Healthcare brokers: Assuming a new role

Since the promulgation of the new Medical Schemes Act, healthcare brokers have added substantial value to the National Health Policy, a contribution which is often overlooked. By acting responsibly and becoming part of the solution, brokers can carve an indispensible role for themselves in a new national healthcare model.

Healthcare brokers are often criticised by the Registrar of Medical Schemes for not growing the number of members in proportion to the growth of broker commission. The regulator also stated in Parliament that healthcare brokers must act in a manner that protects the interest of the National Health Policy.

On another front, medical schemes use various tactics to coerce brokers into presenting their products to clients. Some medical schemes cancel contracts when a minimum number of members are not written. Some lead brokers to believe that their product offering is the best, while others market directly to the brokers’ clients, forcing these brokers to present the specific medical scheme offering to their clients.

Against this background, the value that brokers add in the industry is clearly underestimated and unappreciated. Yet, four areas of evaluation reflect the important role that brokers fulfill.

Source of critical information

This year the Registrar of Medical Schemes instructed medical schemes to indicate, with their application for option changes for the 2011 benefit year, the changes - reductions and increases - in benefits. However, brokers have informed their clients of these changes for many years.

In fact, brokers act as drivers for the publication of financial information and solvency levels. By disclosing solvency levels, as well as operating results, to their clients, brokers prevent medical schemes from hiding non-compliance. This is part of the brokers’ analysis of the inherent risks in various medical schemes, which allow these brokers to inform their clients proactively when medical schemes are financially unstable. Unlike other financial products, this ensures that healthcare consumers are not left destitute.

Brokers also play a crucial role in ensuring that their clients understand the rules of the medical scheme and, therefore, that medical schemes act in a transparent and open manner. The private healthcare market cannot operate efficiently or support the National Health Policy without brokers providing this critical information to their clients.

Source of risk management

Brokers understand their clients’ healthcare risks and play a significant role in ensuring that their clients understand their own healthcare risks properly. Medical schemes do not defray all expenditure in terms of a health event. In fact, the Medical Schemes Act dictates that a medical scheme only grants assistance in defraying medical expenditure. In this regard, brokers understand that health insurance policies are important for properly financing their clients’ health risks.

The fact that brokers effectively discharge their responsibility to ensure clients properly understand the rules of their medical scheme is evident from the registrars’ reports. Complaints due to non-compliance to the rules of medical schemes, or the misunderstanding of medical scheme rules, are negligible in relation to the overall member population, as well as other claims relating to administrator inefficiency.

Brokers also played an important role in growing the private medical scheme market. If the establishment of the Government Employees Medical Scheme (GEMS) is excluded from the growth figures, brokers still played a significant role in ensuring that people who were previously not covered, were brought into the market.

Brokers also brought healthy lives to the industry, given the fact that the industry aged only three years over the last decade. Brokers therefore ensured that, in employer groups, more staff obtained medical scheme cover, and therefore managed the health associated risks of both the employer and employees.

Source of assistance

Brokers look after and assist more members of medical schemes today than they did a decade ago. In addition, an increasing number of members of medical schemes value the role that the broker fulfills. Brokers assist their clients in initially choosing a suitable medical scheme and the most appropriate medical scheme option.

After this initial phase, the broker assists clients annually to evaluate their medical scheme option when benefits and contributions change, when medical schemes experience financial or administrative challenges, or following a life changing event such as the onset of illness, marriage, death or the birth of a baby.

Brokers also often assist their clients with administration, due to the inefficiency of certain administrators. Given the normal asymmetry of information that exists between a medical scheme and its members, many would not have bought products or would have left the system, had it not been for the supporting role played by the broker.

Source of protection

One of the most progressive pieces of legislation, the Medical Schemes Act aims to protect the interests of members of medical schemes. However, few members know their rights and therefore need a broker to help them understand and exercise these rights.

Brokers provide consumers with invaluable assistance in lodging appeals to ex gratia committees and ensuring that, where applicable, cases are taken to dispute committees or the Council for Medical Schemes. On a daily basis, brokers ensure that their clients’ rights are known, protected and enforced. This valuable protection role ensures that consumers of private medical schemes are treated fairly. The fair treatment of consumers of private medical schemes was identified by the Council of Medical Schemes as a strategic objective of the National Health Policy.

Dealing with schemes

Given the value brokers add to the industry, it is disconcerting that brokers must remain vigilant in their relationships with medical schemes. Recognising their important role in assessing the value that medical scheme products can add to their clients, brokers must not be misled by a scheme’s creative marketing activities and should resist undue pressure from schemes.

Brokers must also always remember that they do not represent the interest of the medical scheme, but rather the interests of their clients. Brokers know their clients’ needs best and have a responsibility to assess the offerings in the market against their clients’ needs and to provide products that meet those needs.

Part of the universal solution

The fact that the vast majority of South Africans still do not have access to quality healthcare can no longer be acceptable to healthcare brokers. Together with their clients, employer groups and the Minister of Health, healthcare brokers must seek to find solutions that benefit all South African citizens.

Healthcare brokers can be proud of a century of value they have added to the private medical scheme environment. But now is the time for brokers to stand up and to lead South Africa in finding a model to provide universal health cover to all South African citizens.

This requires brokers to become part of the solution. Healthcare brokers should, with their knowledge of their clients’ needs and approaches to managing the healthcare risks of their clients, become part of the national debate on providing universal access to all South African citizens. They can then develop, together with government, a new healthcare model that may change the manner in which healthcare brokers are remunerated.

The value that healthcare brokers add cannot be disputed, and brokers that add value should not be threatened by a new healthcare model. In fact, a new healthcare model will most likely increase the market for healthcare brokers, and those that add value to their clients will be able to build a sustainable healthcare consulting practice.