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Picture: 123RF/JANEWS094
Picture: 123RF/JANEWS094

The Council for Medical Schemes (CMS) recommended earlier this month that medical aid schemes cap their contribution increases for 2023 at 5.7%.

On the face of it, limiting medical aid increases looks like a prudent cost-cutting measure. In reality it could affect the sustainability of the entire healthcare ecosystem, which includes patients, healthcare providers and funders. 

The bigger challenge is that private healthcare is unsustainable in its current format. There is clear overservicing in many areas. That is why the private and public healthcare systems should be reviewed to devise a system that affords all South Africans access to decent healthcare. 

Meanwhile, the healthcare industry is trying to balance affordability and sustainability. It is essential that the industry finds ways to manage rising healthcare costs, but restricting contributions to medical aid schemes is a blunt response to a complex, nuanced situation. 

Few if any medical aid schemes will adhere to the 5.7% contribution cap being proposed by the CMS. During the Covid-19 years some schemes put through low, and even negative, increases. Medical schemes changed the way they implemented fee increases, including deferring increases, dipping into reserves, and announcing delayed increases.

None of those measures is sustainable in the long term. That is because claims have gone back to pre-Covid levels, so schemes will come under severe financial pressure unless they make more realistic increases now.

What type of increases can we expect? As medical inflation is about 3% higher than the consumer price index (CPI), increases of at least CPI plus 3% can be expected. In fact, several medical aids could institute double-digit increases in the coming months to stay abreast of rising costs and claim levels. 

Some schemes will justify contribution increases above inflation due to industry-specific cost factors. Hospitals are already increasing prices by 10% or more, for example. It doesn’t help that providers hike their rates by 10% but funders can only increase their contributions 5.7%. That is unsustainable. To ensure the sustainability of schemes increases of 7%-10% are anticipated. 

No trust

The bigger question is what steps should be taken to create a more sustainable, equitable healthcare system. There are about 4.5-million registered medical scheme members, and about 9-million beneficiaries. That leaves 51-million South Africans who rely on the public health system. 

The elephant in the room is National Health Insurance (NHI). NHI is necessary because every citizen has the right to access decent healthcare. But implementing the NHI faces several challenges. Perhaps the biggest of these is that there is low to zero trust in the ability of government to manage what will in effect be a single medical scheme that is 20 times bigger than Discovery. Then there is the funding of the NHI, which remains a well-kept secret. We still have no indication of what it will cost, and exactly how it will be funded.

Throw into the mix the chronic shortage of doctors, nurses and facilities and the mountain facing NHI starts to become evident. Medical schools are still generating the same number of doctors they did 30 years ago, but the population has doubled since then. Simultaneously, the brain drain is robbing us of the trained medical professionals the healthcare system is crying out for. The bottom line is that NHI may not be fully implemented in our lifetimes.

That is not particularly comforting to the average medical aid member, whose main concern is that any increases in medical aid contributions are kept as low as possible. Many members are already downgrading their plans and options, and any further increases will only put more pressure on consumer wallets that are already under huge strain. 

Most of the larger medical aid schemes have introduced network options to maintain affordability. Other than that, their options are limited. The best thing medical aid members can do is to speak to an informed broker to ensure they get the best coverage for their family’s needs at a price they can afford. 

Ultimately, balancing affordability with the provision of quality healthcare requires a holistic approach that recognises the complex relationships between the various stakeholders in the system. Until then we will not reduce healthcare costs, let alone ensure a robust and sustainable healthcare ecosystem for all. 

• Feldman is executive head of healthcare consulting at NMG Benefits.   

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