Proposed “draconian” provisions in the draft Road Accident Fund (RAF) Amendment Bill are likely to cause a jump in medical aid premiums as the industry is forced to mitigate the risk of members not being covered by the fund, experts warn.
Medical schemes have historically submitted claims to the RAF after footing the bill for members injured in road accidents. Should the bill be passed in its current form, it will do away with reimbursement of expenses covered by medical aid/insurance.
The Personal Injury Plaintiff Lawyers Association (Pipla) said this will see medical schemes “drastically” increase premiums with dire consequences for all medical aid members.
Ryan Noach, CEO of Discovery Health, told Business Day that the bill discriminates unfairly against medical scheme members and will not pass constitutional review.
“This amendment would certainly impose higher costs on medical schemes, though in truth this is not significantly material considering the quantum of schemes’ claims and hence would not lead to any step-change. Rather it just exaggerates the medical inflation premium to CPI,” said Noach.
“It confers a greater cost of healthcare to road users who are medical scheme members who would continue to pay fuel levies plus marginally higher medical scheme premiums.”
The company expects challenges from multiple stakeholders to the amendments in the interests of road accident victims in general, and medical scheme members in particular.
“Prohibiting the reimbursement of expenses paid for by medical schemes is only one of the amendments among many, which would in reality deprive road accident victims of their rights to full compensation.
“Should the amendments become law in their current form, road accident victims could be deprived of the majority of the compensation to which they are currently entitled.”
The draft bill, meant to limit the liability of the fund to improve its solvency and sustainability, was published for public comment last week. It also aims to ensure equitable distribution of the risk assumed by the fund, the private insurance industry, and other stakeholders. But early reactions suggest the bill might achieve the opposite and hurt medical aid members and the poor alike.
Discovery has already taken RAF to court after the fund last year informed medical schemes that it would no longer pay for past hospital and medical claims issued by members of medical schemes. Most medical schemes provide for the handling of motor vehicle claims in their rules. Members can claim compensation from the RAF for such claims.
Another proposed amendment is the banning of compensation for any person who is not a SA citizen or a permanent resident. The bill also proposes that all future medical claims will have to be pre-authorised by the RAF or they will not be paid.
Rights infringed
Pipla said it will oppose the bill, warning that should it be enacted in its current form, it would curtail the rights of drivers, passengers and pedestrians to claim compensation.
“In effect, only very limited benefits will be paid and the changes amount to a drastic restriction of existing rights which will affect all South Africans, especially the poorest.
“Pipla will be lodging an objection to the bill, but it is imperative that all members also do their own objection.”
Under the mooted changes, an accident must have taken place on a public road for the claimant to be paid out. Injuries suffered in accidents in parking areas, sports fields, farm roads, driveways, private estates, game reserves or any other private road will not be covered.
Under the current regime, a claim for loss of income is paid out in a lump sum. However, the proposed changes provide only for partial payments that will eventually equal the lump sum.
A spokesperson for the Council for Medical Schemes (CMS), said the watchdog is studying the provisions of the bill and will respond at an appropriate time. It referred to a statement it issued previously in response to the legal dispute between RAF and Discovery.
In the statement, the CMS said: “It must be emphasised that the financial risk associated with health interventions for which the need is uncertain is equitably shared within the covered population through a risk pool managed by medical schemes under the Medical Schemes Act.
“CMS cannot condone a situation where members of medical schemes are forced to be out of pocket due to the nonpayment of medical costs by RAF where these have since been paid out by medical schemes.”
SA has about 800,000 road accidents a year, according to data collated by the department of transport, translating to about 2,200 crashes daily.
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