Why medical schemes are not delivering

Brian Sokutu

A lack of transparency and accountability of members are among key factors at the heart of health funders’ failure to deliver better value to consumers, the Competition Commission’s health market inquiry (HMI) has found.

In releasing its provisional findings yesterday – allowing the public until September 7 to comment – the commission also found there was a failure of governance that aligned scheme interests too closely with that of administrators.

The HMI said: “The lack of incentives operating at scheme level weakens schemes’ resolve to hold administrators [accountable] for delivering value to members. Healthcare costs and administration cost fees are increasing and benefit packages cover less care.”

The report pointed out that due to lack of transparency, consumers simply did not know what they were purchasing and could not hold funders accountable.

The report read: “There are too many plan options, very little understanding of what they cover, how the plans compare and no measure of the value that consumers are receiving. In the absence of such information, consumers may simply choose what they can afford.”

While trustees of the medical schemes “should ideally be interceding on behalf of members to ensure that they receive value for money, ensuring that administrators are delivering the best possible value to scheme members”, this was not the case.

Describing governance of the schemes as “problematic,” the HMI found there were few incentives to ensure that scheme employees, trustees and principal officers always acted in the best interest of consumers.

The report claimed that restricted schemes, “by their very nature”, did not compete with open schemes “nor do restricted schemes compete with each other”. There was limited competition on factors that increased the value of medical scheme cover in terms of cost and quality.