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Tariff Freeze in Medical Aid Societies May Choke Healthcare Insurance in Zimbabwe

Published: 1/16/2008 by Roger Goodman, Robert LaCount, Rob Barnett, Sean Biggs, and Margaret Rhodes
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Medical aid societies in Zimbabwe are facing increasing deficits as they try to cover standard and private hospital packages, with the National Incomes and Pricing Commission (NIPC) expected to back a tariff freeze.

Global Insight Perspective



The deficit is mainly due to the NIPC's rejection of tariff increases at the end of December 2007, with hospitals and doctors having already adopted the new rates.


The shortfalls in covering medical treatments are likely to be over three-quarters of a standard hospital bill, with specialist fees amounting to about 95%. However, the NIPC has sparked confusion by stating that fees charged by all medical practitioners should be approved by the regulatory body, though this is not being implemented.


Healthcare costs, driven by soaring inflation and inadequate infrastructure, are at their highest in Zimbabwe. Without government intervention and a pact between the bodies controlling medical practitioners and insurance and managed care providers, healthcare financing would be difficult to sustain.

Zimbabwe's medical aid societies are seeking relief from the government following the National Incomes and Pricing Commission (NIPC)'s decision to freeze tariffs at December 2007 levels. The Herald reports that the aid societies find themselves in the middle of a "three-way squeeze" between medical practitioners, their members, and the government. Medical practitioners have increased tariff rates for consultations and specialist treatments along with private hospitals. Members, on the other hand, have already expressed concerns over health insurance contribution tariffs, which have recorded significant rises in the past two years, depleting disposable incomes. This has subsequently spurred the NIPC to make this decision regarding tariffs.

In its response, medical aid societies are highlighting the increasing gulf in covering treatments through the existing tariff rates. In the face of hospitals' adoption of the new charges, the shortfall is all the more glaring. As noted by the source, medical aid societies were seeking a 265% rise. In making a case, medical aid societies claim that their members will have to foot a greater proportion of healthcare bills under December rates; they also say that a hospital visit may end with a three-quarter shortfall, though with specialist fees the deficit would exceed 95%. They also argue that freezing tariffs will not necessarily bring about a reduction in healthcare costs, claiming that they are driven by hospitals and doctors, with the latter adopting Zimbabwe Medical Association (ZIMA) approved rates. Furthermore, there are also signs of a potential drop in health insurance subscriptions.

Outlook and Implications

Medical aid societies in Zimbabwe work as a buffer to support payment shortfalls in medical treatments for lower- and middle-income groups working to "average out health costs". CIMAS Medical Aid Society, one of the largest firms, late last year announced a 350% increase in contribution rates (source: Financial Gazette), sparking debate over rising health costs and premiums for health insurance. This resulted in many members cancelling subscriptions and withdrawal from its schemes; CIMAS's actions were not isolated. Tariff fees are dependent on negotiations between ZIMA, the National Association of Medical Aid Societies (NAMAS), and the Private Hospital Association, among several other bodies. There is also ample confusion over whether the NIPC's decision will be binding for other members of the medical community, such as doctors and private hospitals.

Hyperinflation, essential drug shortages, and a crumbling infrastructure are piling on the pressure for the patient population of Zimbabwe. CIMAS's decision reflects the current mood in the industry, with rising payment shortfalls for treatments. However, the NIPC's decision has thwarted these efforts, plunging the fragile healthcare financing system into potential disarray. Already, the payment shortfalls have led to members having to themselves bridge the gap through out-of-pocket payments, and this is in danger of increasing in the forthcoming months. The government is expected to intervene and streamline the current pricing structure among the industry's stakeholders. This will provide greater clarity, and in the event of rising costs, price reductions will be carried out uniformly throughout the medical community.
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