New Demarcation Rules for Medical Cover Will Benefit Consumers
GTC Healthcare says that recently announced changes to medical cover provider rules should ultimately benefit consumers
Changes to the medical cover provider rules have caused concern among consumers over the continuity of their products. However, very little attention has been paid to the fact that the Minister of Health has requested the Council for Medical Schemes to grant an exemption for two years for the changes in product structures to take effect.
Jill Larkan, Head of Healthcare at financial advisory business GTC believes that overall, these changes to medical cover provider rules will be to the benefit of consumers.
The National Treasury recently published its long-awaited Demarcation Regulations for health insurance products, essentially reclassifying some insurance products as medical aid policies going forward.
“Demarcation aims to identify those medical insurance products that should be treated as medical aid policies, and therefore be regulated by the Medical Schemes Act. This essentially means reclassifying certain long- and short-term medical insurance products, such as primary healthcare policies,” says Larkan.
Healthcare Products Now Registered as Medical Aid Policies
The demarcation regulations stipulate that, from 1 April 2017, these primary healthcare products will be registered as medical aid policies, rather than insurance products, as is currently the case.
“We have noted concern over what this change means for policy beneficiaries, as these insurance products do not comply with existing regulations of the Council for Medical Schemes. Policyholders can, however, be assured that this change has no immediate bearing on them and their benefits, as their products should be exempt from current regulations for two years,” says Larkan. “During this time, the Department of Health will develop a new set of guidelines to broaden the scope of medical aid schemes so that lower-cost options can also be accommodated,” says Larkan.
She believes these guidelines would go a long way towards achieving uniform standards within the medical care environment.
“The Minister of Health aims to have all healthcare-related products aligned to a single, standardised set of guidelines that will include low-cost medical scheme products. The goal is to ensure the fair treatment of the consumers of healthcare products, who will be assured of a certain minimum level of cover provision of their purchased product.”
She explains that rather than outlawing the existing primary healthcare cover products in its entirety – and thereby removing a large number of beneficiaries from the medical cover net – the government will adapt the guidelines regulating medical schemes.
Gap for Low-Cost Medical Schemes
“There has been a gap in the market for low-cost medical schemes that provide an adequate basic level of cover. Medical aids have been criticised for becoming unaffordable due to premium increases which are often higher than inflation, resulting in many consumers opting for lower-cost options provided by primary healthcare policies,” says Larkan.
She believes a crucial point to this issue is the fact that the Medical Schemes Act has very strict stipulations on the basic minimum requirements of a medical aid. One of these is the provision of minimum benefit levels (as outlined in Prescribed Minimum Benefits), which increase the underlying cost of any medical aid product.
“The new guidelines will, in all likelihood, relax some of the more onerous rules for schemes to be classified as a low-cost benefit option.
“Following extensive consultation with the medical insurance industry and ministry of health that have been ongoing since 2012, we are encouraged by the progress towards the development of low-cost benefit options. A uniform set of rules and one regulator for all medical cover products will strengthen the industry and protect consumers more effectively,” says Larkan.
Migrating healthcare away from the insurance sector also means that insurance providers will not be allowed to introduce new primary healthcare policy options from 1 April, unless these comply with the rules applicable to medical schemes.
More About the New Medical Cover Provider Rules
The demarcation regulations further imposed restrictions on medical expense shortfall policies (more commonly known as medical gap cover), and hospital cash plans.
“The new regulation will limit the amount of medical gap cover to R150,000 per person annually, while benefits from hospital cash plans will not be allowed to exceed R3,000 per person per day or a lump sum of R20,000 per year. This should promote the fair practice and prevent exploitation of consumers,” she explains.
“Over the next two years we will follow developments on these guidelines closely, but we believe, at this stage, that the changes clearly pave the way to greater choice and protection for consumers,” concludes Larkan.
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