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Medical scheme members may be at risk

Time of article published Mar 19, 2012

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Medical scheme members could be left out in the cold if gap cover products were scratched because medical aid benefits were constantly shrinking, health insurance experts said last week.

Over the years, the gap in cover between benefits provided by medical schemes and what providers charge has widened not only for specialists’ consultations, but for in-hospital procedures as well.

Medical schemes have said their reduced reimbursement rates on hospital cover could be blamed on specialists who charged higher rates. This has left members to pay more from their pockets because of co-payments, sub-limits and deductibles, among other things.

In this environment, gap cover products found a market to operate in.

However, the recent promulgation of draft regulations on demarcation between health insurance products and medical schemes, which propose to cut medical top-up and gap cover insurance, would leave medical aid members responsible for funding gaps on their benefits.

The draft regulations suggest that these products are contributing to younger and healthier members leaving medical schemes.

The National Treasury said the regulations aimed to address the risk of possible harm caused by health insurance products to medical schemes and their risk pools.

However, insurance underwriting firm Ambledown Risk & Underwriting Managers said the high premiums of medical schemes had played a huge role in members’ exodus.

“The registrar of medical schemes has in the past argued that members are ‘buying down’ or downgrading to lower cost benefit options due to the availability of gap-cover insurance products. The result is lower contributions to medical schemes which ultimately has a financial impact on the general health risk pool.

“My view is that members are buying down mainly due to affordability. I strongly disagree that the tariff level for in-hospital procedures is a primary factor in the selection of a medical scheme benefit option,” the firm said.

Clayton Samsodien, the managing director of Genesis Capital’s health-care subsidiary, Genesis Healthcare Consultants, said with another gap emerging on benefits for investigative procedures and the so-called “sub-limits”, more out-of-pocket expenditure was assumed by consumers.

“These days, if you want to go for an investigative procedure, like a colonoscopy or MRI, you will need to pay either a deductible or a co-payment.

“In other words, a member of a medical aid can be out of pocket for the same event on three different stages: investigation carries a deductible or co-payment, the procedure has a sub-limit and the specialist charges higher than the scheme rate.

“No protection is offered here for the consumer,” he said.

Heidi Kruger, the spokeswoman for the Board of Health Funders of Southern Africa, which represents about 95 percent of schemes, said while there was no certainty on pricing in the private sector, there was a role for gap cover.

“This issue brings to light the problems of not having certainty in respect of pricing for health-care services. There are no tariffs, which is causing a free-for-all situation when it comes to charging by health-care providers. We call on the minister to urgently regulate providers with regard to health-care pricing,” she said.

Kruger said even if there was a regulated tariff for prescribed minimum benefit conditions, half of the claims would still be subject to prices that were not regulated, and as long as that remained unchanged, a gap would exist.

Gap cover provider Complimed said it was of the opinion that there would continue to be a market for gap cover.

“As medical providers are not going to drop their rates and schemes will certainly be increasing their (premiums), it leaves the consumer out of pocket. From a financial point of view, the question remains: will the consumer be able to afford the cost of a higher option?” asked Brett Daniel, a director at Complimed. - Londiwe Buthelezi

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