WE NEED TO WORK TOGETHER

Unless the government and all roleplayers, including members, work together to tackle the legislative environment and cost drivers, medical scheme membership will continue to rise above the headline inflation rate, making it more of a grudge purchase than it is already, Jeremy Yatt, the principal officer of Fedhealth, says.

Yatt says some of the challenges facing medical schemes could be overcome if:

• There was regulation to support schemes. For example, if the government introduced caps on the tariffs charged by healthcare providers, this would alleviate the cost pressure on schemes. The government could also make it compulsory for young people who earn above a certain amount to join a medical scheme. This would provide schemes with the income to subsidise the expenses incurred by older, sicker members, and it would reduce costs for members across the board.

• People made it a priority to be healthy by exercising, eating correctly and not smoking. For example, South Africa is experiencing a steady increase in rates of obesity, which can give rise to a host of medical costs, such as chronic medication, operations to relieve joint problems, and an increased risk of heart attacks and strokes. Schemes will have to pass on these higher costs in the form of contribution increases for members.

• All roleplayers worked together. Doctors, hospital groups, medical schemes and the government should co-operate to encourage people to live a healthy lifestyle and use healthcare services and medical scheme benefits responsibly.

Yatt says all roleplayers want to provide a good-quality service to the community and be properly remunerated. Instead of medical schemes competing against each other by chasing a small pool of members, they should work together to fulfil their obligations to their members, while remaining sustainable.

High mandatory reserves.

• By law, schemes are obliged to hold 25 percent of contributions as reserves to protect schemes against large claims. Many experts say this percentage is unnecessarily high and that schemes’ reserves should be aligned to their exposure to risk. This would free up reserves, which schemes could use to provide you with better benefits.

Absence of regulatory reform.

• The government’s decision to implement a National Health Insurance (NHI) system has resulted in the regulation of the medical schemes industry being neglected. A number of proposed reforms that could make schemes more sustainable and reduce members’ contributions have apparently been abandoned, because the focus is almost exclusively on NHI (see “Much-needed regulatory reforms could benefit members”, below).

Yatt says an example of how legislation does not support schemes is that it prohibits schemes from rewarding or penalising members based on their claims behaviour. For example, they can’t lower your contributions if you don’t claim for a certain number of years, or raise them if you claim too often, as is the case with car insurance. As a result, Yatt says, there are no real incentives for members to take responsibility for their health.