7 Medical schemes placed on solvency watch

Seven Medical Schemes placed on solvency watch

 

South Africa’s Council for Medical Schemes (CMS), which regulates the medical scheme industry, has placed seven schemes on close watch due to solvency levels below the statutory requirement of 25% during 2014, reports Moneyweb. This was disclosed in the CMS annual report for 2014/15.

The report says the schemes represent 24.1% of all medical scheme beneficiaries, due to the inclusion of the Government Employees Medical Scheme (Gems) with 1.8m beneficiaries.

They are:

  1. Resolution Health (9.4%)
  2. Gems (10%)
  3. Liberty Medical Scheme (17.2%)
  4. Community Medical Aid Scheme (Commed) (21.4%)
  5. Suremed Health (21.4%)
  6. Thebemed (22.8%)
  7. Transmed (22%).

 

Of these, Resolution, Thebemed and Transmed in fact improved on their 2013 solvency rate.

According to the CMS, the drop in Gems’ solvency ratio is largely due to a higher-than-expected claims ratio. Membership also dropped by 0.8% due to resignation of public servants, termination of membership due to the scheme’s debt management policy and members who passed away.

Non-healthcare expenditure – which includes among other things administration cost, remuneration of principle officers and trustee fees, as well as advertising and broker fees – has increased from R1,743 to R1,753.50 per average beneficiary per month. This has long been a focus area for the CMS, the report says. The CMS said while the overall costs have decreased in real terms, some schemes still see it moving upwards. “In the interest of member protection, it is important that such expenditure can demonstrate clear value,” the regulator said. Some of the schemes that fail to meet the solvency level, also feature as high spenders on these non-healthcare items, the report said.

Gems and Liberty with 116,000 beneficiaries, are the top and fifth respectively on the list of schemes with the highest trustee fees and feature with Transmed on the list of top ten highest remuneration for principal officers. Transmed has 81,000 beneficiaries. The CMS has introduced compulsory disclosure of payments to trustees and the next step would be to prescribe the levels of payment, the council said. Liberty and Commed are also among the biggest spenders on advertising, marketing and broker costs.

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