Medical Aid Industry on the Road to Collapse?

Medical Aid Industry to Collapse?


BHF head warns on SA medical aid sector


The medical aid industry is in trouble, and if nothing is done, it will collapse, forcing millions of members to turn to the public healthcare sector, warns a leading medical executive. The industry has been paying out more than it collects from members. And, on top of that, contributions have been increasing at a pace that is 50% higher than the inflation rate, while benefits have been shrinking.

City Press reports that it is this lethal combination that makes the CEO of the Board of Healthcare Funders, Humphrey Zokufa, believe that medical aid schemes are at risk of collapsing. “What we are seeing right now is that schemes are paying out more than they collect per annum. Some schemes are even using their reserves to pay for claims. “This is not an ideal situation and it is not sustainable in the long term,” said Zokufa.

The Board of Healthcare Funders represents the interests of 65% of the country’s medical aid schemes, but works with most of them in one way or another. Zokufa explained that when schemes paid out more than they collected, premiums were bound to go up. “This is what we have been seeing in the past couple of years, with schemes increasing their premiums far higher than the inflation rate. Medical schemes are trying to match what they pay out. The downside to this is that when premiums increase, it’s the members who suffer,” he said.

Elsabé Conradie, GM of stakeholder relations at the Council for Medical Schemes, agreed, saying that members were the ones who bore the burden of hefty annual increases. She explained that the reason medical aid premiums were escalating every year was primarily because of the high prices charged by service providers, mainly specialists. She also cited the decline in the number of young, healthy people signing up for medical aid schemes. This group usually cross-subsidises the old and sick members of a medical aid scheme.

Zokufa also pinned the blame on specialists and private hospitals, as both were claiming exorbitant amounts from medical aids. “Specialists and private hospitals have free rein in this country. They charge whatever they want because their prices are not regulated,” he said. “When you look at private healthcare expenditure in the last 10 years, you will see that 60% of the budget goes to specialists and private hospitals, while general practitioners and other entities share the remainder of the pie. This situation is not healthy or adequate because it fuels the contribution increases and impacts on the money paid by members to cover the shortfall on their medical bills,” he said.

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