Medical scheme membership has become unaffordable for a increasing proportion of the population since 2012, as high unemployment and the rising cost of private health care take their toll.
The proportion of the population belonging to medical schemes declined from 16.4% in 2012 to 15.4% in 2018, according to Business Day’s analysis of data published by the Council for Medical Schemes (CMS) and Stats SA.
The CMS is the statutory watchdog for the medical schemes industry, responsible for safeguarding consumer interests and ensuring schemes comply with the Medical Schemes Act.
While medical scheme membership grew slightly over this six-year period, it failed to keep pace with population growth.
There were 8.916-million medical scheme members in 2018, according to the CMS 2018-19 annual report, tabled in parliament last week, a modest 2.7% growth on the 8.68-million medical scheme members recorded for 2012.
Over this period, the population grew 9.4%, from 52.93-million to 57.94-million, according to data from Stats SA.
“Medical scheme membership is highly correlated to income and employment, and so the proportion of people not on medical schemes is a reflection of the low employment in SA, Insight Actuaries joint CEO Christoff Raath said.
“It is also linked to affordability, and the health market inquiry report gives us lots of information on why schemes are unaffordable [to so many people].”
The five-year health market inquiry published its final report and recommendations on Monday. It said the lack of competition in the private hospital sector, the absence of tariff negotiation between medical schemes and health-care professionals, and weak government oversight are among the factors contributing to the rising costs of private health care and medical scheme membership.
“The affordability crisis is not helped by the medical scheme tax credits not increasing,” Raath said, referring to the Treasury’s decision in 2018 to trim medical scheme tax credits to raise extra money for National Health Insurance (NHI). The cap on these credits is rising at a rate below inflation.
“The health department wants to do away with tax credits entirely. That risks the emergence of a new ‘missing middle’, as it will squeeze out the people on the lowest incomes,” Raath said.
Wits governance professor Alex van den Heever said making medical scheme membership more affordable would require a new regulatory framework, as proposed by the market inquiry. Medical schemes should be incentivised to change the way they contract with providers to drive down costs and get better value for money, he said.
CMS head of stakeholder relations Grace Khoza said the biggest factor affecting medical scheme membership is the state of the economy. The organisation is still considering the health market inquiry report, she said.
The CMS received an unqualified audit for the most recent financial year, which ended on March 31.
There were 79 medical schemes at the end of 2018, with 264 benefit options, the report shows. Schemes received R174bn in risk contribution income and reported a net operating surplus (before investment income) of R1.21bn for 2018.
Risk contribution income excludes optional contributions some members make to their medical savings accounts, which are ring-fenced for their own expenses.
The overall solvency level of the industry, which measures its claims-paying ability, rose to 34.54%, up from 33.19% in 2017.
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