was surprised to find that the matter had still not been finalised. He thought that the amendments being suggested would only complicate the Bill, and went on to mention that the amendments suggested were serving to complicate the Bill and had been doing so for over a year.

The Committee Content Advisor mentioned that this submission related to the amendment of section 2, which had to do with the renewal of the contract of Public Service Commissioner.  The renewal and recruitment processes were different and should therefore be treated differently. He requested that Members take a position soon on the Bill because it had been a year in the deliberation stages.

The Chairperson suggested that the Committee must discuss these issues at the next meeting, and that they should be patient and raise any grey areas when the Minister was present.

The meeting was adjourned.

 

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