Updated 01 March 2016

Why medical aid costs are soaring in SA

Hospitals and specialists are ‘overgrazing’ medical aid members because there is a lack of regulatory controls, says the Board of Healthcare Funders.

Private hospital and specialists’ fees need to be regulated to contain costs for medical scheme members, according to the Board of Healthcare Funders (BHF).

These fees take the “lion’s share” of members’ contributions, BHF Executive Director Dr Humphrey Zokufa told the Competition Commission’s market inquiry into private healthcare in Cape Town on Tuesday.

Read: SA has one of the world's most expensive private healthcare systems – WHO

“We are overgrazing the 8.8 million lives on medical schemes, who face increased contributions and shrinking benefits, while medical schemes face deficits,” said Zokufa, who laid the blame for increased costs on the fact that there is “no regulatory forum that controls what hospitals and specialists do”.

The Competition Commission set aside annual tariff negotiations in 2003, deeming it to be anti-competitive behaviour.

The BHF’s Dr Rajesh Patel said 72 percent of births in the private sector were Caesareans, while a rate of 35 percent might be acceptable.

“These Caesareans are not clinically indicated but done for convenience, and ensured an extra half a billion rand was paid to hospitals,” said Patel.

Read: Don't let medical aid schemes bamboozle you

The BHF, which represents most of the 83 private schemes in South Africa excluding Discovery Health, is a lobby group for medical schemes and scheme administrators.

However, Commissioners were not that sympathetic to the BHF’s complaint.

Inquiry chairperson Judge Sandile Ngcobo said that while members were struggling to pay their contributions, medical schemes were prepared to pay managed care companies rates as much as 28 percent of their expenditure to manage members’ claims.

Prof Sharon Fonn, also a commissioner, asked why medical schemes’ benefit packages favoured hospitalisation if hospital care was so expensive.

Read: Forget NHI, use the money for new clinics: DA MP

Meanwhile, Commissioner Dr Nthuthuko Bhengu asked the BHF if it did not have a conflict of interest as it represented both schemes and administrators.

Patel responded that members’ main concern was hospital cover, and that the BHF’s attempts to orient schemes towards effective primary healthcare had not been that successful.

The Competition Commission has initiated the inquiry because it “has reason to believe that there are features of the sector that prevent, distort or restrict competition”.

Public hearings will be conducted until early March and the commission is expected to table its recommendations by December. – Health-e News.

Also read:

Private health care must become cheaper

Many medical aid members choose flexible options

The best medical aid in SA


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