History of medical aid

Steven Weiss, Weiss & Associates, Parklands

I read with interest your column “Medical aid joiner’s penalty cuts deep (Off My Trolley, December 19), concerning late joiner penalties for some medical aid members.

As an assurance broker myself and one who also pays a LJP, I think that there are a few points which need further explanation.

Back in the day, a few decades ago, individual medical aid was individually underwritten based upon the client’s personal risk profile.

There was not a universal, one rate fits all premium as there is now and unlike now an application for cover could be declined.

One’s medical history, gender and premium rate used to reflect the appropriate rate for an applicant, though if one were a member of a sizable group an average rate would be applied.

However, the Council for Medical Schemes (CMS) decided to require medical aids to charge “community” rates rather than individual rates according to risk evaluation.

Since this rating methodology is clearly financially unsound, the CMS allowed medical aids to adjust their rates for those who joined medical aids over the age of 35 to avoid having only ill or older persons join medical schemes at will.

The more years one was uncovered by a South African medical aid the higher the permanent monthly premium loading.

This permanent monthly premium loading ranged from a nominal 5% to as much as 75%.

Other cover adjustments could also be applied allowing for a general waiting period of three months and a 12 month specific pre-existing condition exclusion.

Proof of prior medical aid cover, however, could be used to reduce the LJP even to zero.

The CMS also required that medical aids provide cover for a long list of the most common chronic conditions under its Prescribed Minimum Benefits provision.

In addition, broker commissions were massively reduced and paid as earned rather than annualised, making it uneconomic to market individual medical aid.

So, unless a client is offering a broker collateral business, the broker can ill afford to spend much time discussing and servicing medical aid cover.

The rule “caveat emptor” applies under this government controlled regime.