Medical aid is now a right, not a privilege, writes Sharon Gill
The new Medical Schemes Act affects every resident in this country. People who have, in the past, been denied membership to medical aid schemes now effectively have access to subsidised health services.
One of the objectives of the new legislation was to level the playing field. Medical aid schemes are no longer allowed to apply underwriting criteria to medical aid contributors. In terms of the new Act, medical aid schemes may not rate people on the basis of race, age, sex, or their state of health. The only basis for the calculation of premiums is the member’s income and the number of dependants.
“Healthcare is a cradle-to-grave issue,” says Rob Slater, principal officer of the National Medical Plan. “Young or old, wealthy or poor, we all get sick, and I support this levelling of the playing field whereby the fortunate must look after the unfortunate.”
The government doesn’t have the resources to support the infrastructure necessary to provide free healthcare for the entire nation, 40% of which is unemployed. “The state will look after the latter,” says Slater, “but the government is urging wage earners to join a medical scheme before June 30 2000, after which penalties may be incurred by people who have never been contributors in the past.”
Which brings us to two further objectives of the new Act – shifting the burden from the state on to commerce and industry, and making healthcare affordable by introducing minimum benefits.
“Basic medical aid schemes must be the same price for everyone,” says Slater. “Offer the bare bones and trim the price accordingly. Allow the frills, but make them optional extras. Wage earners must either contribute towards a medical aid scheme or pay their own medical expenses.”
Another objective of the new Act is to have one legislative framework to regulate schemes “doing the business of a medical aid scheme”.
In the past, health insurance policies were not classified as medical aid schemes. Insurers were allowed to rate their members according to risk. Higher risk meant higher premiums. For the insurers, it was a form of gambling – they were betting that your health insurance claims would be less than your premiums, but the dice were loaded in their favour.
The difference between a medical aid scheme and a health insurance policy is that a medical aid takes care of your day-to-day healthcare, while a health insurance policy concentrates on the long-term issues. Medical aid schemes are governed by the Registrar of Medical Schemes; health insurance policies by the Financial Services Board.
The Financial Services Board has agreed that the Department of Health should decide whether a product is a medical scheme or a healthcare insurance policy, but the department is accused of failing to draw the line between the two types of schemes.
“I think it’s important for the industry to get clarity on what constitutes a medical aid scheme and what constitutes health insurance,” says Neville Koopowitz, marketing director of Discovery Health. “We’d comply with the law if we knew what it was. Between the Department of Health and the Financial Services Board there needs to be demarcation, so that health insurance can have its rightful place in the greater scheme of things.
“People who took out `top-up’ insurance policies to supplement their medical aid schemes may now technically belong to two medical schemes, which is not allowed. We will, how-ever, be able to re-structure the policies in order to comply with the law.”
By registering their medical insurance policies as medical schemes, insurers have the advantage of pre-tax premiums, but lose the ability to risk-rate their members. If they remain insurance policies, they can risk-rate but they’ll lose the tax benefits.
This, many suspect, is the real thorn in the insurers’ side. It’s not so much an argument over “interference in matters of finance” by the Department of Health, but rather about the insurers wanting to have their cake and eat it.
According to Danie Kolver, Registrar of Medical Schemes, improving the governance of medical schemes was one of the reasons behind the introduction of the new legislation.
“This means that if a medical scheme is found guilty of mismanagement, they can be held accountable under the Companies Act.”