SAHR 2007 - Health Systems Trust

Authors:
Heather McLeod i
Shivani Ramjee ii
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Medical Schemes
Abstract
Not-for-profit medical schemes are the dominant vehicles for providing insurance for health
care in the private sector in South Africa. This chapter critically evaluates the role of medical
schemes in revenue collection, pooling of contributions and purchasing of health care.
Revenue is collected by medical schemes from employers and households on a voluntary
basis. Some employees are supported by their employers but the nature of employer
subsidies, particularly for those in retirement, has been changing. Revenue collection costs
are very high and broker activity has a negative effect on risk pool stability. The trend
away from restricted to open schemes has been arrested by the creation of a new single
restricted scheme for public sector workers.
Protections for members have been implemented in the form of open enrolment, community
rating and minimum benefits. Community rating is currently in fragmented risk pools and the
reforms underway to introduce a Risk Equalisation Fund will bring community rating across
the entire industry. Freedom to design benefits is being curbed but there is still substantial
use of benefit design for effective risk-rating of members.
Medical schemes tend to be passive purchasers of health care and few schemes have
become strategic purchasers of health care on behalf of their members. The lack of
engagement by medical schemes with the delivery of health care, together with constraints
in the provider environment is preventing the development of more efficient and costeffective
solutions.
i
Department of Public Health and Family Medicine, University of Cape Town and Department of Statistics and Actuarial Science,
University of Stellenbosch
ii Department of Commerce, University of Cape Town
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