Feasibility of Low-Cost Medical Benefit Options on track: CMS

Reading Time: 4 minutes

The Council for Medical Schemes (CMS) has sought to assure the public that the work on the feasibility of Low-Cost Medical Benefit Options is on track, with the health minister set to receive the findings and final report at the end of the month.

The council held a briefing, announcing the guidance on medical scheme contribution and benefit adjustment increases for 2024.

This follows concerns that costs in the private healthcare sector have been rising faster than inflation, a move that triggered a recommendation for medical schemes to limit their cost assumptions for tariff increases to 5%, in line with the Reserve Bank’s CPI projections for 2024.

The CMS says the country’s multi-year higher interest rates are clear evidence that most household budgets will remain constrained for the foreseeable future, leaving most consumers unable to afford private healthcare. This also saw medical aids lodging court applications on behalf of their members, requesting that medical schemes be allowed to offer low-cost benefit options. The registrar says there’s been a move here.

“CMS has collected all the information and comments by all stakeholders and it underlines all of that. In addition, we’ve made our own findings and recommendations and at this stage, we have presented this to our own government structure at the Council for Medical Schemes. We are at the final stages of the comprehensive documents and we are hoping it will be presented to the minister of health before the end of this month,” says Sipho Kabane, Registrar: Council for Medical Schemes.

The Council says all 72 open and restricted medical aids in the country have been hiking contributions above inflation in the last decade. It recommends that medical aid schemes in the country limit their 2024 price hikes to 5% at minimum.

“For us is to strike a balance between the sustainability of the scheme and the affordability of the contribution by members so given all the prevailing circumstances CMS advises medical schemes to limit their cost assumption for tariff increases to 5%, which aligns with the SARB monetary policy projection for 2024, additionally it is recommended that a prudent percentage mark-up be incorporated, taking into account scheme-specific demographic and utilisation changes for the benefit year 2024,” adds Mfana Maswanganyi, Regulation Executive: Council for Medical schemes.

 VIDEO: Annual medical scheme adjustments:

The Council is worried about the lack of beneficiary growth, which it says threatens the long-term sustainability of medical schemes

“You will see that over time the population covered by medical schemes has remained unchanged at about 15 to 16% of the population which can be evidence that people do not afford medical schemes. The other indicator is the size of families that are covered by medical schemes. We’ve seen over time the average size of the family reducing, it will be that households are making decisions to say who to cover or not to cover so that they are able to continue to afford the medical scheme coverage. Those that don’t have needs will stay out,” says Mondi Govuzela, Senior Manager, Council for Medical Schemes.

The recommendation was taken to all medical aids in the country through the CMS’ latest circular, with the schemes given time to raise their objections and give proposals.

“What’s important for us is that we want to conclude the process as early as possible in order that we allow medical schemes, in order to allow medical schemes to communicate the contribution changes to members of medical schemes by law medical schemes are supposed to give their members 30 days’ notice before implementing any changes so it means the office must conclude this process by end of November. We anticipate that the majority of schemes should be concluded by that time unless there are those schemes where there is no agreement between ourselves and them in terms of contributions in case,” Govuzela adds.

The CMS has also raised concerns that the utilisation estimates submitted by the schemes do not always correlate with the changes in a scheme’s demographic and risk profile.

The Council is worried about stagnation in the growth of people opting for medical aids. With an uncertain economic future, the officials say theirs is to punt Section 7 of the Medical Schemes Act speaking on the protection of medical scheme members and transformation in the space.

The schemes have until November to submit proposals on the benefits adjustment increases.