Schemes battle costs to remain sustainable

SA operates a two-tiered healthcare system: a free public healthcare sector and an expensive, but better quality, private sector.

There are 75 medical schemes in SA, consisting of both open and restricted medical schemes. Medical schemes are regulated by the Council for Medical Schemes, a statutory body which provides regulatory supervision of private health financing through medical schemes.

Rising healthcare costs have been cited as one of the reasons for above inflationary increases in medical aid cover. Medical schemes argue that high healthcare inflation, a struggling economy and increased claims

particularly for lifestyle related diseases have combined to raise the cost of medical aid cover. Most schemes are looking for ways to contain costs while at the same time growing the benefits their members receive.

Cost containment strategies include the introduction of more affordable plans, hospital networks, managed care initiatives to address the increased prevalence of lifestyle diseases and initiatives to address fraud, waste and abuse. It is estimated 15% of healthcare claims contain an element of fraud, waste and abuse.

Poor economic growth and more financially constrained consumers has resulted in medical scheme membership not growing. Those who do join a medical scheme are typically older and with more healthcare needs.

Increasingly many younger, healthier individuals are eschewing becoming members of a medical scheme which means it’s becoming increasingly challenging for schemes to keep their risk pools viable, explains Fedhealth principal officer Jeremy Yatt.

“Medical schemes are not for profit entities, similar to stokvels, where members pay money to a fund that will assist them with medical related expenses,” he says. “Medical schemes provide a strong sense of social solidarity. Essentially, a modest amount every month provides members with access to massive healthcare value.”

He says the perception that medical schemes are greedy profit chasing entities sitting on piles of money and refusing to pay for simple treatment is incorrect. In reality, he points out, medical schemes paid out R160.6bn towards the costs of healthcare for their members.

“To remain sustainable, members need to contribute to these costs. If there were more lower-claiming members, costs would be lower, but healthier, lower claimers find little value in schemes, so they opt out. This, in turn, drives costs up.”

Without medical aids, many people would not be able to access quality medical treatment. “The medical fraternity has to be recognised as a vital thread in the fabric of society and medical schemes should strive to strengthen this service. Many services are only provided because of the existence of medical schemes that are able to fund these procedures,” he says, citing the example of knee replacements which are not available to patients in the public sector.