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What does your medical scheme contribution pay for?

Healthcare expenses outpace increased contributions.

South Africa’s 8.8 million medical scheme beneficiaries contribute on average R1 543.20 per month to their medical scheme, but often question the value they receive.

The Council for Medical Schemes in its recently published annual report shows members’ out of pocket payments grew by 13.4% in 2016, compared to the previous year and it represented 18.6% of total benefits paid. The biggest items members paid for themselves were out-of-hospital medication and supplementary and allied health care.

This is most probably a vast understatement, as members often don’t submit claims for such expenses.

According to the council, schemes in 2016 paid on average R1 423.60 per beneficiary per month or 92% of the equivalent contribution on healthcare.

Of that R1 423.60, more than a third, or R535.79, is paid to hospitals. R224.92 or 15.8% is paid by medical schemes for medication. The council’s statistic show the share paid to hospitals has been growing over the last three years, while the share of medication spend has been shrinking.

Supplementary and allied healthcare professionals were paid R103.21 per average beneficiary per month and general practitioners R84.41.

All specialists, including anaesthetists, medical specialists, pathology services, radiology services and surgical specialists, accounted for 24.02% of healthcare benefits paid during 2016. That means that they received R431.94 per average beneficiary per month.

Source: Council for Medical Schemes Annual Report 2016/7

The monthly administration cost per average beneficiary amounts to R132.40.

The average benefits paid to service providers per discipline per event differed vastly, with the highest being the R2 935.67 paid to anaesthetists. This calculation however does not take into account the duration of the event.

General practitioners were on average paid R369.20 per event, an increase of only 4.42% from the previous year. These doctors were on average paid R861.45 for in-hospital consultations, but only R328.00 for out-of hospital visits.

Source: Council for Medical Schemes Annual Report 2016/7

The council points out that the amounts paid to private hospitals and all specialists per average beneficiary per year have increased consistently in real terms over the last decade. In 2016 alone it increased by 9.22% to private hospitals and 9.34% to all specialists in real terms.

Growing healthcare expenditure has outpaced the increases in contributions since 2000, the council shows. Gross contributions per average beneficiary per month have grown by 64.9% in real terms, but healthcare expenditure grew by 70.5% over the same period.

Schemes utilise investment income and reserves to cover increased healthcare costs, the council states.

Scheme expenditure on non-health items have decreased in real terms since 2000, the council reports. This includes administration, commission and service fees paid to brokers, and impairments.

Nevertheless the council warns that items like advertising and marketing, consulting and legal fees and trustee remuneration continue to increase. Recently the spotlight has been on the cost of annual general meetings and increases in the remuneration of trustees and principal officers, the council states.

The three open schemes with the highest administration cost per average beneficiary per month, compared to the industry average of R132.40, are Spectramed (R224.60), Selfmed Medical Scheme (R204.20) and Fedhealth (R168.20).

The council shows handsome increases in the remuneration of some principal officers in the past year:

Source: Council for Medical Schemes annual Report 2016/17

Discovery Health Medical Scheme with 1.2 million members, spent almost R9 million on its annual general meeting. Moneyweb earlier reported that 111 candidates contested four seats on the board of trustees in 2016 and the scheme appointed consultants PwC to run the elections. Sizwe Medical Fund with 50 784 members, spent more than R3 million on its annual general meeting.

Medical schemes paid on average R62.20 of members’ R1 543.20 average monthly contribution as commission to brokers.

The Medical Schemes Act requires that schemes maintain reserves of at least 25% of gross contributions, also known as the scheme’s solvency ratio. The council points out that, while the reserves are meant to provide a buffer for unforeseen and adverse developments, a lower solvency ration does not necessarily indicate financial difficulty. That is especially the case with bigger schemes.

The council closely monitors the schemes with solvency levels below 25%. In 2016 six schemes failed to comply, namely Bonitas Medical Fund (24.4%), Government Employees Medical Scheme (GEMS) (7%), Lonmin Medical Scheme (15%), Resolution Health Medical Scheme (12.2%), Thebemed (18.6%) and Transmed Medical Scheme (20.8%).

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COMMENTS   16

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Seems like another gravy train. High time NHI is introduced

I’m not against NHI but I doubt there is enough medical aid paying people in SA to support such a system, especially putting those funds in Government hands seems like a bad idea at the moment.

NHI in the UK is a bit of a mess as well.

UK has NHS, not NHI. Different things. NHI is single payer health insurance (hence the name), while NHS in UK is socialized healthcare.

the medical system is not that great in Australia either. why don’t you bang the drum on your adopted country?? your comments are rather boring EXPAT!!

Aus med system in top 3 in the world (France being top). Anyway that’s not the issue at hand. It’s the complete waste of medical aid members funds in sa which is the issue. Clearly the pigs have got their snouts to far in to let go

You must be joking… there are 11 million taxpayers in this country and 55 million citizens. Do you really think that can work?

This one still sounds like a type of ”small socks” KPMG type auditor!

Nothing wrong with Bankmed , that I belong to!

Medical aid, the biggest money making racket of our time.

What puzzles me, is that before the property bubble burst back in 2008, there were warnings that the good times wouldn’t last forever. Yet with medical aid, nobody seems to see the same signs.

I see exactly the same bubble signs here, i.e. continued, extravagant increases in yearly premiums that are not consistent with actual increases in income and inflation etc. When questioning why the premiums increase every year above inflation, you get all sorts of vague and weak excuses. I think greed is a major factor.

Prepare for another bubble people, and when it bursts, you read it first here 🙂

The medical aid companies are essentially middle men. As they get bigger and more complicated, less money is going to pay for doctors and nurses.

The same is happening in the UK with the NHS. “Administrators” are getting paid massive salaries and there are thousands of them. The “administrators” typically get paid more than highly qualified doctors. How is that possible?

Switch to a hospital plan and start your owning medical savings account… medical schemes rely on people’s laziness and lack of discipline. Of course, looking after your health by eating right and exercising regularly also saves you a great deal of money in the long run!

Is this purely costs covered by medical schemes or does it include medical savings claims? Savings is essentially funded by the consumer so should play no part in the above.

If you think health care is expensive now, just wait till it’s free.

Indeed, the average UK taxpayer pays R6000 a month for their “free” medical aid through taxes.

NHS budget: 116.4 billion pounds with 29.3 million taxpayers.

With the average taxpayer in the UK earning about GBP28000,they’re paying about 14% of their salary for the NHS so it’s certainly not free.It’s roughly the same as what those here pay as a proportion of their salary for medical aid!

@Bruce, and remember the UK has over 60 million people, all getting “free” healthcare (but only 30 million taxpayers), so you pay R6000 but only get R3000 of value.

UK depends what you earn. I pay 460 national insurance in Uk. Care is free at the point of delivery. My daughter is a barista in a coffee house. She pays 55 pounds a month. Jeremy Clarkson pays 800 a month. If anyone of us get the same disease eg cancer…we all get exactly the same care irrespective of how much we pay in.

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