Medical schemes council concerned over steep rise in benefit payments

The Council for Medical Schemes has warned that the trend of increasing costs has serious implications for the wellbeing and sustainability of the healthcare system, and the absence of effective supply-side regulation - especially for private hospitals - remains a concern.

Its annual report, released yesterday, showed that despite a decline in the overall number of those claiming benefits, the total amount paid out by medical schemes rose 11 percent from the previous year, to R85bn last year. The council said this trend of increasing prices was unlikely to change. The report indicated that the inflation-adjusted cost per beneficiary for private hospital care per month rose from R172,80 in 2000 to R308,30 last year - a 78,4 percent increase. This was despite a drop in the number of beneficiaries admitted to private hospitals from 193,2 per 1 000 in 2009 to 184,6 per 1 000 last year.

Council chairman William Pick said there was a clear need for supply-side reforms, as "private hospital groups and specialists remain averse to contracting with medical schemes and members are being exposed to the risk of unfair billing practices".

Monwabisi Gantsho, registrar and CE of the council, said beyond regulation, price negotiations between schemes and providers should take place as it was clear that the highest cost drivers were private hospitals and specialists, which took up about 60% of total benefit payments.

Thulani Matsebula, head of research at the council, said despite a trend of increasing numbers of beneficiaries, a process of consolidation was taking place in the industry, with the number of schemes declining from 140 in 2001 to 99 currently. The smaller schemes were being incorporated by larger schemes and the members were being transferred, leading to no "negative impact". However, a worrying trend that had emerged was the increasing age of those in open medical schemes, increasing the risk taken on by medical schemes, which pushed up the cost of monthly contributions. Matsebula said this was largely due to the implementation of the Government Employees' Medical Scheme (Gems) in 2006. This resulted in younger, working-age government members migrating from open medical aid schemes to Gems, leaving a greater proportion of older members in open schemes.

The council said it was also not overly concerned by the proposed National Health Insurance scheme, as medical schemes would operate alongside the new system, providing supplementary services.

Karl Gernetzky: Business Day, 7 September 2011