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26 August 2009

Crunch time for schemes

An increasing number of South Africa's 119 medical aid schemes are feeling the financial pinch, members of Parliament's health portfolio committee heard on Wednesday.

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An increasing number of South Africa's 119 medical aid schemes are feeling the financial pinch, members of Parliament's health portfolio committee heard on Wednesday.

"We're beginning to see medical schemes facing problems," the acting CEO and registrar of the Council for Medical Schemes, Patrick Matshidze, told MPs.

The council is a statutory body established in terms of the Medical Schemes Act. Operating since 2000, its primary responsibility is to protect the interests of beneficiaries.

Solvency ratio has dropped
Briefing members, Matshidze tabled figures showing the average solvency ratio of medical schemes had dropped over the period 2005 to 2008, from 39.1% to 36.6%.

While this average was still "way above" the prescribed level of 25%, a total of 18 schemes had fallen below this.

"We've got... 18 open medical schemes that have failed to meet with the prescribed level of solvency. Among this 18, some are on their death bed... the most we can do is encourage them to either amalgamate, at best, or liquidate, at worst."

The council defines a solvency ratio as "the cash a medical aid scheme needs to keep in reserve, expressed as a percentage".

Amalgamations and liquidations increase
Matshidze said there were an increasing number of amalgamations and liquidations within the medical aid sector.

The council also handled complaints lodged by members against their medical scheme. A total of 37.2% of these (1 166 complaints) in 2008/09 related to accounts not paid by schemes, an increase over the previous year's 36.9%.

"This remains a serious concern," Matshidze said.

Earlier this month, the Sunday Times reported that many of the country's 7.8 million medical aid scheme members were fast running out of funds to cover day-to-day medical expenses.

The newspaper quoted Matshidze as saying the council was investigating whether schemes were slashing benefits.

Speaking later to Sapa, he said the investigation was "ongoing" and the amounts involved had not yet been quantified.

Earlier, he told the committee that at the end of 2008, medical schemes had garnered R74bn in contributions, and paid out R64.7bn in claims.

Of the claims paid, by far the bulk went to private hospitals (about R23bn), medical specialists (about R14bn) and for medicines (about R11bn), Matshidze said.

Committee chairperson Bevan Goqwana told members that medical aid schemes would be called at a "later" date to account to members on their activities. – (Sapa, August 2009)

Read more:
Most in SA without medical aid
Recession threat to med schemes

 
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