Health Squared Medical Scheme beneficiaries are at the mercy of other medical schemes after theirs went into curatorship and also applied for voluntary liquidation.
While the Council for Medical Schemes (CMS) is awaiting the Gauteng High Court (Johannesburg) ruling on 1 November to confirm who the curator will be, scheme members and beneficiaries are struggling to find medical aid providers that will take them without applying penalties.
The CMS industry report for 2021 (released on 18 October) showed Health Squared’s solvency ratio fell to just 6.04%, against a prescribed minimum solvency ratio of 25%. The CMS said in August that the scheme’s solvency ratio had dropped to 2.15% by the end of July and was projected to be between 0.2% and 2.3% by year-end, reports TimesLIVE.
Once the curator is confirmed, the liquidation process is expected to begin.
The CMS held meetings with about eight medical schemes before Health Squared approached the court for voluntary liquidation.
CMS registrar and CEO Sipho Kabane said the regulator tried to persuade these schemes to accept Health Squared members without levying late joiner penalties or waiting periods. But those negotiations failed, and members have had to go out on their own to find alternative medical aid cover.
The CMS executive manager for research policy and monitoring, Michael Willie, said there was a split because some medical aid providers were unwilling to assist. But some indicated their willingness to engage with Health Squared members directly outside those meetings.
“… (W)e have made an undertaking that we are going to be collecting data from all the schemes that have received members of Health Squared so we can get a sense of how many of them have found a home in a new scheme, and if they were subjected to reinsurance or waiting periods. Unfortunately, it’s going to be an onerous process because we are dealing with about 74 schemes,” said Kabane.
While that data were not readily available yet, the scheme’s curator had asked Health Square’s administrator to compile an audit report to show how many members had successfully found medical aid cover elsewhere, what the penalties were, and how many were still battling.
Julindi Scheepers, senior manager for financial supervision at the CMS, said what pushed Health Squared over the cliff was its demographic profile – comprising mostly a large number of older members – which counted against it at the height of the pandemic.
The scheme’s net claims ratio stood at 102.89% in 2021, meaning it paid more in medical aid claims than it collected in contributions.
While the average age for open schemes beneficiaries in the industry stood at 35.51 years in 2021, Health Squared’s members were 47.09 on average. More than a quarter of its beneficiaries were pensioners compared with the industry average of 10.98%.
The other open scheme with an ageing demographic profile, Transmed Medical Fund, also faces solvency problems. Its solvency ratio fell to 19.72% in 2021, below the prescribed minimum of 25%. The average age of Transmed beneficiaries was 56.61 years in 2021, and almost half of them (48.47%) were pensioners.
See more from MedicalBrief archives:
Curator: Health Squared ruined by maladministration
Health Squared under provisional curatorship
Health Squared gets leave to apply for voluntary liquidation