THE impact of the envisaged national health insurance (NHI) on medical schemes will depend on the cover it offers.Players agree that medical funds will probably look different in future and follow an insurance model.The impact on medical funds will also depend on whether public healthcare facilities can be straightened out in the years ahead.Improvement of public healthcare is core to the changes envisaged.The first NHI policy document recently approved by cabinet pointed to the establishment of a fund to which working people will make compulsory contributions. All (the unemployed and retired) will then have free access to certain healthcare products and services, provided by the state or contracted-in service providers in the private sector.Dr Jonathan Broomberg, chief executive of Discovery Health, the biggest open medical scheme, said members will retain their membership for at least the 14 years during which the NHI is introduced, while the state's services are being developed.But he expects medical schemes to lose members over time."This will, however, depend on the contributions that have to be made to the NHI and the benefits available. While the NHI system is being developed, medical fund products and coverage will adjust to the changing environment."To stay ahead, innovation will be required in order to offer relevant and affordable products and services to supplement those of the NHI."Mark Arnold, the principal officer of the Resolution Health medical scheme, which targets younger persons, said the NHI will offer access to certain services only. "Non-essential products will not be included in the national healthcare package," he said."That's why we expect a situation where one will receive basic healthcare from the NHI and then have a top-up medical fund."He believes there are two scenarios:Low-income groups will cancel their membership of medical funds and use public services alone. This will depend on the state's ability to improve its infrastructure and offer high quality medical care that meets expectations. Medical funds could then lose up to 40% of their current membership.The public sector will not have sufficient resources and the quality of care will remain poor. Then people will be prepared to spend more to belong to private medical funds, over and above the national health levy they have to pay. Arnold also believes medical funds will move increasingly to insurance models.Currently, medical funds are highly regulated. Certain prescribed benefits have to be provided, benefits may be offered only in a particular way and no discrimination is permitted with regard to health or age."Because medical funds will complement the NHI and will be there for non-essentials, they will be offered on the basis of an insurance model."There are two views as to whether costs will come down.The costs of medical funds will be lower for younger, healthier people, but the impact on older people will be severe.If the public sector infrastructure works and the NHI provides a great deal of basic healthcare, one will buy insurance for other products, the cost of which will depend on one's personal risk profile.Younger, healthier members will have access to desired non-essential benefits, but costing much less than currently.Other costs brought about by legislation - such as the reserve that a medical fund needs to hold and minimum benefits - will then fall away. There will always be a part of the population that will pay for additional and better quality care. "But if the public sector lacks adequate resources, people will have to buy financial cover for more catastrophic events," said Arnold.