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Cape Town - Just over 41% of medical scheme members in SA belong to restricted medical schemes. It’s important for members to know the facts.
A restricted medical scheme is one not open to the general public for membership: it is often restricted to groups of people such as employees of a particular company or industry. These schemes are subject to the same regulations as open schemes, and also are governed by the Medical Schemes Act of 1998.
Here are some pertinent facts on restricted schemes in SA:
- There are 60 registered restricted schemes in SA. The number of restricted schemes in SA has reduced by 37 since the year 2000. Some of the smaller schemes had difficulty remaining sustainable for a variety of reasons.
- There is a total of just over 12.76 million lives covered on medical schemes in this country (3.95 million principal members and 8.81 million beneficiaries). Just over 41% of these people are members of restricted schemes.
- Restricted schemes are often much smaller than open schemes, and even though a new scheme has to have 6000 principal members to be registered, there were 28 restricted schemes with fewer members than this by the end of 2015.
- Sixteen restricted schemes with fewer than 6000 principal members did, however, manage to achieve a surplus before investment income in 2015. When an employer makes membership of a restricted medical scheme a condition of employment, it often means that there are many young and healthy people on the scheme, contributing to its financial sustainability.
- GEMS (Government Employees Medical Scheme) is by far the largest restricted scheme with over 700 000 principal members and almost 1.1 million dependants. Polmed is next in line with about 200 000 principal members and just under 400 000 dependants.
- In 2015, GEMS had a total market share of 17%, making it the second largest scheme in SA, after Discovery, who had a 32% slice of the market. Many people who worked for the government were attracted to GEMS by the employer subsidy on scheme membership. That subsidy has not increased since 2011, though.
- While members on restricted schemes have larger families (2.38 beneficiaries on closed schemes and 2.12 on open schemes in 2015), both the average age of the members (30.5 years as opposed to 33.8 years on open schemes in 2015) and the pensioner ratio (6.1% on restricted schemes and 8.8% on open schemes in 2015) are lower than on open schemes.
- Transmed is the restricted scheme with the highest average age (50 years) as the scheme has many members who are pensioners. During 2015 they experienced a claims ratio of 105.3%.
- Restricted medical schemes had a risk claims ratio of 94.9% in 2015, as opposed to the 88.7% of the open schemes. This is the proportion of contributions used to fund claims.
- Of the restricted schemes, Sasolmed paid out just under R1600 in claims per member per month, Profmed just under R1400 and GEMS just over R1200.
- In 2015 restricted schemes spent 6% of their contribution income on non-healthcare expenditure, and open schemes just over 10%. Restricted schemes tend to be cheaper to administer as the companies who employ the members often absorb some of the costs of running the scheme. They also do not pay any broker fees.
- Profmed had the highest non-healthcare expenditure of the restricted schemes, coming in at over 16%.
- Of the 10 largest restricted schemes in SA, 8 did not attain an operating surplus in 2015. These included GEMS, Polmed, Bankmed, Platinum Health, Transmed, Profmed, Nedgroup and Sasolmed.
- Restricted medical schemes (excluding GEMS) had an over 60% solvency level in 2015. Including GEMS, whose solvency level sits at 10%, this figure drops to just below 40%.
- Both Platinum Health and Transmed’s solvency levels were, in 2015, below the recommended level of 25%.
(Sources: Alexander Forbes Diagnosis 2016/2017 and the Council for Medical Schemes)
