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Government Employees Medical Scheme attains 'big five' status

13 April 2007 Gareth Stokes

Recent advertisements trumpet the fact that Discovery Health's membership has topped the two million mark. What makes this achievement so impressive is the fact that only some seven million of the country's population are in the market for private healthc

Discovery has long enjoyed its position as South Africa's largest medical scheme. But the private healthcare environment is changing. Discovery may finally have a challenger to rival it, at least in the total membership stakes.

Just 15 months since its launch, the Government Medical Employees Scheme (GEMS) has passed the 100, 000 member mark- and continues to grow to the tune of 1, 000 new members every day. Measured by membership, GEMS is already among the five largest medical schemes in the country.

Attracting government employees

There were a number of arguments for the creation of a government employee medical scheme. One of these was government's lack of control in relation to the huge amount it spent on providing medical cover for its employees. In 2004, government spent as much as R5.1 billion on medical assistance. This money was spread across many different private schemes, leaving government with little say in the administration of these schemes.

A single private scheme for government employees presented a logical alternative. With GEMS, government has more say over the pricing, benefits and quality of benefits afforded its employees.

When the scheme commenced operations in January 2006 there were approximately 550, 000 government employees enjoying benefits as private health scheme members. The majority of these employees were members of 'open' schemes. The GEMS has since eaten away at this base.

Part of the attractiveness for government employees is the subsidy offered to join the scheme. Government's subsidy for employees earning less than R60, 000 per year is set at 100% of the GEMS entry level option. Other employees (those earning more than R60, 000 per annum) receive subsidies of 75% of their contributions, up to a maximum of R1, 900 per month.

These subsidies are extremely attractive when compared with government's subsidy to employees who choose to remain on their existing schemes. Only two thirds of their contributions to a maximum of R1, 014 per month are covered. This offers a serious incentive to existing employees to switch medical funds. The incentive is offered to encourage existing government staff to switch funds rather than taking the heavy handed approach of forcing them to move. New government employees have to join GEMS.

Affordable healthcare for all

One of the major aims of the GEMS is to expand the pool of individuals receiving comprehensive healthcare benefits. By increasing this number, government is able to reduce the load on the existing healthcare infrastructure which services the bulk of South African citizens.

Dr Eugene Watson, the principal officer of GEMS, acknowledges the challenge, saying that "providing more South Africans with quality, yet affordable, healthcare is still a challenge for both Gems and the entire healthcare industry. The sector needs to attract new lives, increasing both the size of the risk pool, as well as the inherent clinical risk profile."

He believes that the GEMS will benefit the industry by "enlarging the risk pool [and] increas[ing] the total revenue generated, which, in turn, will create additional opportunities for all service providers".

While still well short of the two million members covered by Discovery Health, we can expect GEMS to continue its significant growth and perhaps challenge Discovery for the top spot in the future. It certainly wont be long before GEMS is the second largest medical scheme, by membership, in the country.

Editor's thoughts:
Discovery Health is far bigger than its closest local rival. Do you believe that the company's size is creating difficulties for other medical schemes operating in South Africa? Can a medical scheme be too big- or is size one of the ways in which a scheme can pass major cost benefits to its members? Send your comments to
gareth@fanews.co.za.

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