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08 Jul 2008 14:44
A significant and worrying development in the escalation of healthcare costs is that medical aid claims are now outweighing contributions.
Says the BHF’s Heidi Kruger: “Because there has been so much pressure and scrutiny on medical schemes, in order to try to keep monthly medical aid premiums below or just over CPIX (the consumer price inflation index), contribution increases have slowed down—but utilisation and costs have escalated. So the claims from hospitals, doctors and other healthcare providers have outweighed the contributions.”
The 2007 registrar’s report of the Council for Medical Schemes revealed that schemes incurred a deficit of R2,1-billion last year and had to dip into their reserve funds to meet the shortfall.
“This is not a sustainable model for medical schemes going forward,” Kruger emphasises, “even though the schemes currently have adequate reserves in place to cover this.”
This, coupled with various perversities and anomalies in the healthcare system, prompted the health minister to bring industry stakeholders together last year at the Healthcare Indaba, to discuss the vexed issue of medical costs, why they are so expensive and to come up with proposed solutions.
Several issues still need to be placed under scrutiny, says Kruger, such as utilisation patterns in the private sector and the reasons why some of the bargaining chamber schemes that are exempt from the Act are able to operate more efficiently, with less expensive costs.
“A great deal of analysis also needs to take place on non-healthcare costs, such as administration and managed care costs.
We need to know the impact of these kind of interventions — Are we saving money as a result of managed care? How much is paid for claims processing, marketing and fraud prevention, for example,” all of which funding is undertaken by medical scheme administrators.
A package of new healthcare Bills expected to come before Parliament soon seeks to address some of these key issues.
Already on the statute book is another key cost-cutting provision enacted into law about two years ago, which stipulates that there should be a single exit price for drugs and medicines.
“This single exit price now prevails and is a major tenet of the legislation,” says Kruger. “And we have seen drug prices drop by about 20% as a result.”
Another aspect of drug pricing legislation that will be introduced is the international benchmarking of drug charges against those prevailing in other OECD countries and emerging markets. This benchmarking exercise helps the health ministry to assess what are fair and equitable prices for drugs and medication in South Africa.
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