Why the medical savings ruling may be good

two major shifts were witnessed. Firstly, members were suddenly in full control of their day-to-day funds and could easily skip the primary healthcare channel (GPs, clinics or pharmacies) as their first port of call. As a result, members increasingly accessed secondary (specialist) care first, as opposed to being referred by a primary care provider, a behaviour that’s since become the norm.

With secondary care vastly more expensive than primary access, members rapidly deplete their MSA funds. Members quickly learned they’re still able to access specialist care if hospitalised, as healthcare expenses related to hospitalisation are paid from the member’s risk benefits and not personal MSAs.

The ultimate result is ever-increasing healthcare costs.

Adding solvency into the equation

Continuously-increasing healthcare costs – with the CMS’s 25% reserve requirement – are a heavy cross for medical schemes. Members aren’t unscathed: many schemes announced higher than anticipated 2017 fee increases, as schemes attempted to replenish reserves after considerable healthcare expenditure.

The 25% reserve requirement was originally conceived as part of far larger infrastructure – of various factors – supporting the viability of the medical schemes industry.

Unfortunately, many of these other factors have fallen away. This one-size-fits-all barometer doesn’t consider often complex and interrelated factors informing liquidity and sustainability.

The ruling’s overall impact is largely limited to how medical schemes present their financial information. All schemes with savings-based options will report an immediately-improved financial position.