South Africa’s insurer says it has reached a deal with the country’s insurer to begin paying insurers for new patients in the coming months, as the government struggles to make ends meet on the backs of its population.
The company’s chief executive said the deal will allow insurers to cover new patients as soon as July 15, and it will not have to wait for the next government to pay out in the future.
But the agreement could still be subject to a number of legal hurdles, including how much it will cost to provide the new coverage, and how much additional revenue it will generate for the government.
The insurer, HECO SA, said it has agreed to pay insurers 1.5 billion rand ($1.5 million) to cover 1.6 million new enrollees.
It will pay out around 80 million rand in the first year.HECO has said it will begin paying out in July and will cover 1 million new patients, with another 700,000 expected to be covered in 2019.
It said it expects to reach 2.2 million new customers by 2026, and expects to cover 500,000 new patients.
The government has been trying to reduce its reliance on public sector health insurance and has struggled to pay for it.
Herco SA has said that as of the end of 2019, it has a total of 3.7 million employees and a deficit of about 3.3 billion rand, of which 2.5bn rand was for salaries and benefits.
It also says that its financial position is stable, with the company having earned an operating profit of about 4.7 billion rand in 2017.
In an interview with the Associated Press, chief executive Phelim Kine of HECOM SA said the company had agreed to provide new insurance coverage to its new customers and had received commitments from insurers in several states.
“We’re ready to begin offering coverage to our new customers,” Kine said in the interview.
“The process will take time, but we will soon.”
He said the insurer had received several hundred requests for more money from insurers for coverage, but the decision to make the deal was taken at the government’s request.
“There are no issues in terms of what is being paid, the quality of the coverage or how much we’re going to get out of it,” Kines said.
The new agreement comes amid mounting concerns about the economy and inflation.
South Africa’s inflation rate hit a six-year high of 6.8% in May, and unemployment is at its highest level in five years.
The country has been grappling with a shortage of basic goods, and many of its residents have left the country.
The number of people who are without healthcare has been increasing since last year, with about 10% of the population lacking access to healthcare.
The country is struggling with the consequences of the country being saddled with huge debts.
Kine said that it is too early to tell how many South Africans will opt for HECOSA’s insurance option.
“It’s a good option, and we’re glad that we have the option,” he said.