Shortfalls: Health insurance’s big risk

11 Aug, 2019 - 00:08 0 Views

The Sunday Mail

Tawanda Musarurwa

All things being equal, the purpose of health insurance is to cover an individual on a rainy day, but due to the prevailing economic climate, that “cover” seems to be porous and patients have been suffering the burden of paying out not only excessive, but ridiculous out-of-pocket costs, more commonly known as “shortfalls”.

Shortfalls are common the world over, but with the local currency fast weakening against the United States dollar (and with the majority of pharmacies pegging the prices of their medicines to the US dollar), Zimbabwe’s case is rather peculiar.

A real life example may suffice to explain:

Olly Maruta (name changed) went to the doctor with a stomach problem, and was prescribed three types of medication including a painkiller, an antibiotic and esomeprazole which is a proton pump inhibitor that decreases the amount of acid produced in the stomach.

The esomeprazole is specifically mentioned because it highlights the ridiculous shortfalls local patients are having to deal with on a daily basis.

The drug costs around ZWL$130, and the pharmacist told Olly that her medical aid — which is fully and consistently up to date — will only cover ZWL$28 for the drug, and the shortfall that she has to pay is ZWL$102.

Olly scratches her head, and after a while (and without going back to consult her doctor) opts to take the prescription painkiller and the antibiotic, which have a “better” combined shortfall of ZWL$46.

Many medical aid subscribers have been questioning whether it is still worth it to be paying their medical aid subscriptions if they end up practically paying for health services and drugs out-of-pocket.

Undesirable selection tendencies already exist whereby individuals who feel generally unwell and the ageing now constitute the majority of medical aid card holders, while younger, “healthier” individuals prefer to go without.

But perhaps a bigger problem are those drugs being left at the counters. Are patients not placing their lives in danger with half-baked treatments?

Medical Aid Societies argue that the shortfalls are a result of the pricing structure insofar as health service providers are pegging their charges to the US dollar (and at the parallel market exchange rate) when medical aid members are paying subscriptions in the weaker Zimbabwe dollar, resulting in a significant mismatch.

Said the AHFoZ recently:

“AHFoZ rates seem to be chasing a moving target, a chase which is neither practical nor sustainable. AHFoZ rates are funded from member contributions.

“Members’ salaries have not been going up. Most employer organisations are reluctant to increase employment costs and are unwilling to increase medical aid contributions, given the myriad of challenges that the employers are facing.

“The contribution increases that have been effected by medical aid societies are not benchmarked on the US dollar and are still nowhere near the fees being charged by service providers.”

Health insurance providers are also concerned that within the current economic climate, further increases of subscriptions could push many members who perceive themselves to be in good health to drop off medical aid.

Resolution between this dispute between the health funders and the health insurance firms is key to ending this shortfalls crisis, or at least improving the situation.

And indicated plans by the Insurance and Pensions Commission (IPEC) to have medical aid schemes and legal aid societies under their purview may help to ensure that the public is covered for medical treatment and hospitalisation as promised given the regulator’s technical capacity in terms of specialist expertise required for managing insurance funds.

Currently, Medical Aid Societies are  regulated by the Ministry of Health and Child Care as provided for under the Medical Services Act.

On the other hand, there have also been calls for a Government-run health insurance system, which is argued to be morally superior to market-based approaches.

In the interim, there is one way that patients can reduce the burden of excessive shortfalls.

Most people may not be in the know, but medical aid card holders can claim 50 percent of their shortfalls from their employers, with the money being recovered through exemption from Pay as You Earn (PAYE) deductions.

“In terms of the law if an employee pays for medical expenses or buys drugs or invalid appliances such as artificial limbs, wheelchair or glasses which are not covered by the medical aid, he or she is allowed to claim 50 percent of that cost.

“The employer should not deduct PAYE from such an employee until 50 percent of his or her medical costs are refunded,” says Zimbabwean tax expert Tendai Mavima.


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