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Schemes 'shifting higher costs on to members instead of containing them'

August 28, 2010
PERSFIN
By Laura du Preez

Medical schemes have not really tackled the issue of how to lower medical costs, the Registrar of Medical Schemes told an industry conference this week.

The registrar, Dr Monwabisi Gantsho, also told the Board of Healthcare Funders conference that the level of reserves held by medical schemes as a percentage of contribution income has declined over the past year.

Gantsho says the Council for Medical Schemes's annual report for 2009, which will be released next week, will reveal that the average reserves to contribution income, or solvency level, of all schemes has declined from 36.6 percent in 2008 to 32.9 percent last year.

The average solvency level of open schemes (which must admit any person as a member) has declined to 27.4 percent, from 29.8 percent in 2008.

Gantsho also says the number of schemes with a solvency ratio of less than the legally required limit of 25 percent of contribution income has increased noticeably. He says schemes "are having difficulty keeping up with increased claims costs - costs per average medical scheme beneficiary increased by 14.6 percent from 2008 to 2009".

Open schemes incurred significantly greater operating losses relative to restricted schemes, he says.

Gantsho says the Council for Medical Schemes would like to see schemes implementing more cost-containment strategies to minimise the impact of contribution |increases on you as a member.

He says schemes need to get more involved in certain aspects of healthcare delivery, to set up individualised networks and negotiate with providers to contain costs.

Gantsho says schemes have predominantly tried to compete by shifting costs on to members and by trying to avoid members who are a high risk, rather than tackling measures to contain costs.

The registrar says his office is still fighting to drive down non-healthcare costs in bigger schemes that have economies of scale.

The Council for Medical Schemes is aware that some schemes design their options to attract younger, healthier members, leaving older, sicker members no choice but to |pay for more expensive options. Gantsho warned that to prevent this his office "will scrutinise benefit options more closely before they are approved".

Gantsho also told the conference that he plans to take legal action to prevent certain restricted schemes or their affected employers from dumping older and sicker members on to other schemes.

To improve the governance of medical schemes, Gantsho says, his office plans to address parliament on the need to reintroduce improved governance measures incorporated in a 2008 Medical Schemes Amendment Bill that was never enacted. The bill was withdrawn from parliament in 2008 to allow the Minister of Health to reconsider it in light of the government's intention to introduce national health insurance.