B. Medical Schemes

Question 1

Reasons for increase in the amount of contributions paid (4)

Answer 1

1. Medical Inflation
   - increase in the cost of goods and services
   - drugs, equipment often imported
   - declining exchange rate
2. Over-utilisation by members
   - member feel they musk claim more when prices increase
   - “use it or lose it” philosophy
   - causes spiral
3. Over-servicing by Health Care providers
   - fee for service basis
   - increase their income by providing more
4. Fraud
   - giving cards to family members
   - money lending by practitioners (fictitiously billing)

Question 2

Contentious categories in the Demarcation Debate (3)

Answer 2

1. Medical expense shortfall policies
   - cover shortfall between scheme benefits and rates charged
2. Non-medical expense cover as a result of hospitalisation policies (Hospital cash plans)
   - Pay out stated benefit upon hospitalisation
   - unrelated to cost of service
   Resolution: Still allowed but under strict underwriting and marketing conditions
3. Primary healthcare insurance policies
   - limited service benefits
   - like GP visits, acute/chronic medication, emergency, dentistry
   Res: no indemnity cover allowed