The number of medical-scheme beneficiaries remained virtually unchanged for the past seven years with high unemployment and lack of government intervention said to be keeping membership out of reach of a steadily increasing slice of the population. Business Day reports that the trend is revealed in the 2017-2018 Council for Medical Schemes annual report, tabled in Parliament last week.
There were 8.87m medical-scheme beneficiaries in 2017, compared with 8.53m in 2011 while Stats SA said the population grew from 51.55m to 56.84m. The percentage of the population covered by medical schemes fell from 16.55% to 15.61% in this period.
“The lack of growth in medical-scheme membership indicates its lack of affordability,” said Wits University professor Alex van den Heever. The declining proportion of the population belonging to medical schemes reflected the poor state of the economy and the government’s failure to take steps to make membership more affordable, he said. “There is a strong correlation between registered taxpayers and the number of principal members of medical schemes: anyone with a precarious income won’t join,” he said. “Government has sat on its hands. It has done nothing to enhance coverage, nor has it done anything to regulate costs,” he said.
The report says the council once again drew attention to the remuneration of medical-scheme trustees and principal officers, an issue it has flagged as an area of concern for several years. It had proposed in the draft Medical Schemes Amendment Bill that it publish parameters for the pay of scheme officials, said its spokesperson Grace Khoza.
Medical schemes are non-profit entities that pool members’ contributions to cover future health-care expenses. They are headed by principal officers, appointed and overseen by boards of trustees responsible for determining remuneration policies.
The report says the council’s annual report includes details of principal officer and trustee remuneration for all 80 SA medical schemes. It shows the principal officer for Discovery Health Medical Scheme (DHMS) Nozipho Sangweni was most generously rewarded, with pay of R5.13m, followed by the Bonitas Medical Fund principal officer, who received R4.9m. Bestmed forked out R11.9m in principal-officer remuneration: R7.7m to outgoing principal officer Dries la Grange (including a R6.5m severance package) and R4.2m to acting principal officer Pieter van Zyl.
DHMS remuneration committee chair David King said the pay for its principal officer was periodically benchmarked by an outside consultant. “In a scheme as complex as DHMS, it is critical that the scheme is able to attract and retain executives of sufficient calibre to carry out the complex tasks involved in managing the scheme and its contractual relationships with its service providers,” he said. DHMS used a remuneration model aligned to the King governance code.
The report says the council’s annual report shows significant improvement in schemes’ net operating results before investment income between 2016-17 and 2017-18. The industry reported a net health-care surplus of R3.3bn, compared with a net deficit of R2.3bn the year before.
Insight Actuaries and Consultants joint CEO Barry Childs said 2016 “was generally considered as a very bad year in the industry in terms of scheme performance. Claiming patterns have improved in 2017 and schemes had high contribution increases into 2017. The surplus will top reserves back up to compensate for the drop in 2016.”
The Government Employees Medical Scheme was a significant contributor to the change, as it swung from a R700m deficit to a R2.9bn surplus during the period under review, he is quoted in the report as saying.Business Day report