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What is a Medical Scheme and How Does it Work?


What is a Medical Scheme and How Does it Work?

To understand what is meant by a medical scheme, how such schemes work and why they have become so important to the average South African today, it is first necessary to gain a little insight into the history of healthcare in the country. Before the large-scale appearance of private clinics, like many of the former British colonies, South Africa introduced a state-funded national health service.

The service established a network of hospitals and clinics, mainly in the nation’s cities and larger towns, which the general public could attend for diagnosis and treatment. In exchange, these establishments levied a modest fee for each consultation and for prescriptions from employed patients, while providing a totally free service to the elderly and unemployed. The result was a system that originally drew the admiration of numerous other countries who subsequently adopted similar practices in order to develop their own public healthcare resources. Where it differed from the British concept, however, was that outside of the payments received from patients, it was a non-contributory scheme, remaining totally dependent upon the government for the bulk of its funding.

As a result, it was not too long before South Africans were to discover exactly what is so important about a medical scheme when, within just a few years, the growing demand from patients began to exceed the capacity of these state-funded facilities to cope with it. Concerned by long queues and even longer waiting lists, those who could afford it turned to the private sector for their treatment while, for those who lacked sufficient income, the aforementioned schemes offered their members the all-important financial assistance with private healthcare expenses that was needed for them to make the same transition. Not surprisingly, this migration also resulted in a rapid expansion of private sector facilities and a brand new South African industry in its own right.

Given the background then, what exactly is a medical scheme and how does it work? In essence, it resembles any other insurance policy. In fact, it is probably most like a short-term motor product, given that it covers a substantial but fixed proportion of the overall risk and must be renewed each year, at which time it may be subject to revised premiums, terms and conditions. Members enter into a contract with a fund and, in exchange for the monthly premiums, may claim up to 100% of the cost incurred by the various treatments and procedures approved under its terms. In some cases, payments are made directly to the service provider, while in others the member is required to pay up-front and will be reimbursed when providing proof.

Such a system is only possible because it operates according to the principles of shared risk. Statistically, most members will only make minor claims during a given year or even none at all, which ensures that sufficient funds remain in reserve to meet the more substantial claims of the minority.

At KeyHealth, we have placed our members’ needs before all other considerations. Simple to understand products that focus on essential core benefits, plus an extensive network of preferred healthcare professionals who help us to minimise costs, have enabled us to shape a service that exemplifies what is meant by a reliable and affordable medical scheme.