by Hanna Barry


The future of gap cover policies

Is gap cover feasible?
Gap cover is scrutinised

Gap cover policies, offered by short-term insurers, generally cover the shortfall between what a procedure costs and what your medical scheme pays towards that cost. But the second draft of the Demarcation Regulations, released at the end of April, wants to cap that shortfall cover to an overall annual limit of R50 000.

Separately, the per-day benefit applicable to lump sum or income replacement policy benefits payable on a health event will be limited to R3 000.

Clayton Samsodien, MD of Genesis Employee Benefits, said the limit if far too low, based on the cost of even the most routine of procedures, where medical aids often apply deductibles that leave consumers out-of-pocket.
He questioned the “one-sided approach to protect the medical scheme industry” when consumers were left unprotected by gaps in their medical scheme cover.

He said that medical schemes routinely reduced rates of reimbursement, while raising contributions.

Introduce tariffs, revise PMBs
The Board of Healthcare Funders (BHF), which is the representative body for the majority of medical schemes in Southern Africa, believes medical schemes are the correct vehicle for funding healthcare because everyone is treated equally and older, sicker individuals not discriminated against.

Notwithstanding, spokesperson Heidi Kruger acknowledged reforms were needed in the Medical Schemes Act (MSA) to strengthen affordability, specifically, introducing tariffs against which healthcare practitioners benchmark their fees and revisiting prescribed minimum benefits (PMB).

As it stands now, legislation dictates that medical schemes pay in full for a list of 270 PMB conditions, regardless of the charges. “These two issues are pushing up costs significantly, growing the shortfall between what doctors charge and what medical schemes pay,” Kruger said.

“Until these reforms are in place, government cannot stop people from protecting themselves by taking out shortfall cover. However, we agree that gap cover products should be fairer and perhaps not include risk rating,” Kruger said, adding that the proposal to make gap cover products community-rated was “laudable”.
Michael Settas, managing director of health insurance company Xelus Specialised Insurance Solutions, said that the new regulations materially weakened gap cover. “There are currently about 500 000 families who deem gap cover an essential component of their total healthcare package.”

Settas said it was most disconcerting that gap cover products would be subject to approval from the Council for Medical Schemes (CMS), which has been their harshest critic and attempted to outlaw them in the past.
Settas said that meaningful industry engagement was needed to create a workable demarcation framework for the mutually beneficial co-existence of medical schemes and gap cover providers.

The concern is that medical schemes will be at a serious disadvantage compared to insurers, as they are left to cover the old and chronically ill, while struggling to attract the good risks.

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