MEDICAL AID MEMBERS FACE BENEFITS CRUNCH

Once again consumers will have to dig deep into their pockets to maintain the kind of insurance that they are used to or expect for the amount of money that they pay. As usual this is undermind by corruption and fraud and doctors and/or patients who defraud the insurance companies need to be dealt with to the fullest extent of the law.

Regards
Nikki

Medical aid members face benefits crunch
October 10, 2006

Cape Town - The benefits crunch is about to hit home for millions of medical aid members and dependents in South Africa as schemes 'strip out' previously well-entrenched provisions in a desperate bid to beat the medical inflation ceiling set by the industry regulator, according to Lekana Employee Benefit Solutions.

After at least 20 years of medical inflation at levels substantially above general inflation, the Council for Medical Schemes has told schemes to keep annual rate rises to a maximum of 3 percent above the Consumer Price Index (CPIX).

Colin Bullen, head of specialised consulting at Lekana, said: "On the face of it, CPI plus 3 percent looks like great news for members who have faced hefty double-digit increases for years."

"Unfortunately, the council's intervention comes in a year of poor underwriting results. Benefit utilisation has been at high levels, leading to losses at many schemes.

"If they can't hike rates to the extent they would like, they will have to cut back their benefits.

"The full extent of the pruning won't be apparent for a few weeks yet.

"Members will get the news when they are presented with their 2007 tariffs and see the revised benefit plans."

Bullen predicts:

cuts to the percentage of contributions that may be committed to medical savings accounts;

tighter limits on insured benefit payments;

caps placed on 'above the threshold of benefits' cover; and

higher co-payments to help meet fees charged by specialists.

He said consumers are likely to respond with an 'enough is enough' attitude, although an outright membership revolt is unlikely because there is no effective alternative to private-sector medical aid.

Bullen said: "We will see more churn and more leakage. Early next year, more members may seek a new home and better value for money at a different scheme.

"Small schemes may come under pressure, perhaps leading to greater consolidation - which could be positive in the long-term.

"Leakage will occur when long-suffering consumers simply become tired of paying more for less year after year.

"Medical aid membership peaked in 2001 at a little more than 7 000 000 members and dependants. By 2003-'04 - the most-recent industry figures - the number was down to 6 000 000.

'Death-by-a-thousand-cuts scenario'

"I expect further erosion; which is perverse as the industry and regulator are committed to national membership growth through enhanced affordability. The reality is that costs rise while membership falls."

Although the Lekana industry-watcher believes a public outcry is unlikely, the "death-by-a-thousand-cuts scenario" will strengthen the case for new solutions.

Bullen explained: "The traditional system of setting fixed rates for private-sector medical services has been outlawed as anti-competitive.

"The net effect is to strengthen the pricing power of medical service providers while preventing schemes from forming a united front."

"Unless the special nature of these negotiations is recognised and the anti-competitive ruling is overturned, we will see larger schemes take measures to 'bulk up' and create economies of scale.

"Consumer power may be triggered by publishing the rates charged by all providers for all procedures, enabling well-informed members to shop around.

"League tables for quality and value for money might also be published, creating scope for controversy and litigation by providers who feel affronted.

"It could be the year when the straw breaks the camel's back. We'll have to wait and see." - Sapa