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'Medical schemes are remiss in not offering to fill the primary care needs'

12 February 2020 10:03 AM
Tags:
Medical aid
Medical insurance
gap cover
low cost medical benefits
Refilwe Moloto discusses the banning of low cost benefit options with experts in the industry.

Government has banned the private sector’s attempt to create a low-cost medical aid.

The decision by the Council for Medical Schemes has divided the health insurance industry.

Refilwe Moloto looks at the various points for and against the ban and speaks to Dr Brian Ruff of PPO Serve and Barry Childs of Insight Actuaries and Consultants.

These products were intended to come to market to provide lower-cost alternatives to medical scheme cover which is quite expensive and only affordable for people with higher incomes.

Barry Childs - Insight Actuaries and Consultants

He highlights two key issues, one, the lack of communication and poor process embarked on by the Council.

Childs says the lack of consultation is what caused the strong reaction to the Council's decision.

These products are still active...but the registrar indicated that by 2021 he is going to stop them. So the communication and process seem to be a little back to front.

Barry Childs - Insight Actuaries and Consultants

Since the announcement, the Council has been very conciliatory and engaged with the industry players in a roadshow, says Childs.

He is saying tell us what you have to say, give us your feedback, we want to make this work.

Barry Childs - Insight Actuaries and Consultants

Secondly, he highlights that these products exist in a health reform environment with some uncertainty.

Childs says NHI dominates the narrative about where the country is moving regarding health reform.

But there's really no clarity on what role private sector is going to play - the role of medical schemes, the role of health insurance products, etc.

Barry Childs - Insight Actuaries and Consultants

Childs believes these products should not be prohibited.

There is a place for these products. They do provide a valuable service.

Barry Childs - Insight Actuaries and Consultants

But he agrees the products should be properly regulated and provide value.

Dr Brian Ruff weighs in and argues the correct perspective is to understand the role of what he terms gap products which addressed gaps in the medical scheme cover that medical schemes have done nothing about over some 20 years of regulation.

The effect of all of that has been that a combination of these gap products have been offered by these health insurers as an alternative to medical scheme membership to young and healthy people - because obviously they can underwrite and exclude people in a way that the schemes can't.

Dr Brian Ruff - PPO Serve

Ruff argues that current unbalanced benefits in schemes are one of the drivers that make medical aid expensive.

In order to get basic stuff done, you need to be admitted to hospital where it costs tens times more than if it happens out of the hospital environment.

Dr Brian Ruff - PPO Serve

Allowing these products then, rather than just fixing the medical scheme environment and filling in the gaps, is to have an ageing population which mean that prices go up making the problem even worse, he adds.

We're in a kind of vicious cycle.

Dr Brian Ruff - PPO Serve

He says while he agrees the process could have been better managed, the proliferation of these products is not in anyone's long-term interests.

We need to be looking at better solutions.

Dr Brian Ruff - PPO Serve

He says for a medical aid scheme to work it needs to include young and old, with cross-subsidies between old and sick people and young people.

You want everybody involved.

Dr Brian Ruff - PPO Serve

He says these products are not regulated in that way.

So, these products are allowed to exclude older people or to market specifically to young people....they are paying out less than half the money that they are collecting and taking out large profits, none of which would be allowed in a regular medical scheme.

Dr Brian Ruff - PPO Serve

But, he adds, the medical schemes are equally remiss in not offering to fill the primary care needs.

Why do you run out of your medical savings account in February?

Dr Brian Ruff - PPO Serve

Take a listen to the insightful discussion below:

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12 February 2020 10:03 AM
Tags:
Medical aid
Medical insurance
gap cover
low cost medical benefits

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