Unhealthy hike in medical schemes
MOST medical aid members will face big price increases for health cover next year with hikes of close to double the inflation rate asked by some schemes.
With the regulatory Council for Medical Schemes (CMS) listing 97 schemes covering nearly 8.5-million beneficiaries, medical aids are a huge industry. According to the CMS, these schemes have a total annual contribution flow of about R84.9-billion.
Hold Consulting, a Port Elizabeth based-firm which brokers employee benefits such as medical aids and pensions, has supplied The Herald with the increases for which 10 leading medical schemes have asked.
“Medical aid is the most expensive employee benefit and a major source of aggravation for families, who use medical aids pretty much every week,” Hold Consulting principal Michael Stow said.
The scheme increases supplied by Hold are for 10 of the 26 “open” schemes. Stow said increases for “closed” schemes – such as Gems for government employees and other industry specific medical aids – were much the same: “The difference is often only 1% cheaper for the closed systems”.
If the CMS approves the increases, then Medihelp – the fourth largest open scheme – will hit its members with an 11.7 increase. The largest “open” scheme, Discovery, is asking for 8.9%. Traditionally the CMS has restricted increases to CPI plus 3%, with CPI rising to 6.4% in August.
“By November, the council has to have analysed all of them and see which are reasonable. It will slap down over-ambitious increases,” said Stow, who said some of the schemes’ financial demands “need to be clipped”.
South Africa was not alone is ask- ing for increases of 3% above inflation, he said. “What is unique is that if they [medical aids] could, they definitely would ask for a lot more than inflation plus 3% and that has been a problem. There is a debate about why this is so but I certainly see medical schemes as being far from blameless.”
CMS stakeholder relations head Dr Elsabe Conradie said members should “make decisions on medical scheme options based on need and affordability”.
“Having considered the year-onyear changes in the CPI and other key economic indicators, the CMS advises the cost increase assumptions for next year . . . should be limited to a maximum of 6% for each individual cost driver,” says the guiding circular sent out. It further recommended schemes apply “a reasonable estimate” for medicine costs.
Medihelp media affairs manager Leon Rademeyer disputed the figure of 11.7%: “Some schemes have a lower increase but they have scaled down their benefits. Our increases are in line with those of other schemes and we have enhanced benefits”.
Stow, however, said the figure of 11.7% was valid for most members of Medihelp. He also explained how percentages did not reveal the whole story, with chronic medicine allowances typically migrating down to cheaper generics, and “self-payment gaps” widening on many options.
“Medical aid reimbursement rates vary from scheme to scheme [and often one plan to another], but fall far short of the private rates charged by many contracted out specialists – the need for top-up ‘gap’ cover insurance, arguably, is greater than ever.”
Low earners, especially without an employer subsidy, increasingly find primary care networks based on income are their only affordable option – even though these products typically do not cover conditions associated with aging, such as joint replacements or physiotherapy.
See the graphic for how 10 medical aids shape up.