Good health and good sense are two of life’s greatest blessings, Publilius Syrus said. Syrus, a Syrian, was brought as a slave to Italy, but his wit and talent won the favour of his master, who freed and educated him.

It is worth keeping his wisdom in mind as we strive to use good sense to ensure the good health of South Africans. Key to this is creating the kind of environment that ensures a healthy partnership between private patients and medical schemes.

Whenever medical schemes announce their fee structures at this time of the year — with increases in some instances at rates higher than inflation — there are often complaints that members are getting less for their money than before.

With increasing costs, caused by inflation and the rising costs of doctors, hospitals and medicines, medical scheme contributions have become more and more expensive and schemes have to work hard to demonstrate that they really do add value.

Ensuring medical aid increases are within a recommended range does not fall solely on the shoulders of the medical schemes. So what more can we all do to keep health costs down?

Contribution increases differ from one medical scheme to another, based on issues such as the scheme’s solvency ratio, risk profile, claims ratio, as well as the utilisation of benefits.

So what actually goes into the contribution increase? Cost factors that are taken into account include inflation, an increase in people with chronic, lifestyle diseases, and health infrastructure costs.

In the past financial year, medical schemes spent R160.6bn on healthcare benefits, an increase of 6.04% from R151.2bn in 2016. The bulk of their expenditure continued to be dominated by hospitals, specialists and medicines. Private hospitals were responsible for R58.9bn compared to R56.3bnin the previous year; the expenditure on specialists was R38.5bn (2016: R36.3bn); total costs of medicines dispensed was R25.8bn (2016: R24bn); and expenditure on general practitioners was R9.1bn, compared to R9bn in 2016.

The increase in contributions for all medical schemes in 2018 was 7.2%. This increase is, however, lower than the overall increase in 2017, which amounted to 11.3%, which hit members’ pockets pockets.

For 2019, the Council for Medical Schemes (CMS), an autonomous statutory body created by parliament to regulate medical schemes, issued guidance that the increases in costs should be no more than 5.4%, which is based on expected consumer price inflation for 2019.

How does the CMS arrive at 5.4%? Annually, we receive and approve applications for contribution increases from the various medical schemes. The regulator takes into consideration various elements before an application for a contribution increase for specific benefit options is approved. These include issues such as the trends in terms of utilisation and claims experience for the scheme, as well as the impact the increase is likely to have on members.

We use inflation as a proxy measure for the affordability of medical scheme contributions, though the increases are based on the increase in fees by hospitals and doctors and the number of benefits that are used by members of schemes. Contribution increases are generally higher than inflation and salary increases due to this, and it is therefore a cause for concern as it makes medical schemes unaffordable for most members of the working class.

We also monitor costs incurred in the running of medical schemes, including non-healthcare costs. For example, in general, hospital costs constitute a significant portion of medical schemes’ expenditure. Also, expenditure on specialists continues to be one of the key cost drivers of healthcare costs. In essence, this is a significant contributor for the continued medical contribution increases at above-inflation rates.

While medical schemes are required by law to inform members in advance of any impending changes, members must note that all amendments related to the contributions and benefits, which are marketed and communicated by medical schemes, are only valid upon approval and registration by the CMS.

In spite of above recommended average increases, medical schemes are making an effort to lessen the financial burden of members. For example, there has been an increase in the use of efficiency discount options. 

These are structured in such a way that they offer a choice of a network of service providers with whom the medical scheme has negotiated tariffs for services. For the duration of the year, a medical scheme member who has opted for an efficiency discount option only uses the services of the providers that are part of the network. During this period, members pay a discounted contribution as a result of the arrangements that are in place between the scheme and the service providers. Members will find it worthwhile to inquire from their schemes regarding these options and can make a significant saving in monthly contributions.

Ensuring medical aid increases are within a recommended range does not fall solely on the shoulders of the medical schemes. So what more can we all do to keep health costs down?

  • Doctors must claim according to the rates schemes pay; patients must push for this to happen. It makes care so much simpler for all of us and better for the schemes;
  • We must all reduce unhealthy and dangerous lifestyle behaviours;
  • We need to make use of preventive care benefits, as being informed on our health status can help manage and reduce the incidence of disease; and
  • Avoid duplication of services.

Let us all work together as consumers, doctors and other healthcare providers, hospitals, employers, government and schemes to ensure that medical scheme contributions do not keep increasing ahead of inflation and wage increases.

• Khoza is GM for stakeholder relations at the Council for Medical Schemes.