Would you join a medical aid if you were perfectly healthy? Most won’t. That’s why we need waiting periods, says Discovery CEO Jonathan Broomberg.
Discovery Health Medical Scheme and all other open medical schemes apply to wait periods if a member has had a break in membership of more than 90 days before joining/re-joining a scheme. Imposing waiting periods is critical to ensure the sustainability and affordability of medical schemes operating within the legislated environment of open enrolment and community rating.
In the absence of these waiting periods, individuals would only join schemes as and when they require a healthcare service — this is called anti-selection. So rather than making lifelong contributions extending through healthy periods, members only then choose to join during times of high claims.
In an open enrolment and community rating environment, imposing waiting periods is the only mechanism available to medical schemes to limit the impact of anti-selection, which undermine schemes’ abilities to pay claims on a sustainable basis.
One should keep in mind the basic principle of insurance, i.e. that any risk pool must be supported by people who claim less, to maintain affordability and to be able to fund the expenses of those who claim more.
If anti-selection were not managed, it would lead to medical aid claims exceeding contributions and, in turn, increase premiums dramatically and essentially make medical schemes unaffordable.
It would also not be fair to the majority of members belonging to the scheme who consistently contribute to the scheme’s pool of funds versus members who selectively take breaks in cover and then expect full cover when they choose to re-join the scheme.
Some have suggested that medical schemes make arrangements for new, pregnant members in which they would pay higher premiums for an initial 12-months instead of facing a similarly long waiting period. But the Medical Schemes Act does not allow for risk-rating, i.e. charging a member a higher contribution on the status of their health.
The total cost of antenatal care, delivery and postnatal care can range from R60 000 to several millions of rand if a premature infant requires care in a neonatal intensive care unit. If medical schemes had to pay out these costs for members who joined only at the time of pregnancy — and who could then leave after the pregnancy — the premiums paid by these members would never be enough to cover the costs incurred by the scheme.
This would impose much higher costs on the rest of the scheme membership, which would be unfair to those members and would undermine the affordability of all medical schemes.