A new analysis from AlexForbes Health, using Council for Medical Schemes data on the country’s 10 biggest open schemes and the 10 largest restricted schemes, highlights rising pressure on the industry, reports Business Day.
It said increasing healthcare costs, the ageing membership base and higher claims utilisation, are all contributing to the squeeze.
Paresh Prema, AlexForbes Health Head of Technical and Actuarial Consulting, said the strain was apparent in the overall risk claims ratio, which rose from 95.8% in 2023 to 96.2% in 2024.
Open schemes recorded a ratio of 91.9%, while the claims ratio for restricted schemes reached 101.3%, indicating they were paying out more than they had received in contribution income.
The medical schemes industry recorded an operating deficit of R11.64bn in 2024, up from R10.20bn in 2023, mainly because of worsening claims ratio in restricted schemes.
Many schemes that recorded operating deficits had to rely on investment income to help absorb claims and administration costs.
While the number of medical scheme beneficiaries saw modest growth, it was concentrated in restricted schemes, pointing to the growing affordability pressure on members and appeal of employer-supported cover, said Prema.
Overall medical scheme industry membership stood at 9.04m beneficiaries at the end of 2024, a 0.6% increase on the previous year. Open schemes reported a 1.2% decline in membership year on year.
While no open medical schemes recorded a year-on-year increase in beneficiaries of more than 5% in the year to December 2024, six restricted schemes breached this threshold: Alliance-Midmed (5.8%), Foodmed (5.1%), the Government Employees Medical Scheme (5.2%), LA Health (6.7%), Retail Medical Scheme (5.3%) and Umvuzo (5.3%).
Business Day article – Ageing members and rising costs squeeze medical schemes (Restricted access)
See more from MedicalBrief archives:
MP calls for scrapping of costly medical scheme
Chronic illness fuels substantial medical aid hikes
Medical aid schemes shrink, but member numbers grow