More medical trouble

After my last post around common misunderstandings of how medical schemes operate,  I saw a Fin24 article on South African medical schemes that are below the required minimum solvency.

What Fin24 readers had to say

Nolulamo Matutu from Fin24 writes:

Acting CEO of the CMA Patrick Matshidze told MPs 18 schemes have fallen below the prescribed solvency ratio of 25%.

Clearly, these 18 schemes cannot pay all the claims we all would like in an ideal world.

However, more interesting to me than the article itself (fairly balanced and factual) were some of the comments written below. Clearly the misconceptions are still strong!

Fed Up had some strong views:

I’d like to see them look at medical aids the other way and see how many of them are making huge profits, some make billions are rands profit which in my opinion is really just ripping people off, medical aids should be non-profit as the less they pay out the more people suffer. Also medical aid is such a bad word, it should be called what it is medical insurance.

I wonder who be the one to break the news that medical aids are non-profit?

pdbphoto has a useful perspective, but still gets confused about “profit” versus surplus for the non-profit schemes:

I am sure that the high expenses that all medical aids incur are due to the huge amount of fraudulent claims being made by members and the large amount of unnecessary procedures prescribed by many in the medical profession. If all were honest Medical Aids could probably halve their fees to their members and still make a profit.

As I mentioned in my previous post, fraud is a serious problem for medical schemes.

Debbie lays the blame solidly at the feet of medical practioners:

It is time Specialists and Doctors who do not charge medical aid rates are investigate. Most of them live well above what most of us could hope for even in the best of situations. They are fleecing the average patient. One simply has to calculate their hourly rate to see that there is something wrong. I also dont buy into the argument that they have studied for so many years and work very hard, there are many other professions that also require years of study and equally hard word

But is countered by a rather unsuccessful sounding doctor (“doc“) highlighting the costs of running a practice that often aren’t appreciated. I’m not convinced his result of R35 per hour reflects average incomes though!

I sold my practice 7 years ago, no money in it for eithical doctors. I was busy but earned less than 15 k per month even though working more than 17 hours per day seven days per week. one must realise there are staff to pay, the vat man takes 14% off the top and then the equipment and room rentals, insurance, etc. when these are all added up then talled to an hourly take home rate it comes to about R 35 per hour a doctor earns after taxes and expenses if he practises ethically!!!!

I have a great deal of sympathy for doc, especially the point about ethics  amongst doctors. Inappropriate claims allowed by doctors turning a blind eye, or outright fraud by doctors are problems.

National debate on NHI?

With this level of misunderstanding commonplace, and personal interests at the forefront of most people’s minds, how can we hope to have useful, rigorous and informed debate around the proposed National Health Insurance?

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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