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Understanding the South African Medical Aid Scheme

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Some will recall the days when our state healthcare system was seen as a model for other countries. Since then, however, a combination of factors, including rising demands and underfunding have led to its steady decline, prompting a mass migration of patients to the private sector. As is the case elsewhere, without some form of assistance, few patients could afford private healthcare. For the South African, that assistance takes the form of a medical aid scheme.

Although they operate on the same basic principle as the insurance company that provides cover for life or damage to fixed property and motor vehicles, they differ in terms of the benefits they provide. In order to accumulate the cash reserves with which to meet claims, both depend upon shared risk. The principle assumes that, statistically, the majority of those covered will make no claims or only minor claims in a 12-month period of cover, and that their premium contributions will suffice to pay the large claims of the minority.

However, while insurers pay a pre-agreed fixed sum, setting the premiums accordingly, a South African medical aid scheme is obliged to meet the full cost of a treatment, or at least the bulk of it, depending upon the product option chosen by its members.

Significantly, full payment of certain private healthcare costs is now mandatory, following the introduction of prescribed minimum benefits (PMBs) by the Council for Medical Schemes (CMS). In addition to emergency treatments, the mandate requires schemes to meet all costs relating to the diagnosis, treatment, and care of 25 listed chronic illnesses. While many insurance companies now offer some form of medical insurance, their regulatory body does not require them to cover PMBs or to meet the full cost of any treatment.

Generally, insurance companies offer a hospital cash plan that pays a fixed sum for each day the policyholder is hospitalised. While KeyHealth, for example, also offers a hospital plan, unlike most South African medical aid schemes, and provides full cover for in-patients, it also includes some year-round benefits.

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