oa South African Health Review - Medical schemes : pooling of resources and purchasing of health care
Not-for-profit medical schemes are the dominant vehicles for providing insurance for health care in the private sector in South Africa. This chapter critically evaluates the role of medical schemes in revenue collection, pooling of contributions and purchasing of health care.
Revenue is collected by medical schemes from employers and households on a voluntary basis. Some employees are supported by their employers but the nature of employer subsidies, particularly for those in retirement, has been changing. Revenue collection costs are very high and broker activity has a negative effect on risk pool stability. The trend away from restricted to open schemes has been arrested by the creation of a new single restricted scheme for public sector workers.
Protections for members have been implemented in the form of open enrolment, community rating and minimum benefits. Community rating is currently in fragmented risk pools and the reforms underway to introduce a Risk Equalisation Fund will bring community rating across the entire industry. Freedom to design benefits is being curbed but there is still substantial use of benefit design for effective risk-rating of members.
Medical schemes tend to be passive purchasers of health care and few schemes have become strategic purchasers of health care on behalf of their members. The lack of engagement by medical schemes with the delivery of health care, together with constraints in the provider environment is preventing the development of more efficient and cost-effective solutions.
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