Lifeline talks for 38,000 people hit by Health Squared medical scheme's liquidation

Don’t panic: we’re working to get you onto another medical scheme in a way that won’t leave you “unduly” disadvantaged.

That’s the message industry regulator the Council for Medical Schemes (CMS) issued on Tuesday to 14,000 members of Health Squared who were informed last week that the scheme had applied to the high court for voluntary liquidation and that their “health events” would only be covered up to the end of this month.

Those principal members have 23,785 dependents, meaning this affects more than 38,000 people.

Many were gripped by panic at the weekend, fearing they’d be unable to secure alternative cover by the end of the month.

“After almost a lifetime of being a member of this medical aid, through all its iterations — South African Typographical Union medical aid, Master Printers medical aid, Spectramed and finally Health Squared — I have to find another medical aid at the age of 73,” said Michael Hurter. “Have you ever seen anything like this before?” he asked TimesLIVE's Consumer Line.

Most industry stakeholders say it’s an unprecedented development, with mergers being the usual route for struggling schemes.

Health Squared said in court papers it had approached six medical schemes with merger proposals since January, without success.

The Medical Schemes Act requires schemes to maintain a minimum solvency level of 25% as a buffer against an unexpected surge in claims, but Health Squared’s solvency ratio was already below that in 2020, at 17.3%, falling to just more than 6% in 2021. By June this year it was just 3.79%.

The scheme blames the coronavirus pandemic and the resultant rise in claims for its financial woes, given it has, on average, a higher proportion of older members than other schemes. This despite most medical schemes reporting that the cost of Covid-19 claims was offset by the dramatic reduction in the number of claims relating to non-urgent procedures, such as hip replacements, which were deferred during 2020/2021.

Don't rush for another cover

The CMS on Tuesday encouraged affected members to “avoid panic-inspired movements that might leave them worse off” while it engages with seven other medical schemes to “move current Health Squared members to other schemes”.

“All the parties in these engagements are conscious of the urgency of the matter and will endeavour to assist the regulator in finding a solution that is also in the best interests of their respective schemes, current membership and as duly mandated by their boards of trustees,” the regulator said. “CMS will keep Health Squared Medical Scheme members and the public informed of further developments.”

Several brokers have posted adverts on Health Squared’s Facebook page urging its members to contact them for alternative cover.

But Mark Hyman, CEO of medical claims assessors MediCheck, warned affected members not to look for alternative cover now.

“They will be burdened with penalties and exclusions,” he said.

Lives are at stake

Rare Diseases SA’s founder and CEO Kelly du Plessis said her organisation had been inundated with calls from Health Squared members.

“All are chronic patients requiring ongoing care,” she said. “We have reached out to the registrar of the Council for Medical Schemes to determine if members seeking new membership will be treated the same as in the case of a merger or acquisition, removing imposed waiting periods and exclusions.”

The Medical Schemes Act states that medical schemes must accept anyone who can afford their premiums.

“You cannot be excluded from joining a scheme due to pre-existing conditions, race, age, sex, gender, ethnic or social origin, sexual orientation or disability,” Du Plessis said.

“But schemes are able to impose waiting periods: three months as a general waiting period and 12 months for specific conditions and pre-existing conditions.”

Given Health Squared members are not voluntarily seeking to move to another scheme, industry commentators have expressed doubt that such waiting periods will be imposed.

Vanessa Waison missed Health Squared’s email about its liquidation application, discovering the news on Sunday night on Facebook.

Her daughter Sharon, 30, went into renal failure in 2017 as a complication of lupus and has been undergoing dialysis sessions ever since; first twice a week and now that she’s in end-stage renal failure, up to four times a week.

“Sharon’s monthly medical expenses are huge,” said Waison, whose family joined Resolution Health about 2005. In 2018 it merged with Spectramed to become Health Squared. “Dialysis is about R35,000, her medication varies from R8,500 to R12,000 and then there’s her multiple blood tests on top of that.”

Like many others, the Waison family is putting its faith in the CMS negotiating their move to another medical scheme, without a waiting period or additional costs.

“But if they don’t come through, what’s going to happen to my daughter?” she asked.

In late June, the writer took up the case of 75-year-old Boksburg pensioner Joan Paice, whose R30,000 hip operation claim was rejected by Health Squared.

She was operated on, in April after falling and breaking two bones in her wrist, but the scheme refused to pay her hospital bill of almost R30,000 because her treatment wasn’t an emergency as she hadn’t immediately sought medical attention. The procedure was elective and therefore not covered, the scheme said.

Asked to comment at the time, the CMS said wrist bone fractures were a prescribed minimum benefit (PMB) “and a scheme cannot refuse to fund hospitalisation on the basis that the member did not seek immediate treatment”.

The writer also engaged with the CMS about Health Squared’s ever-diminishing solvency levels, asking what the regulator was doing about that.

“We have asked the scheme to submit a business plan to CMS on the course of action taken to ensure future compliance to the minimum required solvency of 25%,” was its response. “The scheme has submitted a Regulation 29 business plan and the CMS is meeting the scheme monthly to monitor the scheme’s performance against the said business plan.”

Industry sources told TimesLIVE that last November the CMS called on Health Squared to appoint a statutory manager — a paid actuary — to steer the business back to financial health. “But no-one was appointed,” they said.

Meanwhile, Health Squared’s administrator Agility Health has said it was not aware of the scheme’s intention to file a court application for liquidation.

“We first learnt of this development with surprise on the same day (August 18) as members of the medical scheme were informed,” the administrator said.  “Agility Health continues to support the best interests of members and the scheme and we must therefore respect the authority of the court to decide the course of action that will put members first,” said CEO Dr Tebogo Phaleng.

The administrator has urged members and clients requiring support to email queries@agilityhealth.co.za “with all relevant information” or call  011 796 6425, “and our service team will respond as soon as possible”.

Agility and Health Squared share the same premises in Woodmead, Johannesburg. 

Mark Hyman, CEO of medical claims assessors MediCheck, told TimesLIVE he was inundated with calls from Health Squared members who are due to have procedures before August 31, when the scheme stops covering claims, worried that the hospitals may turn them away in light of the liquidation news.

“But I’ve had an undertaking from the country’s largest hospital group, Netcare, that that will not be the case until the end of August,” he said.

Story updated to include comment from Agility Health.

• GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via e-mail: consumer@knowler.co.za or on Twitter: @wendyknowler.

TimesLIVE

Support independent journalism by subscribing to the Sunday Times. Just R20 for the first month.