Council for Medical Schemes Approves 5% Increase – but no Details on Low-cost Options
In a media briefing on Tuesday, 8th August, the Council for Medical Schemes (CMS) sought to clarify its process and recommendations over the approved 5% increase to medical aid scheme contributions, levels above which the medical schemes must motivate for. As for low-cost benefit options (LCBO), the CMS indicated that they would only provide a report to the Health Minister by the end of the month. This could prevent medical schemes from applying for new LCBOs in 2023.
Mr Mondi Govuzela, Senior Manager of Benefits Management, explained that the 5% approved increase is based on the Consumer Price Index (CPI) for 2022, which indicated a 4.9% increase. Schemes therefore may raise contributions by 5%, in line with the Reserve Bank’s inflation prediction for 2024. A prudent percentage markup should be incorporated to take into account cost increases and demographic changes, he advised. Before COVID, contribution increases have typically been 2.4–5% above CPI. The years 2020 to 2022 saw contribution increases dip below CPI.
One of the cost drivers that Mr Govuzela noted in the media briefing was supplier pressure stemming from fewer doctors and specialists, who were pushing for higher remunerations. Increased costs elsewhere in the healthcare industry. On the member side, growing rates of chronic diseases, membership ageing and coverage for medical services also added pressure.
LCBO would appear to be a solution for many individuals to access private healthcare for at least some urgent conditions, but the CMS has yet to comply with a Pretoria High Court ruling ordering that they provide a report on their moratorium on granting exemptions to medical schemes to provide LCBO benefits. The case was brought by the Board of Health Funders (BHF).
As to what the CMS’s response to the LCBO ruling was, CMS Registrar Dr Sipho Kabane said that the CMS was preparing a report that would be delivered to the Health Minister “by the end of the month”, but would not be drawn on what it might say. The deadline for registering new benefit options is September 1.
In their circular explaining the decision increase, the CMS acknowledged the persistent macroeconomic headwinds facing medical schemes and their members, with a meagre 1% increase predicted for SA’s GDP next year. “Against the backdrop of the current adverse macroeconomic conditions characterised by multi-year higher interest rates due to stubbornly higher inflation rate, volatile domestic currency and surging energy prices and overall lacklustre economic growth, it is evident that most household budgets will remain constrained for a foreseeable future, leaving most consumers under a precarious financial position. To cushion members of medical schemes against further financial distress and the probable risk of losing their health insurance cover due to affordability constraints, medical schemes are advised to limit their cost increase assumptions for contribution increases for the 2024 benefit year to 5.0%, in line with CPI.”