How Legislation has Improved the Medical Schemes in South Africa
There was a time when assistance with the expenses arising from healthcare was packaged and marketed in much the same fashion as any other consumer product. Apart from the general disregard for possible ethical considerations, the products themselves were ill-suited to the task in hand and operated on basis that lacked even the relevance of a motor insurance policy. Vehicles owners subject to this type of insurers are generally required to obtain a number of quotes for repairs to a damaged vehicle, whereupon the insurer will select one and pay meet the bulk of the repair cost, leaving the insured to pay an agreed excess amount to the repair company upon collection.
By contrast, the earliest medical schemes in South Africa were operated by insurers and provided cash payments, based entirely upon the premium paid, for each day spent in hospital. Inevitably, the total amounts paid during any periods as an in-patient came nowhere close to meeting the policyholder’s actual healthcare expenses. While products such as this are still available, they tend to be used for other purposes, such as compensation for loss of income or perhaps to meet some of the incidental costs that tend to arise from a stay in hospital.
It did not take long for the shortfalls inherent in these simple insurance products to become evident, and for those with a greater insight into the operation of a healthcare service and the true cost of treating the sick to develop more viable alternatives. The birth of dedicated and more comprehensive medical schemes, more like those operating in South Africa today, quickly followed, and the local industry reached its peak in the mid-’60s, with more than 200 companies competing for a viable market share.
Inevitably, along the way, many of these trailblazers were destined to fall by the wayside. Some simply went bankrupt and ceased to trade altogether, while many others were assimilated in mergers and takeovers designed to strengthen the new combined entities. More significantly, however, has been the way in which legislation has served to impose important constraints and codes of practice on the industry to ensure that its services are as comprehensive as necessary, and that these are available to as many South Africans as possible. For this purpose, the Medical Schemes Act 131 of 1998 established a council, known as the CMS, to oversee the financing of private healthcare by this new breed of medical schemes which, unlike the nation’s insurers, were required to operate as Section 21 companies, under the supervision of a board, and not for profit.
One of the most significant improvements introduced as a direct result of the act is the legislation that has now made it illegal for these bodies to refuse membership to those with a pre-existing condition. While they are free to impose a waiting period before claims related to that condition will be accepted, the introduction of so-called prescribed minimum benefits, or PMBs, has, among other things, made it compulsory to meet all costs of 25 chronic illnesses such as diabetes, epilepsy, and glaucoma.
KeyHealth offers some of the most cost-effective and comprehensive products available from the close to one hundred medical schemes now still operating in South Africa.