The Council for Medical Schemes’ “Circular 48 of 2016: Guidance on benefit changes and contribution increases for 2017” contains the requirements for the assessment of the benefits and contributions for 2017.
Apart from prescriptions on the manner in which funds should apply, it also contains key considerations which the CMS will take into account when assessing the industry cost increase assumptions for the new benefit year.
Historical trends indicate that overall medical scheme contribution rate increases have consistently outweighed both the CPI and the CPI “health basket”. The Consumer Price Index is used as a proxy measure for affordability since most sectors within the economy experience CPI-linked salary increases. The persistent high rate of contribution increase relative to CPI is not sustainable and remains a major concern for the CMS.
Whilst the Council for Medical Schemes is cognisant of industry specific cost-push factors, contribution increases in excess of consumer inflation, place an undue financial burden on members, serve as a barrier to entry for potential new members, leads to limited financial protection for the members and threatens the long term sustainability of the industry. In addition, macro-economic conditions have left consumers more vulnerable than in the previous years, and medical scheme Trustees should be cognisant of the adverse effect of higher contribution increases on their members.
Notwithstanding other unique healthcare industry specific challenges including the adverse effect of the current volatility in the exchange rate market, it remains the position of the CMS that the increase in hospital fees, pharmaceutical products and therapeutic appliances should also be limited to 6% in line with consumer inflation. Market participants and stakeholders must seek other efficient ways of curbing costs, as opposed to simply shifting the financial burden to medical scheme members.
Please click here to download Circular 48 of 2016