The Board of Healthcare Funders (BHF) is concerned that the proposed changes to the tax benefits enjoyed by medical scheme members will result in members moving to cheaper options, a practice known as buying down.
The BHF represents medical schemes in southern Africa.
In its submission to the National Treasury on the proposed changes, the BHF says benefits determine contribution levels, and if members buy down, this will dilute risk pooling on different options, which will result in contributions rising. In addition, the BHF says, members will have to fund discretionary benefits out of pocket.
At a recent BHF seminar, Vishal Brijlal, the head of research at the BHF, says buying down has been a problem since 2000.
The Department of Health and the Council for Medical Schemes supported one of the four proposals initially put forward by the treasury to cap the amount your employer may pay towards your contributions without any tax consequences at R300 per beneficiary or R500 if the beneficiary was over the age of 65.
Brijlal says the BHF believes implementing this option would result in more members buying down.
The BHF suggested that the amount be capped at R500 per adult and R300 per child under the age of 21, or R550 per adult and R325 per child, or R440 per beneficiary.
The BHF also pointed out to the treasury that the proposed changes would not help very low-income earners, who do not pay tax.