2017 Benefits and Contributions
As you might have heard in the news, rising healthcare costs have put South Africa's medical schemes under pressure. Consequently, medical schemes are anticipating contribution increases up to 14% for 2017 - in most cases higher than the increases in the past few years.
Unfortunately we won't escape this situation either. In-hospital claims on both the Managed Care Plan and the Standard Care Plan, driven by higher admission rates, have increased significantly between 2015 and 2016. Out-of-hospital claims also increased substantially, predominantly caused by high radiology, clinical technology and pathology costs. At the same time, the Scheme saw an increase of chronic registrations, accompanied by higher chronic claims on the Managed Care Plan.
Previously, the Scheme was able to use reserves to maintain contribution increases close to CPI. Over the past three years benefits have been improved using up excess reserving.
The remaining Scheme reserves are explicitly held to cover increasing costs over the next 30 years, arising from the Scheme's significantly higher than average age. Until recently the Scheme has been able to rely on favourable investment returns to offset higher healthcare costs. However, the current market volatility has resulted in lower returns and increased uncertainty.
The Scheme has committed to keeping future contribution increases at market related rates. We remain confident that the increase, while high, will be at the lower end of the industry average. You will find more information and detail on the 2017 benefit and contribution increases, once finalised, in the next issues of MediBrief.