The news that Supreme Court has given Guardrisk the go-ahead for South Africans to insure the gap between medical aid rates and actual health costs, has come as a disapointment to at least one medical scheme.
The issue really is that regardless of which medical option of cover chosen, the reality is that members may need to fund the difference between what the scheme pays and what the treatment costs. In the case of hospitalisation, the size of this gap could spell financial ruin for many South African families.
Jeremy Yatt, CEO of Fedhealth, says that their scheme offers comprehensive benefits, which according to Yatt makes a top-up product superfluous in their fund.
On the other hand Yatt says that they occasionally loose business as a prospective member moves to a cheaper scheme, after which they purchase the top-up product to get a bit more cover. Clearly the gap cover is cheaper for younger healthier people, so it works against most medical schemes.
Yatt says that one good result of the decision is that at least there is now some certainty about these insurance products and this may open up the way for some commercial opportunities.
Herman Schoeman, MD of Guardrisk, said that if the ruling gone the other way it would have impacted significantly on the entire short-term insurance industry.
According to Schoeman this ruling specifically relates to Guardrisk and its product range. He maintains that the ruling should not, in any way, be construed as a general industry standard and individual insurers will have to examine their own products to measure their validity.