Medical aid clients losing out to brokers

2013-09-08 14:00

The registrar of medical schemes says he is not happy about how much money South Africa’s schemes are spending on brokers.

Monwabisi Gantsho says broker costs have been steadily increasing every year, but the number of people recruited by these middlemen do not correlate with the millions paid to them yearly.

Gantsho largely blamed this trend on open schemes which, he says, will do anything to retain members brought in by brokers – even if that means increasing brokers’ fees.

According to the yearly report by the Council for Medical Schemes, which was released this week, schemes used more than R1.4?billion of members’ money to reimburse brokers for bringing them more clients.

Most of the big spenders were open schemes, which paid brokers more than the national average of R48.80 per member per month.

LA Health, Hosmed and Discovery paid brokers between R56 and R58 a month last year.

Gantsho says a change of policy is needed. “It’s about time we start considering to have an agreement between a medical scheme member and broker, instead of brokers having an agreement with medical schemes as it ends up not benefiting the member.”

Julindi Scheepers, the council’s chief financial analyst, concurred.

“The current scenario has no benefit to members.”

Scheepers says brokers played a power game with schemes.

“If brokers threaten to take away the members they brought in to another scheme, medical schemes have no option but to increase brokers’ fees in order to retain the membership. Sadly, the increase has to come from member contributions.

“Open schemes in particular use brokers to attract new members and that means an additional non-healthcare cost for marketing and acquisition.”

Healthcare brokers were legally recognised in 2000.

Two years later, 5?867 brokers had been accredited.

By 2007, the figure had increased to 9?742, a clear indication that schemes had become fertile ground for brokers.

Gantsho explains that brokers needed to be regulated “more effectively”.

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