What Happens When Motsoaledi's Plan Becomes A Reality?

At the presentation of the Medical Schemes Amendment Bill, the minister of health delivered stern critique of some of the core operational elements in South Africa’s medical aid schemes. Here is how the amended bill will impact on the various roleplayers in the market – and on you.

- Jaco Visser

the national department of health recently took a swipe at medical schemes’ use of brokers to realise membership growth in a stagnant industry. Medical brokers were paid R2.2bn in 2017, according to the department.

“Almost two-thirds of principal members of medical aid schemes pay monthly to a broker as part of their premium,” said health minister Dr Aaron Motsoaledi at the presentation of the Medical Schemes Amendment Bill. “Many of these members do not even know that they are paying this money, which in 2018 is R90 per month.”

The department wants this money to be made available to pay for direct health expenses of members, rather than serving brokers “who are actually not needed in the healthcare system”, he said.

“The draft Medical Schemes Act Amendment Bill does not contemplate the termination of the role of brokers,” says Dr Jonathan Broomberg, CEO of Discovery Health. “It simply requires that members give explicit consent for the appointment of their broker, after which medical schemes may continue to pay broker commission.”

Discovery Health Medical Scheme, with its 2.77m beneficiaries at the end of 2017, owns 57% of the market for open medical schemes. The scheme paid broker service fees worth R1.2bn in 2017, according to its annual report.

Broker fees are capped at 3% of a member’s medical aid contribution per month, or R90, whichever is the largest. Medihelp, another open medical scheme counted among the 10 largest schemes in the country, paid brokers R60.5m in 2017, up from 2016’s R54.8m.