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The ‘gap’ insurance saga continues

29 April 2008 Gareth Stokes

Just when you thought it was safe to go out and buy cover for the shortfall between your medical scheme and actual medical costs the Council for Medical Schemes (CMS) and Registrar of Medical Schemes (Registrar) have thrown yet another spanner in the works. Not satisfied with the Supreme Court ruling on the matter, the Registrar decided to file an application for leave to appeal to the Constitutional Court. This application was filed on Friday, 18 April 2008.

According to their joint press release the CMS and Registrar “contend that these products do the business of a medical scheme, which requires GuardRisk to be registered as a medical scheme and to comply with the requirements of the Medical Schemes Act.” This was their stated position prior to the original High Court hearing, which took place some time ago. The High Court ruled in favour of the CMS and Registrar.

However on 28 March 2008 the Supreme Court overturned the Johannesburg High Court ruling following GuardRisk’s successful appeal. FAnews Online readers welcomed this news, with the majority congratulating GuardRisk for taking the Registrar to task.

Back to square one

The reason these products emerged in the first place was because medical aid schemes were simply not providing enough cover for hospitalisation expenses. Even top medical aid schemes left consumers with huge ‘gaps’ that they had to pay out of their own pockets. The problem is that “most schemes only pay at the NHRPL tariff – and procedures can cost many R1000’s with the scheme covering only about 2/3 of the cost.” So unless you’re confident you can build up R30 000 or R40 000 in savings to cover this shortfall, some form of insurance is essential. And that’s where the GuardRisk AdmedGap and AdmedPulse products served a purpose.

But now things are back to square one! From their press release we can summarise the Registrar and CMS position as follows: “According to the Supreme Court’s interpretation, about two-thirds of medical schemes currently registered under the Act would be excluded from its ambit. It would also create an enormous hole in the regulatory regime created by the Act which would be rapidly exploited by everybody keen to carry on the business of a medical scheme but free of regulation under the Act. Young and healthy lives will be attracted out of the medical schemes environment (or to less comprehensive medical scheme products), resulting in rapidly increasing costs for the older and less healthy who remain dependent on registered medical schemes for their cover - but now with significantly reduced cross-subsidisation from the young and healthy.” Perhaps they have a point...

But the problem would not exist if medical schemes provided comprehensive cover at affordable rates. The consumer cannot be expected to pay the huge amounts currently charged for comprehensive cover and still have to fork out thousands of rand in the event of a hospitalisation!

Readers not impressed by ‘bullying’ tactics

It appears the Registrar and CMS are dead set on imposing their views on gap insurance cover on the industry. FAnews Online readers have had plenty to say on the matter. One reader believes they “should rather concentrate on medical aid schemes and refrain from interfering in the insurance industry…” He believes their current obsession is a massive waste of money and resources. And the greatest irony is that “these products came about because [the Registrar] changed the medical aid rules and benefits…”

Another FAnews Online was spot on when advising caution in the wake of the Supreme Court ruling. He said “that individuals should NOT accept this ruling as industry standard, but should still check their products individually for validity. There are so many of these products developed over the years, and I think the solution for product providers would be to keep such products as SIMPLE as possible, in order to get rid of any confusion when it comes to treading on the toes of the Council for Medical Schemes.” Right now it looks like the CMS will be on the product providers’ ‘backs’ for at least the next few months.

We’ll leave it to another of our readers to sum things up. “The CMS has missed the boat somewhere along the way? Instead of being pro-active and assisting medical aid schemes to exercise their free marker rights, they’re trying to ‘rule’ them.” We hope the Registrar and CMS see the light – and that the Constitutional Court raps them over the knuckles for wasting valuable court time.

Editor’s thoughts:
The private medical sector is in turmoil at the moment. Not only is government taking private hospitals to task – but the CMS and Registrar seem hell bent on preventing innovative products from assisting cash-strapped consumers. Should the CMS and Registrar take this battle to the Constitutional Court, or is this a massive waste of time and money? Send your comments to gareth@fanews.co.za, or add them below.

Comments

Added by Daleen, 29 Apr 2008
Gap cover products very important. Options of medical schemes that cover 300% of the NHRPL rate are really expensive!!!!!!!
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Added by ID, 29 Apr 2008
It would be great if bodies like the CMS and Registrar stopped behaving as if South Africa were a first world country. South Africa is an incompetent third world country. The sooner the authorities recognise this, the better. Otherwise expect even more skilled workers to leave for pastures where they get a lot more bang for their legislated buck.
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Added by Michelle M, 29 Apr 2008
Get down to the rands and cents here! Gap cover is so much more affordable than having to purchase this type of cover here from your medical aid and this is what the medical aid schemes are afraid of - their bottom line!!. We are already paying exorbitant fees for medical aid schemes with standard NHRPL tarriffs and we all know that the cost of obtaining the extra cover would be astronomical in comparison to the purchase price of a gap product. At the end of day, the doctor is happy and most of all, the medical aid consumer is happy!
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Added by peter smulik, 29 Apr 2008
its well known that the dept of health is hell bent on preventing us to obtain private cover where possible, and one word just sums it up: disgusting. madam manto and her lot have absolutely no scruples, and are quite happy to see many a
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