Address by the Deputy Minister for Public Service and Administration

Mr Roy Padayachie

Monday, 26 October 2009 - Sibaya Casino - KwaZulu Natal

GEMS - State of the scheme in 2009

Honorable Members of the Board of Trustees, colleagues and honoured guests - I welcome you this evening and thank you for taking the time to join us at the second annual GEMS symposium.

As in the past the scheme has made every effort this year to deliver the finest possible healthcare benefits at the most affordable rates to its members. Since the inception of GEMS, member growth has continued unabated, especially in key areas such as providing cover to employees on public service salary levels 1-5. The main reason for this growth, we believe, is that government employees know that our focus falls squarely on providing members with "access to excellent healthcare that is both affordable and administratively efficient". As you would have heard today, what sets GEMS apart from other medical schemes is its unrivalled innovation and the ability to design and implement benefits and services that consistently meet and exceed the needs of our members.

This year GEMS hosted yet another highly successful AGM - this time in Nelspruit.  The Scheme released a fine set of financial results, launched a brand-new mobile phone website, Dotmobi, and a host of attractive new member benefits such as an SMS Benefit Lookup, a brand-new Maternity Programme and a GEMS Wellness Screening Service for Departments.

Other successes and achievements worth noting include:
o The fact that over 33% of all eligible public service employees are members of GEMS and in four provinces more than 40% of employees are GEMS members. In fact, in the Western Cape more than 50% of the employees are GEMS members; and
o The fact that of those employees who were employed in the public service since February 2006, and not covered by the scheme when GEMS commenced operations, 26% are now covered by GEMS.

Over the past two years the benefits offered within each of the five product options on offer from GEMS were significantly enhanced, with the scheme actively encouraging and drawing on member suggestions and recommendations in order to provide benefits that were not only much needed but also highly appealing to members.

When a medical scheme grows at such an impressive rate the margin for error - in terms of cost containment and service levels - is significant.  Within GEMS, independent service level audits confirm that service levels have never been compromised and an exemplary cost containment record has been maintained. Closed schemes are by their very nature able to make safer projections on cost increases and pricing based on their pre-determined risk profile.  However, as a brand-new scheme catering for public service employees, many of whom have never belonged to a medical scheme before, the parameters of the GEMS risk profile was unknown.  In spite of this challenge the Scheme continues to waive underwriting while posting surpluses every year. 

Against a background of increased financial pressure on the average South African, and therefore also on many of our members, we have endeavoured to balance the need to build the financial reserves of the scheme in 2010 while providing GEMS members with improved benefits where possible.

The average contribution increase for 2010 is 10,8%.  Despite a recessionary climate and a need for fiscal prudency, the 2010 contribution rate increase is almost 0,50% lower than that of the previous year. While members will unfortunately be paying more for their healthcare cover, a range of innovative new member benefits are being introduced at the same time. 

Importantly, the first 5,9% of the GEMS contribution rate increase comes as a result of the statutory obligation for the scheme to increase its reserves to 25% in 2011.  The real contribution increase is therefore closer to 4,9% and is evidence of the Scheme's ability to manage its clinical risk profile and negotiate tariffs. The fact that GEMS is one of South Africa's youngest but fastest growing medical schemes means that bolstering the reserves of the scheme will remain a focus point for the Board of Trustees in the medium term.

We are cognisant of the current economic climate where everyone is compelled to stretch their rands as far as possible.  That is why members on options such as Sapphire and Beryl can expect to pay only between R21 and R38 more for a family of three once their subsidies have been taken into consideration, in 2010.  Rand value increases on some of the other options range between R142 to R459 for a family of three depending on the option selected.  However, we have increased the income bands applicable to all benefit options have been increased by 10% in 2010 and many members may find that they actually move "down" in terms of income bands. 

One of the more significant changes that GEMS members can look forward to in 2010 is the introduction of a new, more comprehensive network of healthcare service providers which will be known as the GEMS Network.

While several different benefit enhancements have been made on each of the five GEMS options, the highlights for Sapphire and Beryl members is that they are now offered a private hospital maternity benefit that includes pathology and radiology.  In addition, new mental health benefits including treatment by psychologists were introduced on the Sapphire and Beryl options while unlimited primary healthcare benefits were also added.  On Ruby, Emerald and Onyx the in-hospital non-Prescribed Minimum Benefit (PMB) day admissions are no longer pro-rated, while the limit on each of these options has been raised to R10 760. The benefit for medical and surgical appliances, on the other hand was doubled.

In conclusion, this young medical scheme, created by Government for its employees, has set an exceptional track record of operational efficiencies, innovative services and business enhancements based on member's needs. GEMS has exceeded the expectations we would typically have of but one macro benefits.

Thank you, ladies and gentlemen