The Sub-Committee of the Ad Hoc Committee on the parliamentary and provincial medical aid scheme met to receive two submissions to aid the review and amendment of the Act. As of now, membership to PARMED was compulsory but to a very small group of people. As a result of that and changes in salary structures it was unaffordable. The idea was to amend the Act by bringing more members into the PARMED scheme and/or giving the option to current members to choose a medical aid scheme that suited their individual wants and needs.
The first of the presentations was from the National House of Traditional Leaders whose associates had been disadvantaged and excluded because of the existing legislation. Traditional leaders have been left out of the prescribed medical aid scheme and have yet to be included in one. There have been many unfortunate results of this like death and illness which could have been avoided. There were over 8000 traditional leaders in South Africa and their inclusion into PARMED could significantly aid the reduction of the cost of membership.
The second presentation gave an in depth view on the salaries and costing for medical aid for Members of Parliament over the past ten years, from time of the restructuring done by the former Deputy Chief Justice, Judge Moseneke. The question of whether the salary adjustments or the medical aid increases were at fault for the unaffordability was brought to the Members. It was highlighted the continuation of Members on the PARMED scheme incurred a lot of the cost to state but those Members needed to be seriously considered as all current sitting Members would eventually also fall under that membership and its benefits.
The Members found both presentations to be informative and sufficiently detailed. They collectively noted that to bring in more members to PARMED could only happen if it was made affordable for the logical candidates. Membership on a continuation basis could not be ignored as that affected all Members for life. A Member reminded the Committee that everything discussed in the meeting was not mean for final decisions and no submission must be forgotten when this issue would be taken and presented to the Commission.
Members asked for clarification on how many of the members of the NHTL were in full-time positions versus part-time positions; what definition the NHTL would want the definition of public officer bearers to have and what the membership situation with the remaining 45 was.
The Chairperson opened the meeting and welcomed the Members who were in attendance and apologised for having arrived late. She explained that this was a sub-Committee of an Ad Hoc Committee that was established by both houses of Parliament (the National Assembly and the National Council of Provinces). The Members there represented the various political parties and had the responsibility to relay the information discussed to their respective parties.
The Chairperson explained that the understanding of who were political officer bearers was based on who was dealt with by the Remuneration Commission of Office Bearers. This included judges, and so the magistrate and SALGA (South African Local Government Association) had been invited to participate. The National House of Traditional Leaders (NHTL) also had the need to be considered and consulted. PARMED forces Members by virtue of the legislation to fall under this medical aid scheme. Last week it had been discussed that it (PARMED) was affordable up until the restructuring of the salary structure by the former Deputy Chief Justice, Judge Moseneke in 2008. PARMED was a closed scheme and because of that it had a small number of members which meant it was more costly. The idea was that introducing more members and office bearers would help bring down the cost of it.
National House of Traditional Leaders
Inkosi Sipho Mahlangu, Chairperson, NHTL, thanked the Chairperson for the opportunity to present. He explained that the submission he was giving was incomplete as he still awaited input from some provinces.
Inkosi Mahlangu gave a list of Acts that composed the legislative mandate for traditional leaders. These included the Constitution of the Republic of South Africa No. 108 of 1996 (chapter 12 and schedule 4) and the Tradition Leadership and Governance Framework Act No. 41 of 2003. The Ad Hoc Committee was mandated to enquire into and make recommendations on the following:
- The tariffs of members of the PARMED medical aid scheme;
- The need for and possible options with regard to PARMED and other competitive medical aids for Members of Parliament;
- The necessity of introducing amending legislation;
- The impact on retired members of PARMED; and
- Outline findings of customer satisfaction/consumer surveys conducted.
In April of 1975, the then acting President of the Apartheid Government passed the law of the Parliamentary and Provincial Medical Aid Scheme Act which was later amended by Act No. 8 of 1996. To date, all Members of Parliament have been subjected to the legislation establishing PARMED and have enjoyed all the medical aid benefits accruing from the scheme. The mandate of the Independent Commission for the Remuneration of Public Office Bearers (ICRPOB) was to make annual recommendations relating to the salaries, allowances and benefits, as well as resources required by public office bearers to enable them to perform their respective duties effectively. Traditional leaders have experienced challenges with regards to the ICRPOB Act No. 92 of 1997 and Act No. 20 of 1998 due to the insufficient coverage of traditional leaders’ definition in the said pieces of legislation and therefore, exclusion from the medical aid scheme. The definition has since been addressed but there was no medical aid scheme for traditional leaders.
