29 Apr 2001 Sunday News Business Times Sunday Politics Sunday Sport Insight Sunday Lifestyle Sunday Columnists readRight Back page Surveys Community rating under the microscope Managed Health Care Risk-rating is a fundamental principle of all insurance. This is where insurers build a profile of individual members, based on age, occupation, lifestyle, claims history and dozens of other factors.
Insurers can then charge a premium to match the perceived risk.
The new Medical Schemes Act, enacted last year, outlaws risk rating on any basis other than family size and income. The introduction of community rating, as it is known, means factors such as age and claims history can no longer be used in determining medical scheme contributions. Compounded, that's a huge burden on an already over-stretched industry. It benefits those in bad health. Younger, healthier members will leave medical schemes and the result will be higher contributions for those who remain.