Following on the publication of the findings of the Health Inquiry released by the Competition Commission earlier this month, the Council for Medical Schemes (CMS), regulator of the medical schemes industry, also released its Annual Report for 2018/19 on 11 October. The report provides a comprehensive review of the status of the private medical schemes industry in South Africa.
Some of the interesting statistics in the report include:
Number of schemes and benefit options
The medical schemes industry has seen consolidation in terms of the number of registered schemes over the past 18 years. The number of medical schemes has declined significantly from 144 in 2000, to 79 in 2018. The decline was more pronounced between 2008 and 2010 when the industry lost almost 20 schemes over a period of two years through mergers, deregistrations and liquidations.
The rate of consolidation has, however, slowed down in the past five years, with the industry only losing four schemes. In 2018, the number of medical schemes declined to 79, consisting of 21 open schemes and 58 restricted schemes.
Overall, the number of benefit options available in open schemes has remained consistently above the industry average while those in restricted schemes have remained below average. Between 2012 and 2013, the average number of benefit options in open schemes decreased significantly from 6.40 to 5.80. The average number of benefit options per scheme for the industry decreased marginally to 3.43 in 2018 from 3.48 in 2017. In 2018, the average number of benefit options in restricted medical schemes declined to 2.33 from 2.39 in 2017 while in open schemes the average number of options declined to 6.48 from 6.52.
Another interesting statistic is the average age of beneficiaries. Industry-wide the average age increased slightly by 0.2 from 32.6 years in 2017 to 32.8 years in 2018. Female beneficiaries were on average older than male beneficiaries for the period 2015 to 2018. The proportion of pensioners increased to 9.0% in 2018 from 8.4% in 2017. The average age of 34.4 years in open schemes was higher than the industry average age of 32.8 years in 2018 while in restricted schemes it was lower at 30.8 years.
Healthcare benefits paid
The total healthcare expenditure on benefits paid in 2018 amounted to R173.3 billion, an increase of 8.0% from the 2017 amount of R160.5 billion. Ninety percent of these benefits were paid from risk benefits and 10% from medical savings accounts. The average claims paid per beneficiary per annum (pabpa) increased by 6.6% to R19 549.00. Risk benefits paid per beneficiary increased by 6.7% to R17 607.91, and the average spend from medical savings accounts pabpa, increased by 5.5% to R1 941.06.
The council also noted an increase in expenditure on private hospitals, which it said increased by 3.51% from R61.8bn to R64bn, adding that the bulk of all medical schemes’ total expenditure continued to go to hospitals and specialists, who were paid R43bn for the year 2018.
Non-healthcare expenditure refers to all other expenditure incurred by medical schemes that is not related to relevant healthcare services i.e. claims. It consists mainly of administration expenditure, broker costs and impaired receivables.
The gross non-healthcare expenditure for all medical schemes at the end of 2018 was reported at R15.79 billion, an increase of 5.01% from R15.04 billion in 2017. Broker fees contribute almost 15% of the total gross non-healthcare expenditure. Administration expenditure was the main component of non-healthcare expenditure, namely 83.10% amounting to just over R13 million.
The full Annual Report of the CMS, along with Excel and Pdf Annexures which contains detailed information on medical schemes can be accessed at http://www.medicalschemes.com.
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