Healthy members keep schemes going

Medical schemes need a large number of young, healthy members to subsidise the expenses of older members who tend to claim more. Here are the key things you should know about a medical scheme. THE PMBs HOW SCHEMES ARE RUN

Many members blame their medical schemes for not paying their bills, or complain that schemes make big profits, but these false accusations have their roots in myths about how schemes operate.

When you join a medical scheme, you belong to a community where the members rely on each other for support. A scheme operates like a mutual society or stokvel, rather than an insurance company.

Younger members, who tend to be healthier and claim less, subsidise older members, who usually have more illnesses and claim more.

“We ‘ pay it forward’ in our younger years, and then, when we are older, our high healthcare expenditure is carried by the next generation of younger members on the scheme. It’s all about the greater good, about giving to receive later,” Jeremy Yatt, the principal officer of Fedhealth, says.

But younger members can also incur high expenses, for example, when they have a baby and are raising a family.

Some people believe that if they don’t have dependants and are in good health, they don’t need to join a medical scheme. However, no one is immune from accidents and life-threatening diseases, such as cancer, which can occur at any age. If, for example, you are involved in a serious car accident, you will be admitted to intensive care and have to undergo surgery, which will cost hundreds of thousands of rands.

You might think that you can wait until you are older, or your health is poor, before joining a scheme. Or that if you are a scheme member with a health condition, you can save money by leaving the scheme once your treatment is over. The practice of joining a scheme only when you are elderly and/or need to claim is known as anti-selection or adverse selection.

Schemes would be unsustainable if the bulk of their membership consisted of unhealthy high-claimers; they need a large number of low-claiming healthy members to pay the claims of those who need expensive treatment.

The Medical Schemes Act, which regulates all schemes, allows schemes to use two measures to prevent anti-selection: waiting periods and late-joiner penalties. All schemes must provide you with certain minimum benefits, known as the prescribed minimum benefits (PMBs), which cover:

• Emergency medical conditions;

• About 270 conditions that are life-threatening or seriously affect your quality of life; and

• 27 chronic conditions that can be life-threatening without medication.

Regulations under the Medical Schemes Act include minimum treatment standards for each condition, which may not be less than the treatment you would get at a public health facility.

Schemes can specify that you use a particular provider, known as a designated service provider (DSP), for PMBs. Schemes can make you responsible for co-payments or deductibles (the part of an account you must pay from your own pocket) on PMB claims if you do not use the DSP, unless it was an emergency, or the provider was not available, or was not reasonably close to where you live or work.

Waiting periods are periods (either three months or a year) during which benefits are denied or restricted. Late-joiner penalties are a loading on contributions for those who join a medical scheme after the age of 35 and have not been a member of a scheme for a specified period previously.

Many members think their schemes are responsible for their health, whereas your health is your responsibility and your scheme can only help. Many members also don’t understand that looking after your own health can help to ensure your scheme’s costs are more manageable. This ultimately translates into your contribution increases being more affordable.

Yatt says you can help your scheme to keep down costs by:

• Adopting healthy habits, which reduce the risk of “lifestyle” diseases, such as Type- 2 diabetes, stroke, high blood pressure and cardiovascular disease. To this end, you should maintain a healthy weight, exercise, eat nutritious food and not smoke. Chronic medications for lifestyle diseases are very expensive, but these diseases are largely preventable.

• Making use of the screening benefits provided by your scheme. Going for health screenings, such as a pap smear or cholesterol check, at the prescribed intervals can help to ensure that potentially serious illnesses are detected before becoming untreatable or expensive to treat. Older and pregnant members should get an annual flu vaccine to avoid getting seriously ill, and parents should immunise their babies and young children to protect them against potentially harmful diseases such as polio, tuberculosis and meningitis.

• Avoiding surgical procedures when more conservative treatment could work just as well.

• Choosing a generic medicine, instead of the brand-name product.

Your contributions to your medical scheme must be based on what is known as community rating. This means that if you join a particular option, your contributions cannot be based on the risk that you personally pose to the scheme because you are, for example, elderly or in poor health.

Apart from any late-joiner penalties that may apply, you will pay the same contributions as any other member on that option regardless of your age, state of health, gender Members mistakenly believe that their schemes are out to make a high profit and do not know that a medical scheme is not allowed to make a profit. Schemes collect contributions to cover your claims and certain necessary costs. Any surplus the scheme makes must be ploughed back into the scheme or paid into a reserve fund, which, by law, should be 25 percent of the contributions it collects from members. Not all of your contributions are used to settle your claims. Schemes also have nonhealthcare expenses, such as administration, marketing and paying commission to brokers. Most schemes contract with an administrator, which collects your contributions and pays your claims. Unlike a medical scheme, an administrator is a forprofit company. A few schemes employ staff to do administrative work – they are known as self- or the frequency with which you submit claims.

Schemes may not exclude anyone from being a member (including the dependants of a member) as a result of their state of health or the medical conditions from which they suffer. Open schemes have to accept administered schemes and their administration costs are typically lower that those on schemes that contract this work to an administrator.

A scheme is run by a board of trustees, who are responsible for ensuring that the scheme is managed properly and remains sustainable. If a scheme contracts with an administrator, the trustees must ensure that it provides efficient, value-for-money service.

The Medical Schemes Act requires that half of the trustees must be elected by the members of the scheme. You, as a member, can help to ensure that your scheme is governed properly by attending the scheme’s annual general meeting and participating in trustee elections.

Trustees are paid, and because of the expertise required to run a scheme, and the onerous responsibilities on trustees, remuneration can be high. This again highlights why you, the member, should take an interest in how your scheme is being run to ensure that your trustees are providing value for the money they earn. anyone who applies for membership. Restricted, or closed, schemes limit membership to the people in a group to which the scheme is available – for example, the employees of a particular employer or members of a trade union – but cannot exclude anyone in that group.