Category Healthcare
SUB CATEGORIES General  |  HIV |  Medical Schemes | 

The Council for Medical Schemes’ seven objectives

03 September 2008 Gareth Stokes

The Council for Medical Schemes (CMS) released their 2007/2008 Annual Report yesterday. Accountable to the Minister of Health, the CMS is the regulatory authority that oversees South Africa’s medical schemes. Its core responsibility is to administer and enforce the Medical Schemes Act 131 of 1998. In today’s newsletter we’ll take a look at some of the Annual Report’s content – though to cover the entire 177 page report you’ll have to download your own copy at

Seven strategic goals…

At the outset the CMS lists the goals which guided its activities over the period. We though it would be useful to provide a quick summary of these points to give you a better understanding of the medical schemes authority.

  • Goal 1: To monitor the impact of the Medical Schemes Act and recommend improvements. In this regard the CMS angle is to “reduce unfair discrimination in access to health insurance, improve access to prescribed benefits and make information available on important trends in medical schemes.
  • Goal 2: To protect medical schemes beneficiaries. The goal requires continual monitoring of medicals schemes’ financial performance to ensure “a financially sound medical schemes business.”
  • Goal 3: To support the work of trustees and ensure a public understanding of medical schemes, including training, providing training and striving for a better understanding of medical schemes among all market players.
  • Goal 4: To take “fair and timely enforcement actions when required.” Such actions ensure suitable behaviour from medical schemes.
  • Goal 5: To “investigate and resolve complaints of beneficiaries. The CMS acts as a self-appointed ‘ombudsman’ to provide fair and unbiased resolutions to complaints against medical schemes.
  • Goal 6: To be an employer of choice. The CMS achieves this through a focus on “recruitment, remuneration, employee development and equity.”
  •  Goal 7: To develop strategic alliance with other regulators and organisations. The CMS has strong relationships with various government departments (most notably the Department of Heath) and industry bodies (The Board of Healthcare Funders).

That – in a nutshell – is what the CMS stands for.

A catalogue of medical scheme performance

In his opening statement, Chairman of the CMS, William Pick says: “The Annual Report provides a fair and transparent representation of the activities and financial performance of the Council and medical schemes during the past financial year, and I am confident that the Ministry of Health, medical schemes, administrators, brokers, beneficiaries, and members of the public will find it informative and useful. It’s particularly informative to turn to the section titled: “Review of operations of medical schemes – 2007.” This section provides a summary of the entire South African medical schemes industry, whether open or restricted.

For 2007 the total number of registered medical schemes fell from 124 to 122 (of which 41 were open and 81 restricted). Of these medical schemes, 36 had more than 30 000 beneficiaries, 32 had between 6000 and 36 000 beneficiaries and 54 less than 6000 members. An analysis of medical schemes’ membership is also telling. The CMS report confirms the generally slow growth in principal members of registered medical schemes – just 6.5% to 3 178 927 members. Dependents increased by only 3.8% to 4 299 113. In total, 7 478 040 South Africans enjoy medical scheme cover. Upon closer analysis, the total coverage of open schemes declined slightly (by 2%) while that in restricted schemes increased (by 21.7%). This shift is attributed to the Renaissance and GEMS schemes.

Unpacking medical schemes’ disbursement

A great deal has been written about the impact of escalating private hospital costs on the affordability of medical schemes. The reason for these concerns is once again highlighted when we assess the total benefits paid by medical schemes on behalf of their members in 2007. Hospitals (both private and public) still soak up the lion’s share of these payments, with 36% of the total. An increase in hospital fees has a big knock-on effect on total medical benefits. Medical specialists (21.7%), medicines (16.7%), supplementary & allied health processionals (7.9%) and general practitioners (7.7%) are the next largest categories...

The 2007 CMS Annual Report also provides a summary of costs, defined as all commissions, service fees and other distribution costs paid to the broker network. In 2007 the total for broker costs was R1bn (an increase of 6.1% over the previous year). Due to an increase in total medical schemes beneficiaries this total represented only 11.7% of total non-healthcare expenditure for the year. Commission rose some 8.1% to R976.7m, while broker fees increased from R35.4 per average member per month to R37.8.

Another aspect covered in the report is administration expenditure of individual schemes as a percentage of gross contribution income (GCI). This ranged from 14.1% for Medshield Medical Scheme (an open scheme with 182 240 average beneficiaries) to a low of 4.8% for the South African Police Medical Scheme (a restricted scheme with 438 687 average beneficiaries.) Discovery Health remains the largest open scheme with 1 886 448 average beneficiaries and reported administration expenditure as a percentage of GCI at 11.1%. GEMS, with 364 020 average beneficiaries achieved 4.9%.

There are myriads of additional comparisons of open and registered schemes; but we don’t have space in this forum to cover them. The CMS 2007/2008 Annual Report is an impressive record of medical schemes activity in the period. Pick sums up the CMS’s reason for being in his opening address: They continue to “strive for a cost-efficient, equitable health system for the country and its people.

Editor’s thoughts:
The CMS Annual Report contains a wealth of information on both open and restricted medical schemes. Have you read previous CMS reports and do you find the contents useful? Add your comments below, or send them to


Added by sipho mvelase, 10 Jan 2010
I want to comment about late joiner penalty as the subject that must be debated as the majority of our working class do not have healthcare cover due to affordability and also when employed their age is impacting to be imposed for late joiner penalty. May this be reviewed or to consider a limited window period to accomodate the masses that are currently siting with no cover due to this late joiner penalty. I do value all the comments about council of medical schemes report. .
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