There was a time when every citizen in our country had access to reliable healthcare, albeit by means of a tripartite system. For just a nominal charge, those who could afford it could be treated, while there was no charge for treating the unemployed. Those days have long passed and, consequently, the seriously overburdened, underfunded, and understaffed, but now unified, national healthcare system is, in many cases, struggling to provide more than primary care. For many patients today, it is only the medical aid schemes operating in South Africa that make it sufficiently affordable to access the services offered by the private healthcare sector.
For instance, imagine you need bypass surgery which could set you back more than R300k with the current state of our economy; Even a week in a private hospital could cost R5 000 or more per day for accommodation alone. Now, add the cost of any treatment required. How many people could afford to settle unplanned bills of this size? Alternatively, if you were seriously ill, are you confident that a public hospital could provide the attention you need? Possessing a reliable medical aid in South Africa provides the individual of average means with a way to ensure that he or she never have to ponder over this kind of decision.
These schemes operate on the same statistical principle of shared risk that also forms the basis of a long- or short-term insurance policy. That principle predicts that the majority of those insured will make either no claims or only small ones during any given year, so there will be enough premium cash to pay the bigger claims of the minority, with some to spare. All medical aid schemes in South Africa are required to retain a cash reserve equivalent to at least 25% of their premium turnover – this is known as the solvency ratio. In practice, some schemes may fall short of the required figure, while others may exceed it by a substantial margin.
The solvency ratio, combined with a scheme’s international credit rating, is important to ensure its capacity to meet members’ claims in full and on time. As a result, anyone who may be planning to join a medical aid scheme in South Africa would be well advised to check for compliance with both of these requirements before committing to a particular service provider.
These schemes do have one advantage over the traditional insurer because they are required to operate as non-profit companies, so they can’t be burdened by shareholders constantly demanding a bigger share of the profits. Instead, they are managed by a board of trustees and subject to regulation by the Council for Medical Schemes. The council controls premiums charged for medical aid in South Africa, mediates in disputes between schemes and their members, and sets some of the rules with which they must comply. For example, unlike the insurance companies, they are forbidden to deny cover to a potential new member on the grounds that he or she poses too high a risk, in this case, due to a pre-existing illness.
In practice, while someone with osteoarthritis might have to wait a year to gain cover for a knee replacement, should that member develop appendicitis, medical aid schemes in South Africa would be obliged to settle the claim for an appendectomy.
