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Medical aid not working for the majority

MEDICAL Aid Societies are hiding behind high inflation to claim that their reserves are being eroded and therefore cannot fulfil their obligations to clients, the Zimbabwe Pension and Insurance Rights Trust (Zimpirt) said last week.

Melody Chikono

Zimpirt general manager Martin Tarusenga said his organisation did not believe this view.

He was speaking last week during the Big Debate on pension and medical insurance in Zimbabwe hosted by Alpha Media Holdings.

“Don’t tell us inflation has robbed the reserves, there are no more reserves,” Tarusenga said.

“It won’t work. This is the reason why we are having a problem.

“Are we doing these things right? ‘No, If right from the start you take premiums you must reserve realistically for what you are going to pay. You must make realistic estimates for beneficiaries over a certain period and keep the reserve.

“I would like us to look at the angle that we only have 10% insurance penetration when in fact every one of us needs medical attention. I think there is an issue of design,” he added.
Tarusenga spoke as the Insurance and Pensions Commission (Ipec) commissioner, Grace Muradzikwa said medical cover in Zimbabwe is not working for the majority of Zimbabwe.
Only one in 10 Zimbabweans have medical cover in a country of over 14 million people.

This is despite Zimbabwe signing a commitment during last year’s United Nations General Assembly high-level meeting on universal health coverage (UHC) which would ensure that all eligible citizens are covered.

Muradzikwa said at a 10% coverage ratio, medical aid had skirted the majority.

“I think the fact that our coverage ratio is only 10% means that medical cover is not working for the majority of Zimbabwe,” Muradzikwa said.

“If it was working our coverage and penetration ratio would be higher than the 10%. My observation is that most of the people who are covered are actually those employed in the formal sector. If you are a non-standard worker you cannot afford medical aid so I think this is probably the time we need to look at some kind of national health insurance. I think the need is there.”

Low health insurance coverage, the high cost of health services and weak multi-sectoral coordination of programmes and projects in the sector have been cited as detriments to adequate healthcare in Zimbabwe.

Tarusenga said the reason why the whole country would have only 10% of its population medically covered was that there was no confidence in the sector by consumers.
Tarusenga said the fact that medical aid societies were non-profit did not mean they were not to be properly managed.

MMC capital executive director Itai Chirume was quick to say whether or not medical aid societies worked would largely depend on the ability of the company to index Zimbabwean dollar premiums to United States dollar costs.

While most premiums are being paid in the local currency they formed the assets of the medical aid against the liability side of the medical aid which are predominantly US dollars.
“For this to work, local currency premiums must be moving at the rate of the exchange rate so that it matches the liabilities side. Anything short of that would create an asset-liability mismatch. It will simply not work well. As long as your premium payments are not growing to match the rate of exchange between the United States dollar and the Zimbabwe dollar, medical aid will not work,” he said.

Businessman Nigel Chanakira said medical aid societies and pensions funds were not responding to individual needs.

“The moment you ask me to make monthly contributions and I am unemployed, I might have a problem. I am likely to dumb insurance,” he said.

Lawyer and MDC-Alliance legislator Tendai Biti has said government and the insurance companies have an obligation to compensate pensioners who lost the true value of their pension savings in two consecutive periods of hyperinflation, that is from 2008 to 2009 and in 2019

Biti said apart from the issue of pension being a human rights issue, it is also a developmental issue as pensions drive the economy.

The country needs to resolve the issues as a matter of urgency because it is a matter of serious injustice and gross human rights abuse.

“The issue of pensions must be given the same importance as the Gukurahundi issues as it cuts across the entire spectrum of Zimbabwean life as there are millions of pensioners,” Biti said.

He noted that the world’s largest economies like China were funded by pension savings, hence Zimbabwe must follow suit if it is to develop as an economy.

“Pensions drive the economy because they represent forced savings. The World Bank and IMF [International Monetary Fund] literature will tell you that for a developing country such as Zimbabwe, we need a savings to gross domestic product investment of at least 29%,” the former Finance minister said.

“Regrettably, the authorities in Zimbabwe keep on implementing and executing macroeconomic policies that lead to loss of value.”

Biti bemoaned the devastating effects of currency reforms, dollarisation and de-dollarisation as well as preceding statutory instruments that were enacted.

“We have hardly had any gross capital formation in Zimbabwe since the 1960s. You cannot have gross capital formation without pensions. It is in the government’s best interest to resolve the issue because it contributes to economic development, gross capital formation, moreso in a situation when we have arrears with the World Bank, African Development Bank, The Paris Club of Lenders, and we cannot access the huge amounts of grants and cheap money that we need for our roads, energy and infrastructure,” he said.

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