The number of people who belong to medical schemes in SA shot past the 9-million mark for the first time in 2022, but rapid population growth means membership remains out of reach for a steadily increasing share of the population, according to data released by the industry regulator on Friday.
The share of the population belonging to medical schemes shrank to 14.92% in 2022, down from 16.5% in 2000, primarily due to SA’s high unemployment rate and the increasing cost of private healthcare.
“Medical scheme membership is a function of the number of people who are in employment who can afford membership. If employment doesn’t increase, the number of beneficiaries won’t go up,” said Alexforbes head of technical and actuarial consulting solutions Paresh Prema.
Unemployment was little changed in 2022 compared with the year before, with only one-third of the population (33.5%) working, while the economy grew just 2%.
The Council for Medical Schemes (CMS) is the statutory body responsible for safeguarding consumer interests and ensuring schemes comply with the Medical Schemes Act. It released a preliminary industry analysis indicating there were 9.04-million medical scheme beneficiaries in 2022, a modest 1.1% increase on the 8.94-million lives covered in 2021. Population growth averaged 1.8% a year between 2011 and 2022, according to Stats SA.
Membership growth was reported in restricted schemes, which are limited to specific professions or employer groups, and open schemes, available to anyone who can afford their premiums. Closed schemes grew from 4.11-million to 4.18-million lives between 2021 and 2022, while open schemes grew from 4.83-million to 4.86-million beneficiaries over the same period.
Industry consolidation continued, with the number of medical schemes declining from 75 to 72 in 2022.
The medical scheme industry reported a net healthcare deficit of R6.16bn in 2022, a marked swing from the R820m surplus reported in 2021.
While schemes deliberately drew on the reserves they accumulated during the Covid-19 pandemic to hold down contribution increases for 2022, they appear to have faced higher-than-anticipated claims as demand rebounded, said Prema.
“This is also why the increases for 2024 are larger than the CPI [consumer price index] plus 2% we would normally expect, and are of the order of CPI plus 4%,” he said. The SA Reserve Bank forecast in September that CPI will be 5.9% for 2023 and 5.1% in 2024.
Schemes that have announced intended weighted average contribution increases for 2024 include Medihelp (16%), Momentum (9.6%), Bestmed (9.6%), Discovery (7.5%) and Bonitas (6.9%).
Claims fell during the pandemic as elective procedures were deferred and patients shied away from healthcare facilities for fear of infection, allowing many schemes to accumulate reserves and keep contribution increases below CPI in 2021 and 2022. The industry’s net healthcare result, or surplus after paying claims, stood at a high of R20bn in 2020.
The net healthcare deficit reported by the industry in 2022 suggests some schemes underestimated claims for the year, due to factors such as the increased costs associated with late detection of cancers that are simpler and cheaper to manage if caught early, said Prema.
Medical schemes previously reported a significant decline in cancer screening during the first two years of the pandemic, warning at the time that this could lead to higher costs in the future.
The medical scheme industry reported increased healthcare utilisation in 2022, with the average risk claims per beneficiary per month increasing 5.97% to R1,824.54, compared with R1,738.73 in 2021.
For every R100 received in contributions, schemes paid R93.96 in claims and R8.96 in non-healthcare expenditure, and drew R2.92 of reserves, CMS data shows.
The CMS noted the medical scheme population continued to age, with the average age of members rising to 34 in 2022 from 33.6 the year before. The pensioner ratio also increased, rising from 9 in 2021 to 9.3 in 2022. An ageing population is concerning, because it is associated with more illness and higher healthcare costs.
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