Bitter pill heals medical schemes
5 November 2004
It's been a bumpy ride for South Africa's R49-billion medical aid industry - but some of its problems are showing signs of improvement.
That's according to the industry regulator, the Council for Medical Schemes, which says closer regulation has substantially improved the industry's financial footing.
Tabling its annual report in Parliament in September, registrar of medical schemes Patrick Masobe said the council had paid attention to reducing financial risk in medical schemes.
The industry watchdog now requires schemes to submit quarterly returns which, Masobe says, serves as a kind of early warning system.
According to Business Report, schemes moving towards solvency levels below the required 25% have been detected early and remedial action has been implemented. Problems identified have ranged from poor business plans to funds being spent on illegal reinsurance contracts.
South Africa's medical schemes industry has come
under increasing pressure over the past years to get its house in order.
Among other things, it has been accused of excessively high rates - with the result that only the well-off are able to afford good medical aid cover. Contributions paid by members have in the past increased by more than double the inflation rate.
An over-reliance on private sector hospitals also remains an area of concern.
Levelling the playing field
The poor and ill may benefit better from medical cover in the future, if the government has its way.
International experts have backed proposals that may lead to a radical overhaul of the way medical schemes operate.
In line with its vision of a social health insurance system, the Department of Health is considering reforms to the tax expenditure subsidies attached to medical aid contributions. The government's vision entails that medical aid membership will be mandatory for all people in formal
employment.
According to Business Day, it is also looking at introducing a Risk Equalisation Fund to stabilise the medical scheme industry.
A team of international experts has given its blessing to the the idea of using the fund to level the playing field between rich and poor, the ill and the healthy.
Medical schemes with a poor risk profile - with old, sick and costly members - will be in line for payouts from the fund. Schemes with a better risk profile will get smaller payouts, or pay in to the fund, Business Day reports.
SouthAfrica.info reporter
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