How medical schemes fared last year through the pandemic

The Annual Report of the Council for Medical Schemes details the effects of the Covid-19 pandemic on claims experience as well as measures put in place to help struggling consumers.

THE medical schemes industry processed Covid-19 claims to the value of R10.1 billion in 2020, according to the recently released Council for Medical Schemes (CMS) Annual Report for 2020/21. There were 422 894 members of medical schemes infected with Covid-19 in 2020, and out of that number, there were 383 585 recoveries, representing a mortality rate of 3.02%. These numbers are based on data from 73 schemes, representing 99.84% of medical scheme beneficiaries.

REGULATING DURING A PANDEMIC

In various concessions to schemes, the CMS allowed for the use of personal medical savings accounts to offset contributions, the relaxation of credit policies, contribution holidays and lower future contribution increases.

As a result, 19 914 members were granted contribution deferrals to the value of R586.9 million, while 16 654 members received relief through their personal medical savings accounts to the value of R180.11 million. The CMS also extended a hand to small, medium and microsized enterprises (SMMEs) with less than 200 employees, allowing schemes to make payment arrangements with these businesses to protect their employees’ cover. This allowed 30 725 members to receive relief through rule amendments (the impact was R133.31 million).

A further 5 447 members received other types of relief, such as debt policy relaxation to the value of R53.68 million.

MEDICAL SCHEMES INDUSTRY

The number of medical schemes fell by two to 76 registered schemes, as a result of two mergers. These 76 schemes had a total subscription of 8.89 million beneficiaries in 2020, down from 8.99 million in 2019 – a year-on-year decrease of 1.15%.

The average age of medical scheme beneficiaries in 2020 was 33.4 years compared with 33.04 years reported in 2019, with the average age of female beneficiaries at 34.5 years and that of males at 32.2 years. The pensioner ratio increased slightly to 8.9%, with increases in both males and females.

HEALTHCARE UTILISATION AND EXPENDITURE

The Covid-19 pandemic caused a decrease in healthcare utilisation and expenditure in 2020 due to the varying levels of lockdowns and cancellation of elective procedures and services. The decrease in screening activities during 2020 may also affect future costs, as early detection normally results in lower costs and better clinical outcomes in the long-term.

● Healthcare expenditure on benefits was R178.04 billion, 3.81% down from the 2019 reported amount of R185.1 billion.

● Hospital expenditure saw a decline of 8.38% between 2019 and 2020, from R68.4 billion to R62.7 billion – over 92% of this expenditure went to private hospitals. The average amount paid per beneficiary for hospital services decreased by 8.45% to R7 052.

● There were also less doctor visits by consumers – the amount claimed by general practitioners (GPs) decreased by 10.07% from R10.3 billion in 2019 to R9.21 billion in 2020. Despite this, hospital visits by GPs saw a 15% increase in cost, with an average of R1 044.94 per event in 2019 compared with R1 203.43 in 2020, accounting for 14% of the total expenditure on GPs. Out-of hospital visit costs increased from an average of R404.62 per person in 2019 to R424.59 in 2020.

● Caesarean sections increased by 7.30% from R651.83 million in 2019 to R699.40 million in 2020.

● Expenditure on medical specialists decreased by 2.2%, from R13.4 billion in 2019 to R13.1 billion in 2020.

● The average expenditure per event in hospital increased by 10.99% from R1 549.13 in 2019 to R1 719.41 in 2020. The average expenditure per event out of hospital increased by 4.28% from R1 185.57 in 2019 to R1 236.31 in 2020.

● Medicines and consumables dispensed by pharmacists and providers other than hospitals amounted to about R29.43 billion, an increase of 3.73% on R28.3 billion in 2019.

● Overall, risk benefits paid per beneficiary decreased slightly by 4.31% from R18 791 in 2019 to R17 980 in 2020, and the average spent from medical savings accounts per person increased by 0.04% to R2 029.63.

● PMB expenditure (risk and savings expenditure) amounted to R92.4 billion in 2020. As a percentage of total benefits paid, PMB expenditure accounted for 51.9% in 2020, up from 51.2 % in 2019.

NON-HEALTHCARE EXPENDITURE

Gross non-healthcare expenditure for all medical schemes at the end of 2020 was R17.14 billion, an increase of 3.55%, from R16.55 billion in 2019.

Administration expenditure grew by 3.67% to R14.35 billion, from R13.84 billion in 2019. Administration expenditure is the biggest component of NHE (83.73%), followed by broker fees and other distribution costs (14.81%) and impaired receivables (1.46%). (For more facts and figures on medical schemes’ non-healthcare expenditure see Fact File on page 11.)

SURPLUS AND RESERVES

The net healthcare result for all medical schemes combined reflected a surplus of R19.93 billion in 2020 (2019: R1.03 billion surplus). The improved performance was because of the lower utilisation of benefits during the pandemic.

The 2020 industry solvency ratio stands at 44.55% (2019: 35.61%), well above the minimum required ratio of 25%. Supplied by the CMS