Council for Medical Schemes Levies Bill: briefing & voting

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29 September 2000
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Meeting Summary

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Meeting report

29 September 2000

Relevant documents:
Council for Medical Schemes Levies Bill
Presentation Document: National Treasury [see Appendix 1]

Chairperson: Dr S A Nkomo

The meeting commenced with a presentation by the National Treasury on the Council for Medical Schemes Levies Bill. The aim of the presentation was to highlight the need for such a Bill and the various mechanisms to allow for its successful implementation. The committee proceeded to vote and the parties unanimously voted in favour of the Bill.

The Chair observed that this is a Money Bill and such bills are normally dealt with by the Finance Committee. However due to their enormous workload it was referred to this committee as it deals with issues relating to the health sector.

National Treasury briefing on the Bill
Mr John Kruger, assisted by Mr Shahid Khan, gave the committee an overview of the objectives of the Bill. The major need for the Bill was to increase oversight over medical schemes. He emphasised that due to the enormous cost for government of carrying out this oversight function, the industry itself must bear the cost. Mr Kruger pointed out that the benefit in having the industry doing this is that a link is established between the cost and benefits of the service.

Mr Kruger then proceeded to go through the Bill clause for clause briefly explaining to the committee what each clause deals with (see presentation document). Once the presentation was complete the Chair opened up the floor to questions.

Dr Rabinowitz (IFP) asked why the levy is evaluated only every five years, why not on a more regular basis. Mr Kruger answered that the Council must consider the levy every year. He stated that the Council must furnish financial statements annually to the Minister in order to oversee their activities.

Dr Rabinowitz commented that many medical schemes feel that the burden on them is ever increasing as companies are capping the amounts that they are paying out to schemes. Mr Kruger stated that he does not wish to comment on this as he feels that he is to ill informed about the state of affairs in the industry at present.

Ms Njobe (ANC) asked why there is a need for levies to be varied. Mr Kruger stated that costs and expenditure change all the time. The level of the levies must always be kept relative to the costs.

Ms Kalyan (DP) asked whether the rating of the medical scheme influences the levy imposed. She also asked how the level of interest is determined and if the number of members and the schemes rating influences that. Mr Kruger stated that all schemes pay the same rate of interest and that neither the scheme's rating nor the number of members influence the interest rate. He stated that it is a flat rate.

A member of the ANC asked why no provision has been made for an appeal procedure for medical schemes. Mr Kruger stated that Clause 3(a) and (b) makes provision for schemes to make representations to the Council. The Council must have proof that they did have consultations with the schemes. The medical schemes have the right to go to the Minister to have the performance of the Council assessed.

Voting on Bill
The Chair stated that they would commence with the formal stage in dealing with the Bill. He passed a motion of desirability. The committee agreed to vote on the Bill as a whole.
Rather than clause by clause. The committee unanimously agreed to pass the Bill.

The committee will meet on 2 October 2000 to deal with Chiropractors, Homeopaths & Allied Health Services Professions Second Amendment Bill and the National Health Laboratory Service Bill. The meeting was adjourned.

Appendix 1:



Presentation to the Portfolio Committee on Health
National Treasury
29 September 2000

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
· Bill
- Provides mechanism for financing through levies
- Build in checks: periodic review of appropriateness of levy financing and levels of levies
· Section 1:
- Definitions
· 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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