Medical Scheme Members Urged To Use Benefits More Responsibly

It has become vital that members of medical schemes use their benefits more responsibly as over-use of benefits has become a major problem for the industry, says Dr Duncan Laurenson, managing director of Resolution Health.

"People need to become more involved in their healthcare decisions. To some degree, the U.S. way of practising medicine has crept into South Africa doctors don't want to be sued, so therefore they send patients for a battery of tests. Over-use of pathology has become a particular problem," says Laurenson.

He says a major concern for medical schemes is that their premium increases are controlled while price increases levied by their service providers are not.  In addition, non-healthcare costs have not come down in some cases they have even gone up, as schemes have to spend more on marketing, administration and brokers (this applies especially to small schemes trying to grow their businesses).

Underwriting losses within the industry which amounted to around R2 billion in the first nine months of last year are partly due, he believes, to micro-management by the industry's regulator, the Council for Medical Schemes.

"When it comes to regulation, the medical scheme industry is becoming inundated with proposed new legislation. One of the biggest influences will be "Circular 8" which aims at ensuring that all medical cover options include a range of in hospital and out of hospital benefits. This will undoubtedly drive up costs and make medical cover even more unaffordable," adds Laurenson.

Due to the need to contain external costs, he says there is a growing need for medical schemes to be able to have some sort of collective bargaining power when it comes to negotiating prices with service providers, which is currently, not permitted by legislation.

While schemes have tried to introduce low cost options, these have not proved very successful. Even the lowest cost option is still largely unaffordable to low income earners. A major problem for schemes, says Laurenson, is that their low cost options have to cover Prescribed Minimum Benefits (PMBs). PMBs are expensive to cover and are driving up the costs of healthcare in South Africa.

"While we understand the rationale behind the inclusion of PMBs (all 271 conditions) mainly to prevent dumping on the public sector health service once members' private healthcare cover has been exhausted there are no limits and no co-payments when it comes to PMBs, making them extremely expensive for medical schemes to cover," he explains, adding that PMBs have not been reviewed since they were introduced and he believes some modifications are now needed.

Resolution Health Medical Scheme is one of South Africa's fastest growing open medical schemes with over 46,000 principal members and over 110,000 beneficiaries.