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Safeguarding members interests: The obligation of medical schemes

Could rising road accident costs impact medical scheme coffers? 

Johannesburg, Friday, 27 October 2023 The escalating incidence of road accidents and their considerable costs are a source of grave concern for our country, with an estimated 25 annual deaths per 100 000 people attributed to road accidents. In 2022 alone, a staggering 10 000 fatal accidents occurred on our roads, resulting in a daunting annual cost of R186 billion for South Africans.

The personal toll of road accidents is difficult to quantify, especially when considering the impact on individuals' livelihoods and quality of life.

The Road Accident Fund (RAF) has always paid the medical and certain other costs associated with road accidents. It changed tack in August 2022, with the RAF now taking the stance that it will not cover past medical expenses that have been paid by a medical scheme.

This is contrary to a hundred years of legal precedent and principles, as well as being in conflict with the High Court order and judgment of Mr Justice Mbongwe which was granted against the RAF on 27 October 2022.

The High Court order interdicts and restrains the RAF from rejecting claims for past medical expenses that have been paid by a member’s medical scheme.  The substance of this judgment is unassailable, as the RAF’s appeals to both the Supreme Court of Appeal and the Constitutional Court were turned down.

The position adopted by the RAF raises a fundamental question: What happens when a mutual, not-for-profit organisation like your medical scheme, is suddenly burdened with substantial, unanticipated financial responsibilities that were never intended to form part of their budget?

Phumelele Makatini, the CEO of the Health Funders Association (HFA), highlights the financial repercussions of this situation, cautioning that this additional financial burden may impact medical scheme members considerably.

“The recent stance of the RAF significantly shifts the responsibility for covering medical costs resulting from road accidents but this could result in increased medical scheme contribution rates and a situation where members are asked to bear the brunt of a societal problem beyond their control.”

“This is of considerable concern to the Health Funders Association and to medical schemes, which are committed to protecting their beneficiaries' interests and managing the costs associated with membership. The HFA wholeheartedly supports them in this,” says Makatini.

She underscores the importance of safeguarding members' rights to claim medical expenses from the fund established to assist all road users in South Africa impacted by road accidents while emphasising the noble purpose of the RAF, funded by every motorist through fuel levies, to provide compulsory social insurance cover, rehabilitate those harmed by negligent driving and promote road safety.

“The complexities of the fuel price structure in South Africa, with its General Fuel Levy (GFL) and RAF levy, which is funded by motorists, many of whom are members of medical schemes, add to the intricate web of this issue. As costs continue to rise, the crucial question remains: How can medical schemes protect their members and ensure they do not bear the brunt of unforeseen expenses that will ultimately impact the cost of healthcare cover?”

“In the midst of this predicament, there emerges a vital perspective, one that hinges on the legal and moral responsibility of medical schemes as not-for-profit organisations. Their paramount duty is to safeguard the interests of their beneficiaries, ensuring that they receive the care they deserve without undue financial burden,” adds Makatini.

"Medical schemes have consistently strived to support their members during challenging times. However, external factors beyond our control are driving up costs in the healthcare industry, and now we could be about to add the cost of road accidents to this burden," she notes.

Makatini points out the critical role of medical schemes in protecting their members' interests, asserting that this responsibility naturally extends to containing membership costs. In her words, "The HFA firmly supports schemes in defending their members' right to claim medical costs from the appropriate fund created for the benefit of all South Africans affected by road accidents. The responsibility should not fall solely on the shoulders of private health cover contributors, who, in essence, help alleviate the burden on overcrowded state healthcare facilities."

“This situation reminds us that road safety is a collective responsibility, and as we navigate the complexities of our healthcare and insurance systems, it's vital to ensure that the burden of accidents does not become a financial burden to all medical scheme members.”

Makatini concluded by saying that the HFA is steadfast in its support of medical schemes, with a commitment to managing and containing the costs associated with medical scheme membership.

“As always, the HFA remains dedicated to collaborating with medical schemes and other stakeholders to find practical solutions that protect the interests of all South African citizens while maintaining the integrity of our healthcare system.”