Member ignorance the lifeblood of medical schemes

The health ministry is concerned about the level of ignorance among members of medical schemes regarding what cover their monthly premiums entitle them to,  deputy health minister Gwen Ramokgopa said on Wednesday.

"The majority of medical scheme members are the most educated South Africans, yet they have difficulty understanding the products they've purchased," she said at the 14th annual board of healthcare funders conference in Cape Town.

Christoff Raath, chief executive of actuarial consultancy The Health Monitor Company, said that sometimes the very survival of medical schemes depends on this ignorance: "Schemes are actually dependent on some members buying products that are much more comprehensive than they require." 

He said that the "worried healthy and wealthy" often buy a very comprehensive package without fully understanding what their entitlements would be on other packages. "Quite often those beneficiaries, if they applied their minds properly, would realise that a lower package would still entitle them to very comprehensive prescribed minimum benefits," he said. 

Medical schemes, however, complain that prescribed minimum benefits, which include a number of conditions which medical schemes are required by law to cover for all members, hamper their financial viability. According to the Council for Medical Schemes, prescribed minimum benefits include all emergency medical conditions, 25 chronic illnesses and 270 other medical ailments.

PMBs protect members but can "cripple" schemes
Raath said although prescribed minimum benefits are to the benefit of members, "it simultaneously has the potential to cripple medical schemes". 

According to Raath, the introduction of prescribed minimum benefits in 2000 without a complimentary mechanism to equalise risk between schemes made costs hard to manage. The policy of open enrolment also means that younger and healthier people aren't incentivised to join and consequently cross subsidise other members – further compromising the financial viability of schemes. 

Mandatory cover means everyone earning above a certain income would be required to join a medical scheme. That would mean we would have no anti selection which currently happens when people only join when they are sick and need cover.

Ramokgoba said that the majority of tensions arise over prescribed minimum benefits and that "it is quite clear that between the scheme, the provider and the member there is no clear understanding of the benefits within each option".

Moreover, Raath said that healthcare service providers, such as doctors, often overcharge for prescribed minimum benefits because medical schemes can't refuse to pay out. Although these benefits are mandatory there are no standardised costs or treatment guidelines to govern their implementation, as South Africa does not regulate doctor's fees.  

"This is why we're in the very awkward situation where medical schemes almost require people, or at least some beneficiaries, to purchase products on ignorance. The rules of the game are warped," he said. 


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