The Nature and Importance of a Medical Scheme
A medical scheme has become an essential part of life in South Africa and in many other countries where overburdened state facilities are seeing more and more of their citizens turning to private healthcare and the means to fund it. In South Africa, around 90% of those receiving private care would be unable to afford it without the assistance of a specialised insurer. Unlike an insurance company however, the organisations involved are non-profit and thus require ample cash reserves with which to meet claims, a good international credit rating should the drain on reserves be exceptional and very strict governance.
A medical scheme is bound to principles and prices approved by the department of health and overseen by a regulatory body known as the Council for Medial Schemes or CMS. Like short-term insurers, they utilise the principle of shared risk to meet their members’ healthcare claims. This relies on the fact that, in a given year, the majority of members will only make minor claims, if any, which allows a sufficient reserve of funds to meet the major claims of the relatively small minority. Although forbidden to reject a member with a pre-existing condition, imposing a waiting period before accepting the first claim is customary.
Since 1998, all medical schemes in South Africa have been required to broaden their basic cover and, in particular, to meet certain prescribed minimum benefits (PMBs) that include full support for a list of 25 chronic illnesses, such as asthma, diabetes, epilepsy, hypertension and multiple sclerosis. While this is good news for members, it has required considerable innovation on the part of the product designers to meet the new demands, while keeping premium increases to the levels approved by the CMA.
The use of preferred suppliers from clinics, to pharmacies, laboratories and specialists has done much to limit the underlying costs and, together with some careful pruning of the more superfluous benefits and limits, have led to the development of some affordable yet comprehensive products, such as those available from us, under the innovative KeyHealth medical scheme.