WORK TOGETHER TO ENSURE THAT HEALTH CARE CONTRIBUTIONS DO NOT KEEP RISING
“Good health and good sense are two of life’s greatest blessings,” Publilius Syrus once said.
Syrus, a Syrian, was brought as a slave to Italy, but, by his wit and talent, won the favour of his master who freed and educated him. It is worth keeping his wisdom in mind as we strive to use good sense to ensure the good health of South Africans. Key to this is creating the kind of environment that ensures a healthy partnership between private patients and medical schemes. Whenever medical schemes announce their fee structures at this time of the year - with increases in some instances at rates higher than inflation - there are often complaints that members are getting less for their money than before.
With increasing costs, caused both by inflation and the rising costs of doctors, hospitals and medicines, medical scheme contributions have become more and more expensive and scheme have got to work hard to demonstrate that they really do add value.
Contribution increases differ from one medical scheme to another, based on issues such as the medical scheme’s solvency ratio, risk profile, claims ratio, as well as the utilisation of benefits.
WHAT GOES INTO PRICE AND SUBSCRIPTION INCREASES?
So what actually goes into the contribution increase? Consumer Price Index (CPI), an increase in people with chronic, lifestyle diseases and health infrastructure costs are all contributors, amongst others.
In the past financial year, medical schemes spent R160.6 billion on healthcare benefits, an increase of 6.04% from R151.2 billion in 2016. The bulk of medical schemes expenditure continued to be dominated by hospitals, specialists and medicines with private hospitals responsible for R58.9 billion compared to R56.3 billion during the previous year; the expenditure on all specialists was R38.5 billion compared to R36.3 billion spent on all specialists in 2016; costs on medicines dispensed was R25.8 billion compared to R24.0 billion a year earlier and expenditure on general practitioners (GPs) was R9.1 billion compared to R9.0 billion in 2016;
This increases in contributions for for all medical schemes in 2018 of 7.2%. This increase is, however, lower than the overall increase in 2017 which amounted to 11.3%, which had a significant impact on members pockets.
PRICE INCREASES VS CPI
For 2019, we at the Council for Medical Schemes (CMS), an autonomous statutory body created by parliament to regulate medical schemes issued guidance that the increases in costs should be no more than 5.4%, which is based on the expected increase in CPI for 2019
How does the CMS arrive at 5.4%? Annually, we receive and approve applications for contribution increases from the various medical schemes. The regulator takes into consideration various elements before an application for contribution increase for specific benefit options are approved. These include issues such as the trends in terms of utilisation and claims experience for the scheme, as well as the impact that the increase is likely to have on members.
We use the CPI as a proxy measure for the affordability of medical scheme contributions although the increases are based on the increase in fees by hospitals and doctors and the amount of benefits that are used by members of schemes. Contribution increases are generally higher than CPI and salary increases due to this and it is therefore a cause for concern as it makes medical schemes unaffordable for most members of the working class. We also monitor costs incurred in running of the medical schemes, including non-healthcare costs. For example, in general, hospital costs constitute a significant portion of medical schemes expenditure. Also, expenditure on specialists continues to be one of the key cost drivers of healthcare costs. In essence, this is a significant contributor for the continued medical contribution increases at rates higher than CPI.
While medical schemes are required by law to inform members in advance of any impending changes, members must note that all amendments related to the contributions and benefits, which are marketed and communicated by medical schemes, are only valid upon approval and registration by the CMS.
EFFICIENCY DISCOUNT BENEFIT OPTIONS
In spite of above recommended average increases, medical schemes are making an effort to lessen the financial burden of members. For example, there has been an increase in the use of the Efficiency Discount Benefit Options (EDOs). The EDOs are structured in such a way that they offer a choice of a network of service providers with whom the medical scheme has negotiated tariffs for services. For the duration of the year, a medical scheme member who has opted for an EDO option only uses the services of the providers that are part of the network. During this period, members pay a discounted contribution as a result of the arrangements that are in place between the scheme and the service providers. Members will find it worthwhile to enquire from their schemes regarding the EDOs and, as a result, make a significant saving in monthly contributions.
CAN WE KEEP HEALTH COSTS DOWN?
Ensuring medical aid increases are within a recommended range does not fall solely on the shoulders of the medical schemes. So what more can we all do to keep health costs down?
ing to the rates that schemes pay, as patients; must push for this to happen. It makes care so much simpler for all of us and better for the schemes;
healthy and dangerous lifestyle behaviours;
ventive care benefits, as being informed on our health status can help manage and reduce the incidence of disease and Let us all work together as consumers, doctors and other health care providers, hospitals, employers, government and schemes, to ensure that medical scheme contributions do not keep increasing ahead of inflation and wage increases.