Traditional leaders were never remunerated at a total remuneration package of 100%; they have always been short of medical aid, pension fund and motor allowance, which all constitute the non-cash component part of the remuneration package. The salary levels of traditional leaders have also remained a sore point that has remained unsolved. The question was whether PARMED would continue to be compulsory and restricted in its membership. The Remuneration Commission’s recommendations for the 2009/10 financial year were set out in the Government Notice No. 1078 of 12 November 2009; paragraph 20 stated that all kings, queens and senior traditional leaders should be members of the Government Employees Medical Aid Scheme (GEMS). To date, none of all the traditional leaders were members of GEMS simply because it was for government employees whereas traditional leaders were defined as public office bearers and not employees. Traditional leaders consisted of the following:
- Kings and Queens;
- Senior traditional leaders;
- Headmen and Headwomen;
- Traditional council members; and
- Royal family members.
The impact of traditional leaders not belonging to any medical aid has been felt. Some Kinds and Queens have passed away due to the lack of the benefit, like Morena e Moholo Mota and the former sitting Deputy Chairperson of the NHTL, Kgoshi Sefogole Frans Makgeru. Those who have chosen individual medical aid schemes found themselves subjected to high contributions by private medical aid schemes.
Inkosi Mahlangu asked if this initiative by Parliament arose as a result of the litigation brought to the Western Cape High Court on the constitutionality of PARMED or because PARMED was imperilled by its restrictions. The NHTL had approached PARMED between 2012 and 2015 with the proposal for consideration of traditional leaders to join as members but this was denied because of their exclusion by the legislation. He continued to say that the same process should be initiated with the pension fund as it was a precedent being set here.
The NHTL supported the policy review to include all traditional leaders to the medical aid. This review and subsequent inclusion would address the plight of traditional leaders and restore their dignity. There were a total of more than 8840 traditional leaders in the country. He gave the breakdown of salaries for different rankings in the category of traditional leaders as well as the salaries for full time positions within the NHTL and sitting allowance per meeting for part-time members.
More than 20 million South Africans resided in traditional communities. Traditional leaders had existing structures that would support the review process as soon as it commenced, this included:
- Kingship/Queenship councils (including the Principal Traditional Leader);
- NHTL, the seven provincial houses and the local houses of traditional leaders;
- 829 traditional councils;
- More than 8000 headmen/headwomen councils (traditional sub-councils); and
- Interested parties that support and pay allegiance to the institution.
Briefing by Members’ Support Services
Linda Harper, Manager at Members’ Support Services (MSS), explained that she would give a financial breakdown for each year in the past ten years (2008-2018). The information given would include the salary of Members of Parliament, the medical aid cost for Members and a comparison to the medical aid cost for Members with dependents, the state contribution and theoretical Member contributions.
Prior to 2008 Members were paid on a cost-like benefit basis in which Members received the set salary and additional allowances and subsidies for travelling and medical aid. The deemed state contribution was changed to be based on the medical aid cost for a Member plus one adult and two children dependents. On this basis in 2008, medical aid cost amounted to R6094 per month and government subsided R4063 of it and thus the Member contribution was R2031. Over the past ten years, medical aid as a percentage of total remuneration has grown from 10.23% to 14.45% in 2018. In 2018, the medical aid cost for the deemed basis amounted to R13 656 with a state contribution of R6446 which left R7210 to be paid by the Member. It was important to note that for the sake of the presentation, the 5% percentage increase in remuneration for the current year was an assumed figure. The percentage of state subsidy was dependent on the amount of years the Member had served. With Members who had served one year the state subsidy was at 31.67% whilst a Member who had served for eight years or longer received a state subsidy of 66.67% - which was the highest state subsidy possible. If a Member had served for eight years or longer in 2018, the actual contribution from state towards their medical aid would be R9 104.
In summary, the salary increase for Members – with 2018 projected at 5% - from 2008 to 2018 has amounted to 58.68%. The medical aid increase for the same period of time was at 124.09%. Currently, there were 185 Members who had no dependents on the scheme. 93 Members had one dependent, and 77 Members had two to three dependents. A small percentage of Members were in excess of three dependents on the medical aid scheme.
Ms Harper explained the value of continuation membership with the example of medical aid cost for a Member with one adult dependent in 2018. This cost would amount to R10 636 per month. If such Member had served eight years then the state contribution per month would be R7 091, leaving R3 545 to be paid by the Member. The annual state contribution amounts to R85 088 and the future value of benefit for 15 years – assuming an annual cost increase of 10% - would amount to R2 703 584.
Continuation Members as of October 2018 and state contributions:
- Continuation Members amounted to 952;
- 474 adult dependents; and
- 289 child dependents.
- Monthly state contribution was R5 135 470;
- Monthly Member contribution was R3 104 714; and
- The total paid in respect of continuation Members was R8 240 184 per month.
