Namibia: Medical Aids Advised to End Unfair Practices

Namibia's ultimate authority to enforce compliance with financial regulations has instructed all medical aids to immediately address and eliminate unfair practices that favour group members with discounts compared to higher charges for individual members.

The Namibia Financial Institutions Supervisory Authority (Namfisa) says its assessment of the medical aid sector makes it clear that medical aid fund discounts are being used to keep and attract group membership "to the great disadvantage of members that are not part of groups."

This is why Namfisa issued a 'Declaration of Undesirable Practice' in the government gazette pertaining to contribution discounts, loadings and differentiated treatment of individual members and employer group members.

The objective of the declaration, explained in a statement from CEO Kenneth Matomola, is to address and eliminate the unjust and inequitable practice, which prejudices some members of the funds.

"For example, two members of the same age and the same health profile are currently subjected to different contribution rates, only because of their affiliation to a particular group. This is better explained by comparing the premiums paid by employer group members to those paid by individual members," read Matomola's statement.

He explained 'group' discounts are considered to be granted in an unjust and inequitable manner in that these were not granted to encourage responsible claiming behaviour but only offered to members of particular groups.

"It is important to note that this practice ultimately affects all members of funds in one way or the other," Matomola noted.

In the government gazette, the declaration states that unfair practices will be phased in for three years, while the phased approach runs from January 21 to December 2023.

"This declaration, which is effective immediately, applies to all funds. Any contravention of this declaration will be dealt with in terms of section 39 and section 45 of the Act," read the declaration.

Medical aid funds currently have various contribution structures, rates applicable to individual members and rates applicable to members who form part of employer groups.

Namfisa warned that contribution rates charged to members classified as individuals and members who form part of participating employers are different.

"Medical aid funds could previously offer its members discounted contribution rates, but on condition that the discounts were only granted to all members who had low and or acceptable claims history. Therefore, as compensation for undertaking to maintain claims at an agreed-upon level, members could pay lower contributions for the same benefits compared to the original price on the benefit option," Matomola further explained.

"In return, medical aid funds would be able to obtain underwriting efficiencies from lower healthcare claims. As such, the current practice by medical aid funds of offering differentiated contribution rates amongst the participating employer groups is tantamount to discounted contribution rates (decreased contribution rates)," he said.

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