The government has taken a significant step toward reshaping the country’s healthcare financing landscape, with the drafting of the Health Insurance Bill officially approved. The proposed legislation is set to pave the way for medical aid funds to adopt a “for-profit” business model, signaling a shift from the traditional non-profit framework that has long defined the sector.
This development aims to accommodate medical aid schemes that seek to operate as commercial entities, potentially increasing competition and innovation within the industry. Proponents of the move argue that it could attract more private investment into the healthcare sector and improve service delivery for patients.
It is understood that the proposed legislation is set to provide a regulatory framework that balances profit-making incentives with the protection of policyholders.
In its newly released annual report 2024, the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) states that there is currently no specific legislation governing the Medical Aid Funds (MAF) as a unique service in the market. However, NBFIRA says, the Medical Aid Funds Bill is going through Government legislative approvals. It says the Regulatory Authority continues to regulate the sector under the NBFIRA Act and on the conditions set out in the letters of exemption issued to the medical aids.
“It is of note that the Medical Aid Funds Bill referred to above is premised on the ‘not for profit’ model only, hence the development of Health Insurance Bill for the “for profit” entities has already been approved,” NBIFIRA says. It notes that “ The Health Insurance Bill drafting has been approved and is intended to accommodate medical aid funds that will adopt ‘for profit model’ for their business.”
Recently, the Botswana Medical Aid Society (BOMAID) failed to prove to Consumer and Competition Authority as well as the courts that it falls within the limited economic activities exempt from the oversight and regulation of the 2018 Competition Act.
In a matter that has been ongoing for several years, BOMAID after it had lost a case brought by Competition Authority which sought to investigate allegations of anti-competitive conduct. BOMAID then approached the Court of Appeal in hopes that it would overrule a High Court decision made on November 4, 2022, which determined that BOMAID is an enterprise under the Competition Act 2018, and therefore subject to the Act.
The Court of Appeal found that while BOMAID may not have profit-making as its primary objective, it intended to grow as a market player in the provision of medical aid funding. By investing in for-profit businesses, some of which provide medical services, it engaged in business for gain.
Additionally, the Court of Appeal noted that BOMAID’s direct and indirect investments, by way of shareholding in services provided by market players, allowed the company to use its advantageous position to indirectly compete in the health services market with those who are already health services providers of its members and who look to it for the market.
“Profit making may not be its primary objective but its activities are market-related and fall nowhere within the criteria upon, which the cases relied upon by the appellant are based. BOMAID has therefore also failed to show that it falls within the exemption contained under section (3) (a) of the Act. In the premises, the appeal cannot succeed,” the Court of Appeal ruled.
