Johannesburg - Hospital cash plans offered by insurance companies could be a thing of the past if Health Minister Aaron Motsoaledi has his way.
The products, popularly known as “hospital cash-back plans”, are insurance covers that promise to pay clients an amount of cash if they are hospitalised for a certain number of days in exchange for monthly premiums.
Motsoaledi said insurance companies were actually selling “ill-health”, encouraging clients to get sick instead of promoting a healthy lifestyle.
“As a department, we are encouraging people to lead healthy lifestyles but these people are actually selling ill health,” he said.
”They are basically saying, ‘get sick, and we will pay you R1 000 every day that you are in hospital’.
“The adverts are everywhere, so people are buying these products and many of them never get to claim. The insurers are cheats,” Motsoaledi said.
He also said the practice encouraged collusion between patients and medical doctors.
He said he had spoken to Finance Minister Pravin Gordhan about options for regulating the hospital schemes, but appeared to favour a total ban.
The plans are thriving in South Africa, with even major retailers offering them to account holders.
According to a Finmark Trust study last year, there were between 1 million and 1.5 million hospital cash plans in place, covering about 2.4 million South Africans.
The study estimated that 50 000 new policies were sold each month.
But while Motsoaledi was worried the industry appeared to cash in on people’s fears, the industry itself was worried about what appeared to be an increasing trend of fraudulent claims.
Fears are that this could lead to the collapse of the cash plans.
The Association for Savings and Investment South Africa (Asisa), a body representing most life insurance companies, said hospital cash plan fraud was a growing problem.
In 2011, Asisa detected 549 cases amounting to R4 million. In 2010, 649 cases were detected, amounting to R12.6m. The next figures would be available next month.
Asisa deputy chief executive Peter Dempsey said the industry might have to pursue stringent measures to police the schemes, including raising premiums, introducing standard cancellation clauses, and even stopping the plans completely.
Sunday Indepdendent