Section 27 of the South African Constitution provides the right for every citizen to access healthcare services but not every citizen can afford to have a medical aid, one has to recognize that medical schemes cater for the fortunate few. Even the majority of the 13.6 million employed population are unable to join this ‘privileged country club’.
Richard Michael Blackman, from Day1 Health, has taken into account the very beginnings of medical aid and the funding thereof as well as the utmost need for it in South Africa. In his opinion, he highlights real facts that can cause ripple effects all the way down to general insurance companies.
“The worried healthy or worried wealthy” is a very revealing observation by Actuary Christoff Raath of the Health Monitor Group in his assessment of the current state of play prevalent in the medical schemes market. The fact is that a scheme’s longevity is reliant on high income earners not understanding that they can in fact buy down to lower options at a considerable discount to current premiums and then migrate upwards later on when age and ill health creeps up on them.
In view of the above it is surely time to objectively review a model that had its real beginnings back in the daysof the apartheid era.
The Medical Schemes Act 72 of 1967 provided for 256 schemes that catered for 60% of the white population and various more stringent changes were later enforced. More particularly the Medical Schemes Act 131 of 1998 and subsequent provisions (currently supporting only 97 remaining schemes) that sought to redress the inequities of previous provisions with the imposition of idealistic doctrines of community rating, open enrollment, prescribed minimum benefits (PMBs) and draconian solvency/reserving rules. The result being that self serving health service providers are literally and rationally able to charge what they like knowing that a deep pocket in the form of a medical scheme will be footing the bill the moment anything becomes “life threatening”.
With the greatest respect to the good intentions of all present and previous legislators and lobbyists including Professor Alex Van Der Heever who have fought vigorously to inject steroids into an old lame elephant in the hope that regulation as opposed to market forces will determine the way ahead, the medical scheme model is fatally flawed.
For the Professor to assert that ‘Medical Schemes form a substantial part of the country’s social security system, making a major contribution to covering healthcare costs’ only speaks for the privileged Medical Schemes members and is of less relevance when seeking to redress overall bad healthcare policy.
It is a fallacy to assume that companies should be forced to make Medical Schemes mandatory for all employees as suggested by Actuary Barry Childs at last weeks 14th annual BHF conference that was held in Cape Town, as it wouldn’t be economically viable nor would employers agree to this.
Conveniently for Medical Schemes, most retirees cannot afford their high monthly contributions with the result that many are forced to opt out which negates the argument that Insurance Policies purposely exclude the aged. Actuarial analysis is the reason for this. Taxation surely has a role to play as in any 1st world economy the aged would be covered by the state.
PMB’s are the reason why medical schemes are no longer affordable and it is ridiculous to suggest that insurance policies have contributed to making medical schemes more expensive.
It is true that these days more and more costs are covered out of pocket and that schemes are more inclined to cover only hospital events or PMBs. This is the very reason why hybrid products such as Day1 Health are increasingly more appealing. I like to think that we were the pioneers of the combination of products linking a legitimate day to day service to a stated benefit insurance package.
The demand for insurance products is a direct consequence of the inability of medical schemes to provide cost effective cover at the right price. Agreeably as with any other financial services provider, there should be close scrutiny of the health insurance market. But the means to do this is already is in place and if there are operators who carry out unscrupulous business practices, they should be closed down.
Section 27 of the Constitution provides the right for every citizen to access healthcare services and one has to recognize that medical schemes cater for the fortunate few. Even the majority of the 13.6 million employed population are unable to join this ‘privileged country club’. Currently no more than 7.8 million lives are covered on medical schemes and this figure has been static for more than a decade whilst at least 45 million citizens remain without cover an indictment to the failure of the Medical Schemes Act.
Having attended the 14th annual BHF conference it became apparent to me that the future of private healthcare should focus its attention on involving all role players namely; Medical Schemes, Insurers, Service Providers, Hospital Groups, Consumer bodies and Trade Unions in an endeavor to reach a more sensible affordable solution for the mutual good of all citizens.
Just as Medical Schemes have a role to play for the more affluent members of society so do Insurance Policies for those wanting practical cost effective cover.
Any attempt by the privileged class to deny the rights of ordinary citizens to elect the cover of their choice will be vigorously challenged.