Medical aid is good business

J. van den Bergh writes:

I have been in contact with various newspapers regarding the issue of gym rebates and had received a copy of questions sent to NAMAF. With regards to the questions I would like to respond as follows:

THE EFFECT OF CANCELLING GYM REBATES

I was told by various medical practitioners that a healthy lifestyle might assist with a healthier body and mind, but there is no scientific proof that practising in a gym is better than walking down the road. According to them a healthier diet is of much more importance than to go to gym.

In accordance with the Medical Aid Act gym rebates are illegal.

The medical aid funds only give gym rebates to approximately 20-30% of the members.

The medical aid funds have no evidence at all that the members going to the gym and receiving refunds have lower claims than the members that do not go to the gym, in other words the paying of gym rebates has got nothing to do with health but it is being used by the funds to attract members to join the fund and to keep their membership.

The medical aid funds cannot proof that the paying of gym rebates leads to lower claims against the funds, thus the poor members not getting gym rebates are cross-subsidizing the one that get gym rebates.



HOW IT WORKS

Medical aid funds have rule which are firstly approved by the Trustees and are also approved by NAMFISA. These rules guide the operations of the funds.

In accordance with the rules premiums are approved annually and consist of premiums for single members and lower rates for employer groups. Some of the funds even has different rates for different sizes of employer groups.

The funds' premiums are very competitive.

If a fund wishes to attract an employer group which is a member of another employer group, they try to give them lower premiums, however it is illegal to give premiums lower than what is specified in the rules and was approved by NAMFISA. What else can they do to convince employer groups to join them? Offer them gym rebates.

If a member provides proof that they went to the gym a number of times in a month, they receive a cash refund from the medical aid fund at the end of the month, in other words what does the fund actually do? They refund a portion of the premiums to the members, in other words they are receiving a higher discount that that what is provided for in the rules.

Some funds only allows gym rebates for one member per family but others allows up to three family members to get gym rebates. You would probably asked but how can they afford it? Bigger funds have large reserves to cover their risks, while the smaller funds must be conservative or else a high amount of gym rebates might result in a situation where the reserves are no longer covering the risks.



ANNUAL AND MONTHLY AMOUNTS

The funds would not give you detail about the annual and monthly amount of gym rebates they pay. In order to hide the quantum they do not declare gym rebates on their financial statements.

If for example they receive N$10 million in premiums per month and the gym rebates totals N$1 million, they declare their premiums to be only N$ 9 million.

The funds should address the directive of NAMFISA in only one way. According to the legal opinion received by NAMAF the practise of gym rebates is illegal, thus it does not matter if a NAMFISA directive states they can continue with this illegal practice for another 18 months. Their conscience and integrity should force them to stop any illegal practice.



PROOF OF THE EFFECTS OF HEALTHY LIVING

Obviously NAMAF will "feel" going to the gym and participating in wellness programmes is lowering the claims. They will however not be able to scientifically proof it.

Nobody in the worlds can do that.

You musts remember NAMAF is not an autonomous body. NAMAF is formed by the representatives of the medical aid funds.

The crux of the matter is that NAMFISA is only empowered to regulate the medical aid funds in accordance with the Medical Aid Fund Act. The Act determines that gym rebates are illegal, thus NAMFISA cannot approve the breaking of a law because they are the regulator.

The mere fact that NAMFISA tries to excuse themselves for the issuing of the directive, is an act that should be investigated. Who is the responsible Ministry, where is the NAMFISA Board that should ensure that NAMFISA operates within their powers?

In order to ensure that all members of a medical aid fund enjoy the same benefits, the solution would be to lower the premiums accordingly, but if the premiums are being lowered it also means that the maximum of 10% the fund administrators can claim will also be lower and that's where the problems actually lies in the medical aid fund industry.

Administrators will do whatever to ensure that the premiums increase constantly, either by higher premiums because of higher membership, or by ensuring that the claims are as high as possible because that would lead to even higher premiums the next year and the 10% gets bigger and bigger.



PSEMAS

Following the recent problems with PSEMAS and the millions it cost the tax payers, it is very easy now to blame it on corrupt service providers.

Everyone should actually ask why did the administrators of the PSEMAS medical aid fund not pick up these corrupt practices. In my opinion they should be blamed.

If you have a corrupt services provider and he submitted illegal claims and the administrator approves such a claim, why would I stop my illegal claims? It is an easy and well paying crime.

If you would like to open a can of worms, you should start to investigate the administrators of the medical aid schemes.