CompCom Concludes Negotiations on Medical Aid

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DUDU RAMELA: I’m Dudu Ramela, standing in for Jimmy Moyaha tonight. Let’s delve into this issue. More than 30 members of the Board of Healthcare Funders [BHF] have faced a setback in their efforts to persuade the Competition Commission to allow collective negotiations with healthcare providers on matters such as pricing and prescribed minimum benefits, among other concerns, as they attempt to reverse the decline in the medical aid sector.

The Commission has denied the BHF’s request for exemptions from Section 4 of Chapter 2 of the Competition Act, which prohibits agreements between competitors that could reduce or hinder market competition.

We are joined by Mapato Ramokgoba, divisional manager of market conduct at the Competition Commission, who will help us understand their decision. Thank you for being with us this evening. Can you explain what the BHF was seeking?

MAPATO RAMOKGOBA: Good evening, and greetings to your audience. Let me set the stage for this discussion.

In 2003, the commission determined that collective bargaining within the healthcare sector was anti-competitive and effectively collusive.

This situation pertained to industry organizations like the BHF collaborating to negotiate and establish healthcare pricing.

This practice was ruled unlawful. However, this ruling led to an unintended pricing void in the market, leaving no clear method for determining healthcare costs. Medical schemes had to negotiate with individual private healthcare providers instead of collectively to establish prices.

Following this, the commission undertook an extensive inquiry called the Health Market Inquiry [HMI], chaired by former Chief Justice Sandile Ngcobo.

A key finding was that the 2003 ruling had unforeseen adverse consequences.

It was suggested that a different body be created to regulate price determination, supported by a strong regulatory framework.

This highlighted a gap in the market. After the HMI report was published, we initiated discussions with various stakeholders, including the BHF, the Department of Health, and the Council for Medical Schemes (CMS), to develop an appropriate framework. During this time, we received multiple individual applications, not just from the BHF, but from other organizations as well.

Given that this issue is systemic rather than merely isolated, we believe the most effective way to address it is through a collective framework for direct price determination, overseen by the CMS or the Department of Health. We are in continuous discussions with all relevant stakeholders to shape this process.

Thus, our rejection of the BHF’s application does not mean we are disregarding the issues; rather, we are working toward a collective solution supported by an appropriate regulatory framework. I hope this clarifies the matter.

DUDU RAMELA: Thank you for your insights. For those of you who have medical aid, what were some of the findings regarding consumers? Did the Competition Commission take consumer considerations into account?

MAPATO RAMOKGOBA: Absolutely. A major concern related to the absence of a price determination framework is that consumers are often left uncertain about their expenses. There is a significant lack of price clarity.

Consumers often do not know what their medical scheme genuinely covers, which is a primary issue we are addressing.

However, as I mentioned, to resolve these challenges, we cannot grant exemptions to just one association. There are many other organizations in the medical scheme sector, as well as administrators, and some schemes are not affiliated with these associations.

If we allowed a single exemption for the BHF, it could disrupt market equilibrium. We need to ensure fairness. Therefore, we are dedicated to creating a collective solution that will systematically address these challenges within a structured regulatory framework.

DUDU RAMELA: Thank you very much for your time this evening. Mapato Ramokgoba is the divisional manager of market conduct at the Competition Commission.

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