Guiding consumers since 2009

Low cost options discriminatory - BHF

By Staff Writer
The Board of Healthcare Funders are urging the medical schemes industry to do more than simply adding more affordable benefits to already established products. The BHF believes that adding such benefits will not necessarily enable low income households to afford to join a medical scheme.
“In the long term the creation of low-cost options with limited benefits as a separate add-on to those products already on the market is potentially discriminatory and will only serve to make an already fragmented and complex environment more so. Rather, the introduction of such options needs to form part of a larger road map to an overall reform of the private health care funding environment,” revealed BHF.
The BHF’s comments follow the release of the Council for Medical Scheme’s (CMS annual report for 2014-2015 this week. According to the report, the expenditure by medical schemes has increased from 2013 to 2014, along with the average age of beneficiaries and the pensioner ratio.
Dr Rajesh Patel, head of benefit and risk at the Board of Healthcare Funders (BHF), added that while they have not had the opportunity to study the report in detail, “there appears to be inadequate emphasis on health governance reporting.”
Low cost benefit options
In addition to the rise in expenditure, the CMS highlighted the advances being made with regards to the proposed low cost benefit options (LCBO). The aim of the LCBOs are to provide low income households, who would otherwise not be able to afford it, with medical scheme coverage.
Daniel Lehutjo, acting chief executive officer and registrar of the CMS, highlighted that the CMS has already approved the LCBOs framework and is “allowing medical schemes to apply for registration of such options upon publication of the framework.”
However, the BHF said that more needs to be done than simply adding more affordable benefits to already established products.
The report
Among the results released in the report, it was revealed that there is a downward trend in the total number of medical schemes. However, the CMS noted: “Such developments are an expected response to market forces and are not necessarily a negative development or an indication of instability in the South African medical schemes environment.”
There were 83 registered medical schemes on 31 December 2014, of which 23 were open and 60 restricted. BHF said it was concerned about the reduction in the number of closed schemes. “Closed schemes remain an asset for employer groups because the cost of healthcare benefits is lower for closed schemes than for open schemes.
“While BHF supports consolidation in the industry, we have noticed that the average number of plans per medical scheme has been going up over the past few years,” revealed Patel.
The report also showed that the average age of medical scheme beneficiaries has increased from 31.9 years in 2013 to 32.1 years in 2014, with female beneficiaries generally being older than males (32.9 and 31.1 respectively). Meanwhile the pensioner ratio also increased by 7.3%).
During 2014, medical schemes spent 11.1% more on healthcare benefits than in 2013 (from R111.7 billion to R124.1 billion), with expenditure on private hospitals increasing by 11.6% from R41.6 billion to R46.4 billion.
Part of the increased expenditure for 2014 was that more was spent on specialists. Specialists have been divided into five categories by the CMS, these are: anaesthetists, medical specialists, pathologists, radiologists and surgical specialists.
Specialist payments accounted for 23.5% of total healthcare benefits paid in 2014. The amount paid to specialists (R29.1 billion) increased by 12% from the R26 billion paid in 2013. Other expenditure included payment to general practitioners (GPs) and pharmacies.
The report also highlighted that the cost of admin fees, broker fees and other non-healthcare costs increased by 7.1% in 2014 (R15.4 billion) compared to 2013 (R14.4 billion).
The CMS noted: “Given the substantially high increases in non-healthcare expenditure observed in the earlier years (higher than the rate of increase in contributions), this has consistently been a key focus area for the CMS. While these costs have reduced in real terms overall, there are still individual schemes and components, such as advertising and marketing, consulting and legal fees and trustee remuneration of non-healthcare expenditure that are displaying increasing trends and thus require attention. In the interest of member protection, it is important that such expenditure has a demonstrable value proposition. The CMS will continue working with trustees and management of medical schemes towards managing these costs to acceptable levels.”
While the report highlights the changes in the medical schemes industry. Patel noted that more can be done. “BHF would like to see a lot more reporting on healthcare quality and health governance in the future.”
He added: “The report presents a lot of information on the state of the industry but there is inadequate analysis of what this means for the industry. [It is] too early to comment on whether it would have an impact.”
To read findings by the CMS, click here.

Recent Articles

Featured Debt counselling – the two sides of the coin

Being overindebted doesn’t just put a strain on your personal finances; it also puts a strain on your state of mind. The best solution is to start the process of debt counselling so that you can escape the debt cycle. But what are the ups and downs of joining this debt relief programme?

Travel ban – how to claim for the loss incurred

As with the recent Covid-19 pandemic, governments sometimes issue travel bans to prevent people from travelling to other countries. This becomes even more complicated if you’ve already planned and paid for your trip. Your flights will be cancelled, and you may lose money from cancelled accommodation arrangements. How do you claim for the financial losses incurred due to a travel ban?

How to finance and insure a second-hand vehicle

Buying a second-hand vehicle may suit your budget better than acquiring a new one. But what impact does an older model have on vehicle finance and car insurance? We reached out to specialists in the field to explain what the financial implications are of pursuing a second-hand vehicle.

Reading your loan agreement: look out for this

Many people don’t read their loan agreements. They just sign on the dotted line without realising that they could be signing their lives away. But it’s important to review your loan agreement before and after taking your loan to avoid future setbacks.



Udemy online course for R180

Price: R180
When: Until 27 March 2020
Where: Online

Educate your kids for free with Skills Share

Price: Free
When: Daily
Where: Online

Take advantage of payment holidays from Standard Bank and Nedbank

Price: Free
When: From 1 April to 30 June 2020
Where: Nationwide