Oxygen Medical Scheme announces its 2009 Benefit Structure
As part of its 2009 benefit structure review, Oxygen Medical Scheme has announced that it has extended its “pay for the first child and the rest are free” offer to all its benefit options for 2009. In 2008, only six of its nine options enjoyed this cover.
In 2008 alone, Oxygen has saved South African families approximately R135 million through this offer.
“Thanks to the introduction of “pay for one child, get the rest free” on all options, some families will experience decreases on those options where previously each child was paid for,” says Oxygen’s Chief Executive and Principal Officer, James Van Vught. “This could mean a 24% reduction over 2008 contributions for families with three children on Oxygen’s low income options.”
Van Vught says the Wellness programme provided to Oxygen by its wellness partner will also include a new gym benefit for 2009. For adults wishing to join a Virgin Active gym, the joining fee for Oxygen members on selected Oxygen options has been reduced from the current level of R700 to just R300.
The monthly cost of this benefit will remain at only R65, having been kept at this low level for several years.
In addition, if the members are part of an employer group of at least 11 members on Oxygen, then they need not pay the R65 monthly fee, but only the R300 joining fee, allowing them to enjoy a gym membership at no further cost.
Overall, Oxygen has announced an average 15.3% premium increase for the 2009 benefit year, slightly below the current medical inflation rate of roughly 16%. Medical inflation is typically measured as running at a rate of about 3% above CPIX, which is currently 13.1%.
Van Vught says Oxygen has levied the increases on each of its benefit options in line with the option’s claims experience. “In other words, it has levied increases per option according to the option’s performance, and has not loaded performing options to cover the cost of non-performing options.”
The increases come with significant enhancement to members’ day-to-day (primary care) benefit limits.
Primary health care promotes the early detection and prevention of larger, down the line expenses, and as such Oxygen has increased its GP and Acute Prescribed Medication benefits from 30% to 50% depending on the benefit option selected. This is well above medical inflation and contributes towards the strategy of promoting wellness through providing benefits for preventative care.
Van Vught says there are a number of reasons driving the increase in monthly premiums. “Firstly, the number of people going to hospital has increased, due in part to a deteriorating age profile of membership across the industry. There has also been continued loss of healthy government employees to GEMS.”
There have also been increases in supplier costs and the cost of new treatment methods. The Rand depreciation against the dollar doesn’t help either, as this adversely affects drug and technology costs.
Van Vught says there are also industry issues contributing to the increases. “Prescribed Minimum Benefit costs are high and not controlled in the industry in any manner, allowing open charging and threatening to increase the burden on members. The delay in the introduction of the REF (Risk Equalisation Fund) to help compensate for Prescribed Minimum Benefit costs is also adding to the cost pressures.”
However, on a more positive note, Van Vught says that Oxygen has been relatively successful in keeping service related costs under check through its preferred provider agreements. Examples are the Hospital, Doctor and Pharmacy Networks where preferred rates have been secured over time.
