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SA Health Review: Too many benefit options ‘confusing’ for med scheme members

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Market segmentation analyses suggest that medical scheme beneficiaries in South Africa are confused by too many benefit options; that choice sets facing different beneficiaries are not the same; and that information is not equally accessible.

Researchers at the Council for Medical Schemes and the department of economics, University of Pretoria write in the SA Health Review that a salient finding of the Competition Commission’s Health Market Inquiry Provisional Report on the functioning of the health market is that there is a lack of transparency for medical scheme beneficiaries, particularly in matters pertaining to medical scheme benefit options. Inefficiencies in the health market, such as unequal or incomplete information, are likely to impact premiums and lead to sub-optimal decisions by consumers when considering their options.

They write that the policy challenge is to enable access to standardised information sets so that medical scheme beneficiaries can make optimal decisions when choosing benefit options. This chapter investigates non-health price barriers (in this instance, the inability to choose optimally), and their impact on beneficiary benefit option choices. Emerging health economics literature was studied to ascertain the impact of these barriers in other voluntary health insurance markets.

The authors said they found the proliferation of benefit options led to market fragmentation, which was identified as a policy issue in the National Health Insurance White Paper. The White Paper took issue with market fragmentation as it impedes beneficiaries’ ability to determine prices on the supply-side, and hampers the achievement of economies of scale. For example, the proliferation of benefit options means that beneficiary decisions become more complex, efficient price allocation (purchasing decisions) become less obvious, and appropriate cover is less easily accessed/achieved.

This chapter describes the extent of option proliferation, and the outcomes of beneficiary benefit option choices, in both open and restricted schemes.

The chapter also makes a case for health information systems (HISs) that provide decision-support tools for health information exchange (HIE).

SA Health Review chapter

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