We all know that the good things in life are not for free. And certainly, there are no free lunches in this day and age.
And so it is with medical aid schemes. Every claim lodged by a member is reimbursed from the contributions paid by all members of the scheme. The question often asked is why does the medical aid not pay for cleaning of teeth, pap smears, prostate exams, mammograms and other preventative benefits.
The answer is simple, but not favoured. Members can have almost any healthcare benefit they want. But – they will have to pay for it themselves by way of higher contributions. Higher contributions often cause some members to question the value add that they get and if unaffordable or not worth it, they resign, or move to another medical aid scheme. When such healthy members resign, they leave behind the less healthy, higher claiming members that must then finance their own health needs without any cross-subsidisation.
Mammograms are expensive and so every female member over, say 40, will have an exam. This means that all members under 40 and particularly male members will be subsidising female members over 40. They may think this unfair and resign.
Most medical aid schemes have a simple philosophy – their benefits are designed to provide funding for catastrophic events – accidents, illness and disease.
The counter argument is that if the medical aid scheme paid for preventative medicines and tests, then the catastrophes could be avoided. Such an argument is certainly compelling, except for the fact that there is nothing to stop a member from using the preventative benefits from his/her scheme and then moving, in a very healthy state, to another medical scheme.
The Medical Schemes Act does not promote member loyalty. Under the old Act members could receive no-claim bonuses or contribution loading to reward good health or punish bad risk. The current Act however has none of that as all members must be treated equally.
Members of medical aid schemes therefore have a choice. Because the majority of schemes are focussed on the “big ticket” items, members looking for cover for the out of hospital, preventative benefits, must self-insure that portion of the risk. By doing this, their respective schemes are able to keep the cost of insuring the major catastrophic events as low as possible. This principle is not new, as short-term insurance companies do it all the time. When insuring a car, you can choose to pay a high premium and have no excess or, you can choose a lower premium but then you will have to cover the excess – the first portion of a claim up to a pre-determined amount. The bigger the excess or portion that you carry – the lower the monthly premium will be and, of course, vice versa.
Medical aid schemes do not determine what prices doctors and hospitals can charge. They can only reimburse the legitimate claims of members on the basis set out in the rules of the scheme after the doctor and hospital have charged the fee that they want to charge their patient – the member of the medical scheme. Medical schemes take prices – they do not make prices.