Worker-controlled medical scheme delivers affordable healthcare and financial stability

Having grown membership rapidly over the last three years, while simultaneously containing contribution increases and improving financial reserves, worker-controlled Samwumed is a rarity in the turbulent medical aid industry.

Speaking in Cape Town today, Fund Officer Neil Nair said that the Scheme's success in the face of significant challenges facing the industry was based on the value it offered members.

"The critical distinction between Samwumed and the broader industry is our claims ratio. We spend over 90% of member contributions on health benefits, while the average for our peers is closer to 72%. Rand for rand, Samwumed spends far more than the industry average on members' health claims."

Nair said that many competitor schemes tended to spend a proportionately greater amount of contribution income on non-health expenses including administration and marketing costs, broker fees and bad debt.

According to an Alexander Forbes Survey of medical schemes, Samwumed's monthly expenditure on administration was R81 per member last year. The equivalent figures for Discovery and Medshield, for example, were R209 and R156 per member.

Samwumed is a restricted scheme available to all local government employees.
Self-administered by a highly experienced team of industry experts and governed by a Board composed exclusively of elected workers, the Scheme has
22 000 principal members with more than 77 000 lives.

"Everything from membership, finance, claims, assessing and customer service to marketing and advertising is dealt with internally. In three years we've grown membership by more than 25% in areas outside of the Western Cape, stretching across 250 local authorities nationally.

"We have every confidence of becoming the predominant scheme in local government and have negotiated hospital and pharmacy network agreements, and have forged relationships with general practitioner associations," said Nair.

Unusually, growth has not translated into greater costs for members.
Samwumed has been able to contain contribution increases over recent years, with no increase applied from 2005 to 2006. Despite this, the Scheme prides itself on a solvency ratio way above the 25% required by the Medical Schemes Act.

"The Scheme is committed to a progressive healthcare dispensation in South Africa. To this end, we're dedicated to the principle of 'not-for-profit'
and endeavour to maximise member benefits through the provision of comprehensive primary and tertiary care benefits. In addition, we use a model that is not predisposed towards inflated non-health costs," said Nair.

On the migration of members from some medical aids to the Government Employee Medical Scheme (GEMS), Nair noted that GEMS is restricted to public service workers employed through provincial and national government. Local government employees are from a separate tier of government with revenue derived mainly from the local community rates base.

"Conditions of employment, and more specifically employee benefits, are differentiated. However, GEMS may have a consequence on local government schemes should we see a closing of ranks between public service and local government employees," he said.