Money and Markets

Four big changes the Competition Commission just recommended to how medical aid works, including standardised benefits and geographic schemes

Business Insider SA
  • The Competition Commission has recommended some big changes to the way medical aid schemes operate after a years-long market inquiry.
  • Medical schemes should be forced to offer exactly the same coverage, it says, so they can be more easily compared, with optional ad-ons.
  • It also wants to see geographically-based medical aids – and confirmation from members every year that they want to pay broker fees.
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On Monday the Competition Commission released the findings of a years-long inquiry into the healthcare sector and the factors that keep the cost of care, including medical aid contributions, high and rising.

In a report that runs to more than 250 pages the body listed hundreds of ways it believes the provision of medical services in South Africa should change, in some cases recommending significant changes to long-standing practices and regulations.

See also: SA’s biggest medical aids are hiking rates by nearly 10% – these are now the cheapest entry-level options

Among these are some dramatic changes to the way medical aids operate, designed to make them work harder to compete with one another on efficiency and administration – and to ultimately make medical schemes cheaper for members.

These are four of the big changes the Competition Commission has recommended in how medical aid works in South Africa.

Every medical aid should offer the exact same "standard benefit package" – competing only on the quality of treatment for specified conditions.

Medical schemes are currently too difficult to compare, the Competition Commission says. To change that it recommends the introduction of "standardised benefit packages" (SBPs) that every medical aid will have to offer, and that every member must sign up for.

These packages will be an expansion of current minimum prescribed benefits that will cover "catastrophic expenditure as well as some level of out-of-hospital and primary care," the regulator said, and will be identical for everyone with private medical insurance in South Africa.

Where the SBP list specifies the treatment of a condition, the Commission said, "these will be considered the minimum requirements schemes must provide to members, thereby creating scope for schemes to offer better quality treatment".

But while schemes can offer better levels of treatment for conditions, they would be banned from adding more conditions to the SBP.

'Supplementary packages' on top of basic cover will be priced on how risky your health is.

If they want to cover anything beyond the standard base package, medical aids will have to create "supplementary packages" that are offered on top of the SBP – with separate pricing.

Medical aids should be allowed to create an unlimited number of such extra packages, the Competition Commission said, creating modules that can be bolted on to the basic package.

Crucially, provided that the basic package is comprehensive enough, the bolt-on options would be risk-rated, making them more expensive for high-risk members than for those at lower risk, such as young, healthy members.

New geographic medical aid schemes will offer cover specific to a region – with deals specific to local clinics and hospitals.

The Competition Commission recommends that geographically-based medical aids should be encouraged, to the extent of creating a special reinsurance system to help them get off the ground.

Medical aids based in a specific part of the country would be able to "take into account variations in population, disease burden, and delivery of care models," the body says.

Such schemes could perhaps reach deals with local healthcare providers, the regulator suggests.

Medical aid members who pay brokers for their services will have to confirm those payments every year, and it will come out of their pockets.

Medical schemes should still be able to pay brokers who help them win members, the Competition Commission recommends – but transparently, and only on the ongoing say-so of members.

Medical aids would be forced to detail exactly what they pay brokers, with that information published every year. Members who wish to pay such commission will be "required" to declare that decision every year.

"Members who chose not to use the services of a broker will pay proportionally lower scheme medical fees," the Commission said. 

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