Dealing with the medical-aid industry use to be a science, now it’s an art, says Medihelp’s CEO Anton Rijnen, referring to the juggling act of trying to guess annual increases.
“Medihelp has formed a subcommittee especially to monitor and calculate what affects the promises of reduced drug prices, the introduction of the 2004 insolvency clause, the rand/dollar performance and the chronic disease list will have on the market,” said Rijnen, responding to charges by a leading employee benefits company, Lekana, that the annual medical aid price hike will vary by between 9% and 18% in 2004.
There are reportedly seven million members of medical aids, but that number is said to be declining because of the lack of affordability. That in itself is a problem.
Rijnen said it means the existing pool of paying members may be shrinking, leaving fewer members to fund ever more expensive medical aid costs.
Lekana’s head of specialised consulting, Colin Bullen, said the bulk of this year’s blame for price hikes must go to the Department of Health for its policy on the introduction of the solvency clause that required medical schemes to have reserves equal to 25% of their annual contribution inflow.
“This is dead money,” Bullen argued, adding that it sits in reserve and no financial management of the fund is allowed.
All medical aid schemes knew about the imminence of this move by the government as far back as 1999.
“Medihelp already has 22% of the 25% and should have the remainder in place by the end of the year.”
He said Medihelp has settled on a 14,9% increase in tariffs this year and is not expecting to make an interim adjustment as was needed for the 2002/2003 period.
“We are desperately crunching numbers to see what is needed to stay on the right track,” he said, adding that if the government does manage to cut drug prices by about 50%, then the sick will be smiling.
But he was doubtful.
“Manufacturers have already cut costs by 50% and if they agreed to drop prices by another 50% then I am sure prices in other areas will rise radically,” he warned, saying it is just human nature to try to defend their profit margin.
But Rijnen did say it should be a good year for the elderly with the government pushing for an increase in the chronic disease list requirements on all policies to come as standard.
This allows patients with diabetes, Parkinson’s disease and 24 other listed ailments to be diagnosed, treated and cared for on any basic medical aid scheme.
Rijnen said this will have a tremendous impact on the resources of medical aid companies.
Meanwhile, Health Minister Manto Tshabalala-Msimang opened an international review panel workshop in Cape Town on Monday that would debate and make recommendations on establishing a Risk Equalisation Fund as part of reforming the country’s private health care system.
This allows for younger members to contribute to older members’ schemes in an attempt to reduce the subsidies.
“This appears to be the purist form of a cross-utilisation fund, which as far I recall was declared unconstitutional by [the] government not too long ago,” said Rijnen. — Sapa
Manto lauds medical-aid reforms