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Mediclinic News : MEDICAL SCHEMES REGULATOR CONSIDERS UMBRELLA FUND

Title

MEDICAL SCHEMES REGULATOR CONSIDERS UMBRELLA FUND

Date

2019-04-02

Link

https://www.businesslive.co.za/bd/national/health/2019-04-02-medical-schemes-regulator-considers-umbrella-fund/

News Description

BUSINESS LIVE Proposition is for small restricted schemes to pool resources for more affordable membership The Council for Medical Schemes (CMS) is considering introducing an umbrella fund to help small restricted schemes pool their resources to try and make membership more affordable. It is one of several measures being explored by the regulator in response to the government’s policy on National Health Insurance, which advocates industry consolidation. The CMS initially suggested in 2017 that schemes with fewer than 6,000 members might be the first target for dissolution or mergers with larger schemes, drawing fire from industry players and activists alike. It has since softened its position. In a discussion document released at the weekend, the CMS said the size of a scheme alone was “not the most objective and justifiable measure” to determine which schemes should be prioritised for consolidation. The council said it planned to do further research to identify which schemes could be amalgamated, and the effect this would have on administrators. The council also said it planned to release a discussion document soon on the creation of an umbrella fund, which would introduce a standardised benefit package across the schemes that belonged to CMS. This follows on from work it previously commissioned from consultancy Percept on medical scheme consolidation. Among the proposals Percept made to the CMS, detailed in a draft consolidation framework it published last September, were merging public-sector medical schemes, grouping industry schemes, amalgamating vulnerable schemes with stronger ones, and the creation of an umbrella fund. Many small restricted schemes did not want to lose their identity in mergers with large open schemes, but saw potential benefits in merging their risk pools, Percept CEO Shivani Ranchod said on Tuesday. An umbrella fund would provide all the advantages of consolidation, such as a more stable risk pool and greater bargaining power (due to the increased scale of its risk pool), while enabling employers to maintain a close relationship with their staff, she said. Schemes that joined an umbrella fund would all offer members the same benefits, and could share resources such as provider networks to reduce costs. “There is also a broader industry benefit, as it would allow the entry of another large player,” she said. Restricted schemes limit their membership to a specific profession or employer group, while open schemes offer membership to anyone who can afford their premiums. There were 80 medical schemes and 331 options at the end of 2017, according to the CMS’s 2017-18 annual report. CMS senior health economist Nondumiso Khumalo said the discussion document on the umbrella fund would provide details of its proposed structure, the schemes that could participate and the benefits they would offer members. It would be published within the next three months, she said. She emphasised that the CMS could not compel schemes to consolidate. “We can only guide schemes, we can’t compel them,” she said.
Created at 2019/04/08 11:30 AM by Mediclinic
Last modified at 2019/04/08 11:30 AM by Mediclinic