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Medshield shares its view on industry dynamics at play and its impact on the medical scheme industry, announces the Medshield Value Proposition, option benefits and Medshield member contributions for

26 September 2018 Jerry Molefe, Medshield
Jerry Molefe, Acting Principal Officer of Medshield

Jerry Molefe, Acting Principal Officer of Medshield

Medshield Medical Scheme today provided an update on the market position of the Scheme and the value for money it provides with its range of member-centric options, which are offered at very competitive prices in comparison to the market.

Medshield confirmed its position as a responsible contributor to the changing South African healthcare marketplace, and pledged its support to transparent and sensible national efforts to provide greater access to quality healthcare for all South Africans.

In the announcement of its benefits and annual member contribution update, Medshield expressed confidence in the Scheme remaining sustainably competitive in the future, with the benefit of its members and their dependants firmly at the centre of its business strategy.

“Medshield provides value for money at a lower contribution than most in the marketplace. Members are recognising the value that they get from Medshield,” says Jerry Molefe, Acting Principal Officer of Medshield. “We have seen steady year-on-year membership growth (11.12%) since 2016 (*73 390) to 2018 (*81 553) and our membership totals in the first six months of 2018 are significantly higher than the budgeted number. Additionally the Scheme has been attracting younger members which impacts favourably on the Scheme’s age profile,” states Molefe.

“We must recognise that many changes are afoot in our industry. The Minister of Health gazetted the draft National Health Insurance Bill and the draft Medical Schemes Amendment Bill on 21 June 2018. In particular the Medical Schemes Act could have significant implications for medical schemes on issues such as governance, structuring of contribution tables, benefit design, management of networks and reimbursement for healthcare services. Medshield has a firm intent to be part of the solution for the challenges facing SA’s entire healthcare value chain, and are ready to contribute to the clarity and transparency that is required in the current healthcare market. It is vital to provide positive solutions for issues facing our industry – in the interest of all South Africans,” states Molefe.

“Medshield has a strong leadership team in place. Our operational efficiencies and track record of providing value bears testimony to this. The team acts in the interest of our members with integrity, transparency and accountability,” says Molefe. “As from 1 October 2018 Medshield will also have a newly appointed Principal Officer, Thoneshan Naidoo, at the helm leading this talented team of experts” states Molefe.

“Scheme value offerings and the determination of benefits and contributions need to always be seen in context of the business environment,” states Glen Sikosana, Executive: New Business Development and Marketing. “Affordability of healthcare and fulfilment of members’ needs, coupled with a higher burden of disease and increased healthcare utilisation by an aging membership population influences such decisions,” explains Sikosana.

South Africa does not have an official medical price index and although the Consumer Price Index (CPI) published by Statistics South Africa is used as a starting point for estimating the increases in healthcare input cost, it is important to note that medical inflation is higher than CPI, and always impacts price and benefit decisions for both providers and funders alike. “The South African healthcare needs uniquely South African solutions specific for the challenges facing us. Medshield in principle supports the regulatory reforms intended by the Medical Schemes Amendment Bill as long as it is introduced in an inclusive and transparent manner,” states Sikosana.

“Against the changing healthcare environment and the technical recession the South African economy finds itself in, Medshield is happy to confirm that the Scheme growth is outperforming our expectations, providing more benefit value for every rand spent in comparison to most schemes in the market,” says Rosalind Reddy, Executive: Clinical Risk. “Our member-centric approach and option range meets the needs of our members and are translating into positive results,” states Reddy.

“Even in a very cyclical market and a depressed economy, Medshield offers cover that provide excellent value for money through its competitive suite of benefits. The Scheme is confident of its sustainable financial future in the interest of its members. Medshield membership growth continues to outperform the budgeted 2018 membership. As a result the Scheme is projecting to end the year at a solvency ratio of 32.3% by 31 December 2019, but still remaining significantly above the statutory requirement,” says Reddy. Innovation is customary at Medshield and initiatives are underway to contain care models and to tailor options even further in the future, securing the value that members reap from their contributions.

The increased burden of disease and an older member population impacts contributions decisions. “Although the Scheme has attracted younger members of late, in 2018 the Scheme’s average beneficiary age of 37.6 is relatively high compared to the average age for all South African medical schemes, which is 32.5. Similarly, the Scheme has a high pensioner ratio (proportion of beneficiaries aged 65 and older) of 12.2% compared to the industry average of 7.9%. Currently the total contribution income is R26.7m (1.2%) lower than budget due to members choosing to join lower cost options where an anti-selection dynamic is at play while more child beneficiaries than predicted causes variance in the claims experience,” says Angela Blackburn, Executive: Operations.

“Over the last 4 years Medshield has given R120m back to members in the form of lower contribution increases funded from reserves. To ensure future sustainability of the Scheme, amongst others, a weighted member contribution increase of 14.3% is required for 2019. We are pleased to announce that after much research and review, even with this increase, rand-for-rand our options still provide better value than most schemes in the South African market,” says Blackburn.

The table below indicates the Medshield 2019 gross contribution by option in comparison to the 2018 Medshield gross contributions as well as the prevailing 2019 contribution for similar options available from other open schemes in the market – illustrating the value for money in real terms:

The Rand values represents the weighted average contributions payable per person for each of the respective Medshield Options based on that option’s average family composition.

As one can see from the graphic below, the Medshield product spread offering fares very favourable against the market line when doing a like for like comparison against the required member contribution:

In considering our benefits for 2019, some limits will be increased by 5.5%, consistent with CPI inflation and healthcare inflation assumptions,” states Blackburn. “Medshield will remain competitively positioned in 2019. Our range of value options cater for a diverse member base and ranges from options that are suitable for the young and healthy who just need basic healthcare cover all the way to comprehensive cover options for all family sizes. In reviewing the member contribution increases, it is important to look at the real rand value of the contribution, as increases are from a lower base and in most cases remain well below the market line,” explains Blackburn.

“Medshield is confident of its sustainable financial future, in the interest of its members,” concludes Acting Principal Officer Molefe.

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