Medical schemes industry solvency ratio continues to exceed required 25% – report
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THE medical schemes industry solvency ratio continues to exceed the minimum required ratio of 25 percent. It stood at 44.55 percent last year, up from 35.61 percent in 2019 even though the industry saw Covid-19 claims to the overall value of R10.1billion in the same period, according to the Council for Medical Schemes (CMS) 2020/21 Industry Report.
The recent CMS Industry Report reveals the impact the Covid-19 pandemic had on the medical schemes industry. According to it, 422 894 members of medical schemes were infected with Covid-19 in 2020 and out of that number, 383 585 recovered. This represented a mortality rate of 3.02 percent. These numbers were based on data from 73 schemes, representing 99.84 percent of medical scheme beneficiaries.
The net healthcare result for all medical schemes combined reflected a surplus of R19.93bn in 2020 (2019: R1.03bn surplus). The improved performance was attributed to the lower use of benefits during the pandemic.
Through various concessions for medical schemes, the CMS allowed for the utilisation of personal medical savings accounts to offset contributions, the relaxation of credit policies, contribution holidays and lower future contribution increases.
As a result, 19 914 members were granted contribution deferrals of R586.9 million, while 16 654 members received relief through their personal medical savings accounts of R180.11m.
The CMS said it also assisted small, medium and micro-sized enterprises (SMMEs) with less than 200 employees, allowing schemes to make payment arrangements with these businesses in order to protect their employees’ cover. This allowed 30 725 members to receive relief through rule amendments and the impact was R133.31m. A further 5 447 members received other types of relief such as debt policy relaxation to the value of R53.68m.
Registered medical schemes fell by two to 76 following two mergers. These 76 schemes had a total subscription of 8.89 million beneficiaries last year, down from 8.99 million in 2019, which showed a 1.15 percent decrease year-on-year.
The average age of medical scheme beneficiaries in 2020 was 33.4 years compared with 33.04 years reported in 2019. The average age of women beneficiaries was at 34.5 years and that of males at 32.2 years. The pensioner ratio increased slightly to 8.9 percent with increases in both males and females.
According to the council, the Covid-19 pandemic caused a decrease in healthcare utilisation and expenditure in 2020, due to the varying levels of lockdowns and cancellation of elective procedures and services. It however cautioned that the decrease in screening activities during 2020 may also affect downstream costs as early detection normally resulted in lower costs and better clinical outcomes in the long-term.
Healthcare expenditure on benefits fell by 3.81 percent to R178.04bn, down from the 2019 reported amount of R185.1bn. Hospital expenditure saw a decline of 8.38 percent between 2019 and 2020, from R68.4bn to R62.7bn. The average amount paid per beneficiary for hospital services also decreased by 8.45 percent to R7 052 while more than 92 percent of this expenditure went to private hospitals.
There were also less visits to the doctor as the amount claimed by General Practitioners (GPs) decreased by 10.07 percent from R10.3bn in 2019 to R9.21bn in 2020. There was an overall decline in the amounts paid toward specialists, hospitals, general practitioners, dentists and dental specialists at 2.26 percent, 8.83 percent, 10.07 percent, 7.19 percent, and 5.52 percent, respectively.
The CMS said despite this, hospital visits by GPs saw a 15 percent increase in cost, with an average of R1 044.94 per event in 2019 to R1 203.43 in 2020 accounting for 14 percent of the total expenditure on GPs. Out-of-hospital visits costs increased from an average of R404.62 in 2019 to R424.59 in 2020.
Caesarean sections increased by 7.3 percent from R651.83 in 2019 to R699.40 in 2020.
Medicines (and consumables) dispensed by pharmacists and providers other than hospitals amounted to R29.43bn representing an increase of 3.73 percent compared with R28.3bn in 2019.