The medical aid industry is in trouble, and if nothing is done, it will collapse, forcing millions of members to turn to the public healthcare sector, warns a leading medical executive. The industry has been paying out more than it collects from members. And, on top of that, contributions have been increasing at a pace that is 50% higher than the inflation rate, while benefits have been shrinking.
City Press reports that it is this lethal combination that makes the CEO of the Board of Healthcare Funders, Humphrey Zokufa, believe that medical aid schemes are at risk of collapsing. “What we are seeing right now is that schemes are paying out more than they collect per annum. Some schemes are even using their reserves to pay for claims. “This is not an ideal situation and it is not sustainable in the long term,” said Zokufa.
The Board of Healthcare Funders represents the interests of 65% of the country’s medical aid schemes, but works with most of them in one way or another. Zokufa explained that when schemes paid out more than they collected, premiums were bound to go up. “This is what we have been seeing in the past couple of years, with schemes increasing their premiums far higher than the inflation rate. Medical schemes are trying to match what they pay out. The downside to this is that when premiums increase, it’s the members who suffer,” he said.
Elsabé Conradie, GM of stakeholder relations at the Council for Medical Schemes, agreed, saying that members were the ones who bore the burden of hefty annual increases. She explained that the reason medical aid premiums were escalating every year was primarily because of the high prices charged by service providers, mainly specialists. She also cited the decline in the number of young, healthy people signing up for medical aid schemes. This group usually cross-subsidises the old and sick members of a medical aid scheme.
Zokufa also pinned the blame on specialists and private hospitals, as both were claiming exorbitant amounts from medical aids. “Specialists and private hospitals have free rein in this country. They charge whatever they want because their prices are not regulated,” he said. “When you look at private healthcare expenditure in the last 10 years, you will see that 60% of the budget goes to specialists and private hospitals, while general practitioners and other entities share the remainder of the pie. This situation is not healthy or adequate because it fuels the contribution increases and impacts on the money paid by members to cover the shortfall on their medical bills,” he said.
The news report says although the law allows doctors and private hospitals to charge whatever they want, medical aid schemes have set a cap on how much they will pay for procedures and consultations. That, however, does not help patients. All it means is that when members visit a facility that charges more than their medical aid is willing to pay for a procedure or consultation, members must cover the shortfall themselves. Last year, medical aid scheme members were compelled to pay R20.7bn in addition to their premiums to cover shortfalls on medical bills.
According to the report, the Council for Medical Schemes revealed in its latest annual report that this figure was the tip of the iceberg, as there was a great deal of under-reporting when it came to out-of-pocket payments. Zokufa explained that these out-of-pocket payments were causing much unhappiness among members. “Imagine being a member paying thousands of rands to a medical scheme every month. And when you need it to settle your medical bills, it pays only a portion of what is claimed by the provider, leaving you to cover the shortfall. You will obviously be unhappy and, when you are unhappy, you will leave the medical scheme. This is the risk that medical schemes are also faced with right now.”
“Members are not satisfied with the service they are receiving compared with what they are paying,” he is quoted in the report as saying.Full City Press report