SA’s biggest medical scheme for public servants plans to extend private hospital cover to all members from January as it seeks to standardise core benefits in line with government policy on National Health Insurance (NHI).

The move by the Government Employees Medical Scheme (Gems) to expand core private hospital cover is in line with the Competition Commission’s health market inquiry, which recommended an industry-wide standard benefit package.

It also has the potential to reduce the load on the overstretched public health system by using spare capacity in the private-hospital market.

The development is expected to make medical scheme membership more attractive to lower-paid civil servants, most of whom are not covered, Gems principal officer Stan Moloabi said at a briefing on Thursday.

Gems provides cover for 720,000 principal members and their dependents. Civil servants who join Gems enjoy generous subsidies linked to their income, but until recently low earners on salaries up to grade 5 were restricted to the public sector for all hospital admissions except for births. This year, Gems began to provide private hospital cover for a limited number of admissions, which it now plans to expand. Members will have to stick to strict referral rules, and will be restricted to a network of hospitals.

The average salary for a public servant on grade 5 was R258,312 in 2018-2019, according to the 2019 medium-term budget policy statement.

Only 47% of public servants on salary bands 1 to 5 belonged to medical schemes, said Moloabi. “Our target is to cover all of them,” he said.

There are 1.1-million civil servants, who belong to a range of medical schemes, including Polmed for the police and Parmed for MPs and members of the judiciary.

Gems has been able to expand benefits for members because it has a significant surplus, due largely to the recent introduction of underwriting.

“There is no additional cost to the fiscus,” said Moloabi.

The Medical Schemes Act protects schemes from antiselection, a phenomenon in which people join only when they get ill or expect big health bills. The act allows schemes to use underwriting — measures such as late-joiner fees and waiting periods for pre-existing conditions — to deter this.

Gems introduced underwriting only after its cash crunch in late 2016, when its solvency levels fell to less than 4%, well below the statutory requirement of 25%.

Underwriting saved Gems R1bn in 2018, says CFO Karyna Pierce. Its solvency level was 26.8% at the end of September.

Gems announced a weighted average premium increase of 7.7% for 2020, lower than SA’s biggest open medical scheme Discovery Health Medical Scheme, which recently announced a weighted average increase of 9.5% next year. Momentum Health will increase premiums by a weighted average of 8.2%, while Bonitas plans a hike of 9.9%. 


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