Claims exceed contributions

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. In addition to the overall priority of addressing the skewed nature of the medical spending pie, some of the other key aspects are:

  • A national health insurance system to provide equitable and accessible healthcare to the entire population (the minister’s mandate under the South African Constitution), given the fact that the current model of private healthcare is becoming increasingly unaffordable.
  • A review of the current prescribed minimum benefits package (PMBs). This is the basket of basic healthcare services to which all medical scheme members are entitled and which, by law, medical schemes are obliged to pay for. The BHF has made a submission to government, urging that these be reviewed to make them less expensive.

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.

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Advertising

Inside Facebook’s big bet on Africa

New undersea cables will massively increase bandwidth to the continent

No back to school for teachers just yet

Last week the basic education minister was adamant that teachers will return to school on May 25, but some provinces say not all Covid-19 measures are in place to prevent its spread

Engineering slips out of gear at varsity

Walter Sisulu University wants to reprioritise R178-million that it stands to give back to treasury after failing to spend it

Lockdown relief scheme payouts to employees tops R14-billion

Now employers and employees can apply to the Unemployment Insurance Fund for relief scheme payments
Advertising

Press Releases

Covid-19 and Frontline Workers

Who is caring for the healthcare workers? 'Working together is how we are going to get through this. It’s not just a marathon, it’s a relay'.

PPS webinar Part 2: Small business, big risk

The risks that businesses face and how they can be dealt with are something all business owners should be well acquainted with

Call for applications for the position of GCRO executive director

The Gauteng City-Region Observatory is seeking to appoint a high-calibre researcher and manager to be the executive director and to lead it

DriveRisk stays safe with high-tech thermal camera solution

Itec Evolve installed the screening device within a few days to help the driver behaviour company become compliant with health and safety regulations

Senwes launches Agri Value Chain Food Umbrella

South African farmers can now help to feed the needy by donating part of their bumper maize crop to delivery number 418668

Ethics and internal financial controls add value to the public sector

National treasury is rolling out accounting technician training programmes to upskill those who work in its finance units in public sector accounting principles

Lessons from South Korea for Africa’s development

'Leaders can push people through, through their vision and inspiration, based on their exemplary actions'

Old Mutual announces digital AGM

An ambitious plan to create Africa’s biggest digital classroom is intended to address one of the continent’s biggest challenges — access to education

The best local and international journalism

handpicked and in your inbox every weekday