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It would seem that there is a subtle attempt to de-legitimise the commission earned by healthcare brokers, despite the fact that it is already regulated to a paltry R60.76 (exc VAT) or 3% of contributions, whichever is the lesser, per member per month. The attempt to de-legitimise the minimal income earned by brokers comes from the Registrar of Medical Schemes, who has always had an uneasy relationship with brokers.

The Council’s latest report hits out at brokers in terms of the non healthcare costs they add to the healthcare system – by quoting a 114% increase in fees over the last seven years. This would amount to an average increase year on year of nearly 20% – which does seem outrageous.

What the Council, however, has not presented in their report is the full facts of the case. Yes, income distributed to brokers has increased by 114%, but what a broker can earn is legislated and no scheme pays a broker more than the legislated amount. So where has this growth in income come from The simple fact is that more and more members are turning to brokers for support as medical schemes become more complex with the passing of time. Add to this the fact that medical costs escalate at twice the rate of the CPIX index, and people naturally start to question what they are spending on medical cover, ultimately turning to the broker for assistance and assurance that their medical spend is legitimate.

Most members seeking assistance from a broker are looking for value for money, and many brokers have in fact saved their clients large sums of money in marrying their healthcare needs to the most appropriate healthcare option. Brokers will ensure that clients are not over-insured. They also save underinsured members from large out-of-pocket outlays by fi nding the most cost-effective cover for members with compromised health.

Brokers are paid for services rendered to existing members as well as for the introduction of new members to a scheme. So, whilst the growth of membership may well lag behind 114% (in fact membership growth is only at 46.9% for the same period), existing members within the medical schemes who had previously taken care of their own financial affairs now avail themselves of and value the services that a broker offers.

Furthermore, the fee for the broker is paid out of the contributions paid to the medical scheme, which does not discount the contribution if the member elects not to use a broker, so, in effect, the member can secure the services of a broker at no additional cost. This makes the decision to appoint a broker a relatively painless one.

Would schemes have escalated their contributions at the same rates if they were not paying commission to brokers?

The answer to that is yes, they would, because schemes are not geared to provide the services that brokers offer to members, and in trying to replicate those services, they would need to escalate their contributions by a higher amount than members are already experiencing.

So please don’t blame the medical scheme contribution increases on your broker. Instead look to what is happening within the hospital groups – a large oligopoly that dictates prices to schemes and has continued to escalate costs well above CPIX inflation.

The other culprits are medical specialists who, by the very nature of their shortage of supply, are able to charge rates that also gallop ahead of CPIX inflationary increases. This is economics at its simplest – demand exceeds supply, and specialists are, therefore, able to ask higher fees for their services than they would be able to if the balance of supply swung the other way! So, whilst the Registrar is attempting to de-legitimise the broker’s hard-earned fee, there are multiple factors which are driving medical inflation, and the fat cat is not the one wearing the broker’s hat!

Janette Clark (FSP), Principal Consultant,
Glenrand M.I.B Benefi t Services (Pty) Ltd. Tel:
+27 11 293 2646. Fax: +27 86 713 3297.
Cell: +27 83 267 4221.
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