An article in the November 13 issue of Business Day entitled: Medical Aid Schemes weigh up cost of doing business in difficult times mentions: “Members can draw some comfort from the fact that open schemes are hiking fees by an average of 13%, roughly in line with inflation…” What the article fails to mention is the change in the value of benefits the 13% increase buys. Giving the consumer only half the information is highly misleading and certainly not enough information from which the consumer can draw any conclusions let alone be comfortable. The 13% could be buying a lot less in benefits.
Schemes often juggle benefits between options they offer the consumer. In other words a benefit under one option in the current year might be available next year but in a different, more expensive option. This is why it is important to have an accurate measure of the change in the value of benefits from one year to the next. Only then can a valid comparison be made in terms of the increase in cost of medical scheme premiums. It is hardly comforting to learn that over and above the 13% increase in premiums the consumer is also going to have to find the money for higher copayments, because of lower benefits. This is particularly relevant in the current economic climate, where consumers have had to deal with the impact on their disposal incomes of higher interest rates, higher cost of food and fuel and reduced access to credit.
What chance does the consumer have when something as important as benefits (what is being bought) is left out when discussing cost? Can the consumer trust medical schemes and their administrators when information this critical is not provided? What are medical schemes and administrators doing if they are not measuring benefits? Why has nothing been said, let alone been done about it?
The answer is that it is in no one's commercial interests to measure change in the value of benefits. Indeed, it is against the interests of schemes and administrators on the grounds that it would be highly embarrassing for a number of schemes and administrators if the consumer and employers were shown the full picture.
In South Africa, third party administrators effectively control the funding side of private cover, however, they are not made or take responsibility for the outcome of the uses to which the funds should be put. Save for the scheme actually running out of money, administrators and the managed care firms they mostly own get paid irrespective of the performance of the scheme, including the maintenance of benefits. Until administrators are placed on performance based fees the situation will continue and the consumer will remain uninformed, unprotected and taken extreme advantage of.
