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Mediclinic News : Brace for surge in cost of medical fund membership

Title

Brace for surge in cost of medical fund membership

Date

2016-09-12

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News Description

BUSINESS DAY Medical scheme members are likely to face higher-than-usual contribution increases in 2017, along with greater restrictions in their choice of healthcare providers, according to Insight Actuaries. Open medical schemes reported an overall operating deficit for 2015 due to higher-than-anticipated claims, but they managed to cushion the effect on consumers going into 2016 by dipping into their reserves, according to a report released last week by Global Credit Ratings (GCR). However, after another year of higher-than expected claims, Insight Actuaries joint CEO, Christoff Raath, said the schemes were going to have to make changes to ensure their income covered their expenses. His analysis is consistent with a warning sounded at the Board of Healthcare Funders conference in July, during which SA’s two biggest medical schemes - Discovery Health Medical Scheme and the Government Employees’ Medical Scheme - told delegates that they had experienced an unexpected spike in claims. Raath said there appears to be general consensus in the industry that the 2016 claims experience is higher than expected. He said Insight’s impression is that this is an industry-wide phenomenon driven by higher utilisation rather than higher tariffs, and more hospital claims. Most open medical schemes appear to be affected. The magnitude of this effect differs from scheme to scheme and although it is not catastrophic, it is not insignificant. Raath said the tighter margins reflected in the GCR report imply that most schemes cannot retain their current solvency levels in the wake of higher claims experience without making changes for 2017. Schemes will be trying to strike the balance between introducing higher contribution increases and implementing tighter managed care initiatives and greater restrictions in choice of healthcare providers. They will also try to lower administration fees and negotiate hard on tariffs with healthcare providers, he said. Open medical schemes are due to announce their contribution increases and product changes from late September. GCR said contribution increases among open medical schemes were fairly low for 2015, as schemes tried to retain members. The average contribution increase for the schemes GCR assessed was 9.1 percent in 2015, compared with 10 percent in 2014.
Created at 2016/09/21 04:30 PM by Mediclinic
Last modified at 2016/09/21 04:30 PM by Mediclinic