What does 2013 hold for the medical schemes industry?

"Our country’s private healthcare system is a precious national asset, as it ranks among the best healthcare systems worldwide, providing citizens with access to world class, high-quality healthcare,” says Dr Jonathan Broomberg, CEO of Discovery Health.

Medical schemes are critical to the success of the private healthcare system as they form the backbone for financing the private healthcare system. As healthcare costs continue to rise we will see a number of changes to the medical schemes industry, both domestically and globally.

"These changes will have a significant impact on medical schemes’ long-term sustainability,” he says. Change will also impact members who can expect their contributions to increase over time.

The main challenges facing the medical schemes industry are the rising costs of healthcare, the relatively slow growth in schemes’ membership, the increasing prevalence of chronic lifestyle diseases, tariff and member contribution increases, and certain unintended consequences of medical schemes’ legislation. Adverse selection by new joiners who are allowed to join medical schemes when they are old is singled out as one such consequence.

"Tariff increases serve to address the challenges of adequately remunerating healthcare professionals against the backdrop of a critical and worsening shortage of such skills countrywide,” says Broomberg. "We believe the current tariff and coding system urgently requires updating and on-going maintenance to take into account new procedures, new technologies, the changing costs of medical practices and the increasing disease burden across society”.

He adds that a modern tariff and coding system that is acceptable to all stakeholders and is in line with long-term sustainability goals would require broad industry consensus. It will only be achievable in an organised forum consisting of healthcare professionals, medical schemes and regulatory authorities working together in a spirit of transparent cooperation. If successful, these tariff guidelines will serve as a guideline to healthcare professionals on acceptable billing practices.

Members’ contributions increases are hotly debated each year. Broomberg says that medical schemes are at pains to ensure that member contribution levels do not impact negatively on benefits. The intention is never to erode benefits, but rather to enhance them and thereby add value to members’ lives.

The Discovery Health Medical Scheme (DHMS) recently announced that members’ contributions would increase by between 9.8% and 11.8% for 2013… Similar increases have been announced by many of the schemes’ peers. Broomberg explains that contribution increases are set at a level that factors in benefit enhancements while allowing for growth and solvency requirements, as well as making provision for the effect of increased utilisation and advances in medical technology.

For schemes to prosper in a constantly evolving healthcare sector they must employ a well-thought out strategy that will steer them through the many challenges already discussed. It is up to the country’s medical schemes to ensure that members receive the best possible medical care as well as added value through enhanced benefits.

The bottom line for medical scheme members is that they receive affordable, quality healthcare services. For medical schemes the focus is on sound financial management – balancing their healthcare and administration expenditures, member contributions and cash balances – to ensure that schemes can grow sustainably into the future.

All stakeholders in the private health system have a role to play in the new National Health Insurance (NHI) plan by supporting government in its goal to make quality healthcare accessible to more South Africans. Discovery Health supports the NHI in this regard and believes that it and other stakeholders can and should contribute to strengthening and improving the country’s healthcare system .