Statement from Discovery Health Medical Scheme - 18 April 2003
Financial strength of the Discovery Health Medical Scheme means members are
protected
Some interpretations in the media of the statement issued by the Registrar
of Medical Schemes last night, have confused the financial and commercial
strength of Discovery Health with the statutory requirements for technical
reserves.
The financial solidity of the Discovery Health Medical Scheme is not
disputed. The medical scheme has the highest possible rating for claims
paying ability in the medical schemes industry from independent credit
rating agency, Global Credit Ratings. The issue playing out in the media
today is a technical issue that has no impact on the financial stability, or
the long-term sustainability, of the Discovery Health Medical Scheme (DHMS),
and certainly has no impact on the scheme's ability to meet its claims
obligations and service its clients.
The technical issue at hand has been debated for some time now. In 2000, the
new Medical Schemes Act heralded a new set of rules for calculating the
technical reserves required in a medical scheme. DHMS is in an exceptionally
strong position, as it has access to substantial capital. During the past
two years DHMS has proposed solutions that use this financial strength of
Discovery to satisfy the technical reserve requirements, in order to ensure
that Discovery Health members don't pay more for their benefits.
However, the Registrar has indicated that members should fund these
requirements. A crude implementation of this philosophy would result in an
increase in member contributions and a decrease in the quality of service
offered to members - a trend unfortunately already prevalent in the
industry. This is an outcome that Discovery Health will do everything in its
power to prevent.
In February this year, DHMS proposed a solution that meets the Registrar's
requirements without members having to pay more. Discovery Health's ability
to manage the health care environment, and its access to substantial
capital, means that it has the ability to facilitate the injection of
billions of Rands into the medical scheme. All that is required to implement
this solution is a rule amendment. Discovery has senior counsel's opinion
that its solution meets all the legal requirements, in that the rule
amendment meets the requirements of the Act and is fair to members- members
do not pay more and their benefits and services are not impacted in any way.
DHMS is committed to ensuring that this solution is implemented and will
appeal the Registrar of Medical Scheme's decision of yesterday not to
register the rule amendment. The next step in the process is an appeal to
the Council for Medical Schemes and thereafter, an independent appeal board
would be constituted to hear the case and, if necessary, this issue would
then go before the High Court of South Africa.
In the final analysis, this is about members. Discovery Health has made an
implicit promise to provide sustainable, quality health care cover at the
best possible rate. If we fail in the process we have embarked on, members'
contributions and the services offered to them will suffer. Discovery
Health's solution is an exceptional plan and we will stay committed to it -
it is worth the effort.
Ends.
FOR FURTHER INFORMATION PLEASE CONTACT:
ADRIAN GORE ON 082 606 2800
SHAUN MATISONN ON 082 606 2865
ROSEMARY RENTON on 082 491 0364
Or
Roz McComb // Hans Venter at
Corporate Communications Consultants
Tel: (011) 783-8926 Cell: 083 365 5152
Date: 18 April 2002
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