Medical Schemes Amendment Bill Briefing to Select Committee

Medical Schemes Amendment Bill Briefing to Select Committee on Social Services

Medical Schemes Act, 1998 n Main Provisions: n n Community rating Prescribed Minimum Benefits Open enrollment Financial management and governance

Impact of Act n Membership Growth: n n n 7. 7% for open schemes 16, 4% for closed schemes 0, 6% in overall growth

Impact of Act n Costs: n n n Contribution income grew by 7% Claims grew by 6% Admin costs grew by 26%

Impact of Act n Solvency: n n n Statutory requirement is 10% for 2000 Open schemes average was 13% Closed schemes at 35% Average for all was 20, 5% Only 16 out of 47 open schemes below 10%

Amendment Bill, 2001 n n n n n Defn of complaint Reinsurance Waiting periods Marketing and conditional selling Submission of financial returns Scheme governance Broker regulation Transfer of business Transitional provisions

Definitions n Inserts: n n n Beneficiary Broker Reinsurance contract Amends: n n Complaint dependant

Beneficiary n n Clause 2 Clause 10, 11, 14, 18, 19, 20, 21, 23, 24, 27

Clause 3, 4 and 5 n n n 3. allows Council to grant exemptions to entities other than medical schemes. 4 removes Council staff from membership of GEPF 5 deals with reinsurance

Clause 6 and 7 n 6 enhances consumer protection: n n n Prohibits marketing of unregistered schemes Prohibits conditional selling 7 prohibits discrimination on the basis of age

Clause 8 to 11 n n n 8 clarifies contract between member and scheme, not dependants 9 relates to waiting periods 11 eliminates requirement for Council approval of routine business activities

Clause 12 and 22 n n Independence of Principal Officers Independence of Boards of Trustees Independence of auditors Two-year transitional period

Clause 13 and 15 n n n 13 allows Registrar to request financial statements on a quarterly basis 15 creates flexibility for Registrar to specify other time frame for responses to his queries 16 allows for inspections and routine compliance monitoring

Clause 17, 22 and 24 n n n 17 corrects grammar 22 allows scheme to determine level of indemnity insurance 24 extends procedures for transfer of schemes to entities other than schemes

Clause 25, 26, 27 n n 25 and 26 relate to brokers 27 empowers the Minister to make regulations relating to managed health care 28 relate to amends deeming clause for POLMED and MEDCOR 30 is the short title

Waiting Periods n n n Intention: protect against adverse selection. S 29(3) (c ) goes beyond this mandate Solution: Define waiting periods Move all provisions into Act

Waiting Periods n n n General and condition specific for new members. Condition specific or balance thereof for those in schemes for less than 2 years General waiting periods for those in schemes for more than two years No waiting period on PMB for transferees No waiting periods for those changing because of employer decision

Clause 5: Reinsurance n n Policy concern: abuse and resulting loss of scheme reserves Industry concern: need to strengthen role and responsibility of trustees

Reinsurance n n n New definition according to LOA Stipulation that schemes must furnish contract and evaluation to Registrar to raise concerns within 30 days Schemes to address Registrar’s concerns Schemes to fully disclose contract Non-disclosure renders voids the contract

Regulation of Brokers n n n Minister to make regulations to govern brokers. Current Act already requires accreditation. Broker remuneration already subject to statutory limit

4. Amends section 19 n Council staff no longer members of GEPF