Ms Harper said that the areas for consideration would be whether salary adjustments were the problem or the tariffs on medical aid. The whole medical aid issue had not been addressed properly by the Commission which was partly why it had come to this. The total cost to company was intended to create a flexible remuneration structure for Members but in doing that while there was a compulsory membership to scheme which was expensive, the idea of flexibility was then nullified as Members were forced to pay even though there was a flexible type of remuneration structure. She highlighted that the continuation type of membership had to be considered when deliberating if the compulsory nature of the membership should continue or not.
The Chairperson thanked Inkosi Mahlangu for the presentation. She indicated that after all the submissions had been received, the Committee would present its findings based on every parties’ input.
Dr C Mulder (FF+) said that currently PARMED was a closed scheme with restricted membership. One of the options was to bring in more members to the scheme and for such logical candidates needed to be determined. However, this did not mean bringing in more members would be the only way to solve the issues surrounding PARMED. The Commission would make the recommendations that would go to the President. He explained that the initiative to address PARMED came as a result of pressure brought on from members of the scheme. He asked for clarification on how many of the members of the NHTL were in full-time positions versus part-time positions.
Mr S Tleane (ANC) clarified that this initiative was not by PARMED; PARMED was an entity of Parliament and in this particular incident Parliament as a whole had decided to take this initiative. It was important to hear everyone’s’ perspective as there was a need to accommodate those who were not previously accommodated. The submission from the Remuneration Commission did not specify GEMS or PARMED but said that for the purpose of justice, traditional leaders should fall under some kind of government medical aid. Once there was agreement on the principle for the way forward, the finer details would be determined.
Ms S Kaylan (DA) said that National Treasury was responsible for paying out salaries and allowances, if traditional leaders were to be brought into PARMED then Treasury would need to subsidise it as it does for Members of Parliament and so impact on the fiscus would need to be looked at. She asked what definition the NHTL would want the definition of public officer bearers to have.
The Chairperson explained that they (traditional leaders) were willing to become members of PARMED as it would make life better for them but this was if PARMED was affordable.
Inkosi Mahlangu said that the NHTL was moving to have most of its members as full-time and not part-time because of benefits like a pension fund. A definition that would be preferred was one that appreciated the structures that the NHTL, which would include traditional councils members and others that have been previously left out.
The Chairperson said that she was happy with the submission and if more input was received from the other provinces, it would be welcomed and appreciated.
Members’ Support Services
The Chairperson said that when looking at the contribution from current Members and former Members, they had been very vocal and wished to participate in every meeting as they wanted to protect their benefits. The Members were assured that everyone’s needs were of vital importance and no one would be jeopardised.
Ms Kaylan said that the membership breakdown given totalled to 355, she asked what the membership situation with the remaining 45 was.
Ms Harper said that she had not gone into the details of those Members with four or more dependents as the amount varied. There was one Member who had nine dependents.
Dr Mulder said that the state’s contribution did not keep up in terms of the salary and another issue was that on the payslips there was no detail given on the deductions. He noted that in 2016 when there was a 0% salary increase there was a decrease in the medical aid cost; however over the next two years Members suffered as there was a 10% increase in medical aid cost in 2017 and then a 15% increase in 2018.
Ms Harper said that in addition to what Dr Mulder said, the cost of an adult dependent decreased but the cost of the primary member increased. This only benefited those with an adult dependent.
Dr S Thembekwayo (EFF) said that the general impression of the view on PARMED was that it was expensive and unaffordable. Without the establishment of this Ad Hoc Committee Members would not have known about the breakdown of those costs and would continue to only see the money that was deducted from the payslip with no explanation.
Mr Tleane thanked Ms Harper for the presentation as it further confirmed the problem being experienced. Smart and creative solutions were needed to be presented to the Commission in a sensitive manner with a realistic approach and outcome.
The Chairperson said a group of people will need to be organised to present to Judge Musi.
Dr Thembekwayo said that Members should have the right to join a different medical aid as the full state contribution only happens if a Member has served for eight years, those who have served one or two received much less benefits.
Dr Mulder said that Members who only served one year at Parliament still received the continuity benefits that would not be offered with any other medical aid scheme. He added that the idea was also that most Members served at least one full term (five years) in Parliament which meant that half of the cost would be subsidised.
Mr Tleane said that when people paid less for the membership to medical aid schemes that the quality of service and benefits also became less. The quality of PARMED must not be brought down in attempt to make it affordable.
The Chairperson asked the Committee how the National Health Insurance (NHI) bill would affect PARMED.
Dr Mulder responded to say that at this moment there was pressure being placed by their colleagues to resolve the issue of PARMED. The NHI had not been completed yet and therefore its impact could not be known. PARMED needed to be resolved regardless.
The Chairperson noted that next week there was no meeting.
Dr Thembekwayo reminded the Members that the EFF was not changing its submission and that what was discussed today was not the final solution to the problem.
The Chairperson said that the EFF’s submission would not be left out and was being taken into consideration. It would also be presented with all the other submissions to the Commission.
The meeting was adjourned.
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