The Council for Medical Schemes (CMS), regulator of the medical schemes industry, released its Annual Report for 2016-2017 on 5 October, providing a comprehensive report on the status of the private medical schemes industry in South Africa.
Some of the interesting statistics in the report include:
Number of medical schemes and beneficiaries
The total number of medical schemes registered as at 31 December 2016 was 82, down from 83, as a result of the amalgamation of LMS Medical Fund and Bonitas Medical Scheme on 1 October 2016. This figure included a total of 22 open schemes and 60 restricted schemes.
Altogether the 82 schemes had a total subscription of 8.879 million members as at 31 December 2016. The industry experienced a year-on-year increase of 0.78 % in the total number of medical scheme beneficiaries, up from 8.809 million in December 2015. The total number of beneficiaries of restricted schemes increased by 1.39% compared to a 0.30% increase in the beneficiaries of open schemes.
Broker costs
Commissions, service fees and other distribution costs increased by 10.0% from R1.8 billion in 2015 to R2.0 billion in 2016, compared to 5.8% in 2015. Broker costs represented 14.1% of total non-healthcare expenditure in 2016, a slight increase from 13.9% in 2015.
Administration expenditure was the main component of non-healthcare expenditure in 2016, at 84.2%, down from 84.6% in 2015. It accounted for 7.3% of GCI in 2016 (unchanged from 2015).
Net healthcare results and impact on reserves
The net healthcare result for all medical schemes combined reflected a deficit of R2 390.8 million in 2016 (2015: R1 208.5 million deficit). Open schemes incurred a total deficit of R955.7 million (2015: R539.6 million deficit), and restricted schemes generated a combined deficit of R1 435.1 million (2015: R668.9 million deficit). This deterioration is mainly due to the worsening claims ratios of all schemes from 91.4% in 2015 to 92.1% in 2016.
The industry average solvency ratio decreased to 31.6% in 2016 from 32.6% in 2015. The solvency ratio of open schemes decreased by 2.1% to 28.6% in 2016 (2015: 29.2%). Restricted schemes experienced a decrease of 4.5% in their solvency ratio, 35.8% from 37.5% in 2015.
The full Annual Report of the CMS, along with Excel and Pdf Annexures which contains detailed information on medical schemes can be accessed on http://www.medicalschemes.com.
