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Hunt or be hunted, says Cape medical scheme boss

31 October 2007 Cape Medical Plan

It's what the medical aid industry call "prime hunting season" the statutory period when medical aids announce their new pricing for the next 12 months and their clients are legally permitted to join a different scheme or change their benefits. Members may alter their choices between December 1 and 31.

The general manager of Cape Medical Plan, Mark Clark, advises: "Look hard before you buy. A hospital bed is a bad place in which to discover the facts."

"Many people simply avoid the real question: 'What am I covered for - or what am I not covered for?'"

Clark said: "The healthy will find it easier to change their scheme than the older and less healthy who will face exclusions from their new medical aids and waiting periods before they can claim."

He believes that scheme members face double-digit price increases or more while the government is calling for three percent above the consumer price index (CPIX) which measures inflation. The headline CPIX annual inflation rate for August 2007 was 6,7 percent. Two dominant schemes have already announced their increases of 9,8 percent and another of 10,9 percent.

"If you're shopping around for a new medical scheme, look behind the increases, which have to be disclosed, to whether benefits have been reduced in part or if co-payment has been introduced," Clark advised.

Cape Medical Plan and other medical aids will announce fee and benefit changes in forthcoming weeks once the regulatory Council for Medical Schemes has approved them.

Real private healthcare is becoming expensive. As claims and medical costs rise, many people can expect to pay more for less cover or the same subscriptions for less benefit. Medical inflation, traditionally higher than the CPIX, reflects factors that include hospital and medicine costs and professionals fees. These, Clark says, are not capped.

By the end of the year many medical schemes have exhausted their options for absorbing costs and now have to pass them onto members.

"Last year, many schemes dipped into reserves to contain fee increases. This is no longer an option for most because by law, they must have a 25 percent solvency ratio the proportion of reserves to likely claims. Many larger funds haven't yet met or are struggling to maintain this minimum legislated solvency requirement."

Growth at Cape Medical Plan - a medical aid whose assets are owned by its members - has been carefully managed to 7 000 principal members. It met solvency criteria of 161 percent in 2006 and has one of the industrys highest reserve levels, some six times the legislated required minimum.

Clark concedes it is "extremely difficult" for customers to compare medical aids and their products. Its even more difficult than comparing cellphone packages.

"The industry is complex and traditionally the public hasnt cared enough. However, the alternative to being better informed in choosing medical cover is facing some serious, unexpected financial shocks."

Establishing the health of a medical aid is simple: data supplied by the regulator equips people to make informed choices and if necessary vote with their feet.

Clark gives a tip: "A general rule to all service businesses: if you want mechanised service, choose a big company. If you want to be treated as a human being, choose the small, focused company."

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