You and your phantom broker

If you belong to a medical aid scheme, you are most likely contributing to the fees of an insurance broker, even if you've never met him.

Currently most open medical aid schemes - schemes that are not restricted to employees of a company - pay brokers up to R69 a month per member to advise their members on their options.

The Council for Medical Schemes, regulator of medical aids, says the law should be changed to ensure that brokers who advise members of medical aids are independent and are paid by the members who use them and not by the scheme.

Wits University health economist Alex van den Heever said the law created a conflict of interest.

"Brokers cannot be independent because they work for the medical schemes. They are not being paid to advise you on the best medical aid, they are contracted by the specific medical scheme to sell specific deals."

He said brokers were assigned to members, even if they had not asked for one.

Council for Medical Schemes registrar Monwabisi Gantsho said amendments to the Medical Schemes Act the council had drafted would change the way in which brokers were paid. The amendments are being considered by the Department of Health.

Justus van Pletzen, CEO of the Financial Intermediaries Association of SA, said not enough research had been done on whether changing the law would benefit consumers.

He said brokers were independent.

"Most brokers have contracts with several schemes to be able to offer their clients a variety of choices in accordance with their medical needs analysis.

"Conflicts of interest are eliminated because broker commission is capped."

He said scheme members could tell their medical aid to stop paying the broker assigned to them if they were not using the broker's advice. But the money saved would stay within the scheme.

He said the proposal that brokers be paid by the scheme members who used them, and not by the scheme, would increase healthcare costs.

"If the broker is required to contract with the healthcare client, there will be more of an administrative burden and this will lead to higher costs that will be borne by the consumer."