GEMS will bring costs down

It has only been eight months since the Government Employees Medical Scheme (Gems) opened doors for business and already some open medical aids are feeling the pain.

Gems, the for-public-servants-only medical scheme which became operational at the beginning of this year, has signed up 20 000 members.

More than half of these members have been drawn from three private open schemes.

"The schemes have lost 10 000 members since the beginning of this year" said Gems principal officer Eugene Watson, who dismissed talk that Gems had failed to sparkle.

The other 10 000 Gems members are new to medical schemes.

"Our presence in the market is definitely being felt," he said.

"The true impact though is still to come," said Watson, conceding that the new bull in the ring was really still a calf.

Gems is expected to become the biggest medical scheme in the country within a few years.

With free medical aid cover for public servants with an annual income below R60 000 membership is expected to swell.

Watson said he was content with the steady growth in membership but was worried that some of the schemes were stretching the rules of the game.

"They are imposing a notice period of up to three months for public servants wishing to switch to Gems," he said.

Council for Medical Schemes spokesperson Pat Sidley said there was nothing untoward with schemes imposing a notice period if that was in the rules and was being applied to all members and not just public servants.

"That would be discrimination and is definitely not allowed," she said adding that Watson had approached the council with his concerns. Watson's optimism over the prospects of Gems is not shared by all industry observers.

I am not at all surprised that the take up of membership by especially the low income groups has been slow.

Many of these employees access what they need from state hospitals and clinics. They may also be worried that there may have to be co-payments and that it (Gems) won't last said one analyst who requested not to be named.

Watson explained the slow enrolment as owing to difficulty getting messages through to civil servants spread across the country.

"There are 140 departments and 29 000 schools out there so it will not be a quick process," he said.

"It has only been six weeks since the offer of 100 percent subsidy was extended to the 200 000 employees not on medical cover," he said.

The subsidy offer to these employees was made by Public Service and Administration Minister Geraldine Fraser Moleketi and was effective from last month.

Benefits for government employees on Gems are also better than those in open schemes.

Public servants on open schemes get a subsidy of two-thirds of their contribution up to R1 014 a month while those on Gems get 75 percent up to a maximum of R1 900.

According to a new resolution passed on July 24 the following extended family members can be registered as dependants on Gems: a member's grandchild, the child of a sibling of a member for whom the member is responsible and foster children.

A member's grandchild or the child of a sibling of a member must be under the age of 21 and not receive an annual income that is more than the maximum social pension or totally dependent on the member due to a mental or physical disability or between the ages of 21 and 27 and a registered student.

Another observer said once Gems had achieved critical mass, it would be in a strong position to realise economies of scale which would drive healthcare costs down. He said the Gems benefit design was a little inferior to that of some of the leading open schemes. Medscheme - a Gems supplier and Bonitas administrator - the scheme with the highest exposure to public servants - said Gems would affect business.

According to Medscheme: "The raising of subsidy to 75 percent for Gems members will accelerate the migration of members and ultimately this will negatively impact schemes.

We therefore anticipate some degree of consolidation in the industry.

However, from a Medscheme perspective, the group has been appointed as the preferred supplier of managed care and HIV Aids disease management services to Gems and this means that the impact will be mitigated by effect of the increased membership of Gems.

In addition, Medscheme, has for some time, been implementing a range of strategies to increase our penetration into the private sector.

Medscheme is fully committed to supporting government's vision to improve access to affordable quality healthcare for all South Africans and Gems is an integral aspect of making that vision a reality.

"Gems will not only lead to growth in the order of 14 percent in an industry that is currently stagnant in terms of membership growth but the sheer size of Gems is likely to introduce new dynamics into the industry that will act as a catalyst for a range of innovative health delivery mechanisms that will ultimately bring down the cost of healthcare delivery."

Bonitas principal officer Bafana Nkosi had not returned our messages at the time of going to press.