Call us directly: 0861 111 501

Licence: CMS BR5404 & FSP 19742

Authorised Financial Service Provider

CMAC Licence: FSP 17112  CMS: ORG 35

James Easton - Licence: CMS BR 39065

Health Check on Medical Schemes

The Council for Medical Schemes (CMS) released its annual report on Tuesday.

Industry Overview

Number of medical schemes and beneficiaries

The report notes that the downward trend in the total number of medical schemes continued in 2014. This figure reduced from 131 in 2005 to 83 in 2014. The number of open schemes dropped from 47 to 23, while restricted schemes shrunk from 84 to 60 over this period.

Medical schemes had a combined total of 8.81 million members in December 2014, compared to 8.78 million in December 2013. This represents growth of 0.4%, while restricted schemes actually experienced negative growth.

Age of beneficiaries

The average age of medical scheme beneficiaries in 2014 was 32.1 years, slightly older than the 31.9 years reported in 2013, while the pensioner ratio increased slightly to 7.3%.

Contribution income and healthcare expenditure

Scheme contributions increased by 8.0% as at December 2014, while the total gross relevant healthcare expenditure increased by 10.0%.

Expenditure on hospitals, specialists and pharmacies

Medical schemes spent 11.1% more on healthcare benefits in 2014 than in 2013. Total hospital expenditure consumed 37.6% of the total, while expenditure on private hospitals increased by 11.6%.

Payments to all specialists amounted to 23.5% of total healthcare benefits paid in 2014, an increase of 12.0% from 2013.

Medical scheme payments for medicines dispensed by pharmacists and providers other than hospitals amounted to R20.5 billion or 16.6% of total healthcare benefits paid. This was an increase of 8.9% compared to the R18.9 billion spent in 2013.

Other interesting aspects

An article on the Media24 website notes that, after hospitals (37.6%), specialists accounted for 23.5% of total expenditure, and medicines dispensed by pharmacists and providers other than hospitals consumed 16.6%.

The article notes that anaesthetists earned, on average, R2 506 per visit or case, while the corresponding figure for surgical specialists came to R1 720. General practitioners received R328 per case or visit.

Moneyweb reports that the CMS placed seven schemes on “close watch” due to solvency levels below the statutory requirement of 25% during 2014.

“The schemes represent 24.1% of all medical scheme beneficiaries, due to the inclusion of the Government Employees Medical Scheme (Gems) with 1.8 million beneficiaries.

They are: Resolution Health (9.4%), Gems (10%), Liberty Medical Scheme (17.2%), Community Medical Aid Scheme (Commed) (21.4%), Suremed Health (21.4%), Thebemed (22.8%) and Transmed (22%).

Discovery Health Medical Scheme, which accounts for 53.8% of the open scheme market, maintained a solvency level above 25% for the year in 2014, up from 24.3% in the previous year.

According to the CMS, the drop in Gems’ solvency ratio is largely due to a higher-than-expected claims ratio. Membership also dropped by 0.8% due to resignation of public servants, termination of membership due to the scheme’s debt management policy and members who passed away.”

The CMS media release contains a summary of the annual report. Those who want to read the full report can access it here.