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Medical Schemes
Saturday, December 1, 2012
Usual story

Liberty Medical Scheme says it has “done everything possible to minimise the 2013 premium increase to an average of 11%, in line with medical inflation which currently stands at 10,5%.

According to Executive Principal Officer, Andrew Edwards, “This is to ensure that members continue to get the maximum benefit from their plans.” In detail he explains that 46% of members will have an increase of below 10% while 59% of members will have an increase of below 10.7%.
He points out that while the main focus tends to be on spiralling healthcare costs, people should not overlook the fact that over the last five years the quality and standard of healthcare in private facilities has vastly improved, benefiting hugely from major technological improvements. “During this time our benefits have also increased significantly.”
Sizwe Medical Fund has announced its proposed 2013 increase at a weighted average of 10.82%. Sizwe provisional curator, Dr Ngubekhaya Gobinca, says the scheme has expanded its product range to include a new generation savings-style product with a 25% savings account. “We have taken into account the need to focus on taking a more preventative approach. To this end we have added new wellness screening benefits and an oral contraceptive benefit for women across all options. We have also increased the hospitalisation benefit for our lower end option, Primary, to R1 million.” He attributes the contribution increase to a rise in the use of benefits as a result of ageing beneficiaries, an issue faced by all schemes in the market; external cost drivers; the rising burden of disease; advances in more expensive technology and ensuring that the scheme maintains healthy reserves during 2013.
The Government Employees Medical Scheme (GEMS) says the average weighted contribution increase will be 10.26%. Christa Brink, Deputy Chairperson of the GEMS Board of Trustees, explains that the contributions paid by GEMS members are income based and so the Scheme will at the same time adjust all salary band boundaries by 7% to ensure the majority of members who recently received salary increases will not move to higher salary bands in the Scheme’s contribution table.
One main reason given for the increases is “to strengthen Scheme reserves in line with legal requirements and to protect member interests into the future.”
The closed Scheme, which provides healthcare cover to public servants also said that it had reached a membership level of more than 660 000 principal members. This represents over 1.7 million covered lives. GEMS now covers about 62% of all eligible public service employees, 55% of whom did not previously have access to the medical scheme subsidy provided by the employer.
Brink said the increase was also attributable to the fact that GEMS has historically been a fast-growing Scheme, with approximately 6 000 new members joining every month during 2012. “As these new members join, the total annual contributions received by the Scheme, and therefore the reserves that the Scheme is required to hold, increases significantly.
“Our true test came with the migration of approximately 16 000 pensioners who retired before 1992 to GEMS in April 2012. This significantly diluted the reserves of the Scheme as the pensioners did not bring reserves with them.
“The average age of these pensioners is 82 years. On the other hand, the average age of Scheme members prior to them joining was 43 years. One of the Scheme’s greatest concerns is the cost associated with covering the healthcare needs of such a large group of individuals who are of an advanced age. It is noteworthy that 96.6% of them are chronic medicine users while 95% claim benefits on a monthly basis. The 2012 Scheme budget did not provide for these members and the impact of this financial burden has weighed heavily on the Scheme and will reduce reserves by 1.1% by the end of this year.”
The 2013 benefit increase, which is unavoidably higher than increases of previous years, comes off a historically low base. GEMS is required by law to build reserves equal to 25% of annual contributions.
“Benefit levels have been increased by 5.5% across the board on all GEMS options,” she says. “While we are at all times mindful of the need for greater affordability we also fully understand the importance of good benefits that will serve the healthcare needs of our members and their loved ones.”
Meanwhile, concerning the focus of prostate (and testicular) cancer in November. Dr Peter Bond, Chief Medical Officer at Old Mutual, says although prostate cancer is common in men older than 45 with about 4 500 new cases per annum in South Africa, it is a very treatable condition.
Detected early, it can be treated in a number of ways, ranging from ‘waiting and watching’ to see if it worsens, to different forms of radiation therapy or surgery. Outcomes of treatment are very favourable, especially if caught early, and has given rise to the expression “dying with it, rather than from it”.
But treatment – when required – can be expensive. The last thing you need when undergoing treatment is the stress of financial pressure, which can hamper the healing process. So proper financial planning, which incorporates severe illness cover, can prevent financial stress from possibly aggravating the situation, says Dr Bond.
One certainty about prostate cancer is that while you can’t do anything to prevent it, you can do a lot to minimise the outcome. “It is important for men to be aware of any family history of cancer and to adopt a healthy lifestyle. It is vital to go for annual checks, as early cancer detection and effective treatment ultimately reduce the number of preventable deaths.”
Dr Bond adds, “I want to encourage men to overcome their reluctance to undergo an annual examination. It remains one of the most effective ways to detect disorders of the prostate - such as an enlarged prostate, for example - and prostate cancer.”
There’s no single cause for prostate cancer, but a healthy diet can help to limit your chances of developing it. Green vegetables are recommended, as well as foods containing boron, such as almonds, and red wine in moderation.
Says Dr Bond, “Sound planning remains key in making sure that you are financially protected should you be diagnosed with prostate cancer. The first financial defence is to belong to a good medical scheme. However, many people do not know what their medical scheme covers, and only find out too late when their claims are rejected. So it’s critical to understand the benefits offered by your scheme, and the shortfalls in medical expenses that you may face.
“It’s also important to consider the loss of income while recuperating. You may need weeks or even months off work while receiving treatment. If this happens, how will you replace your income during this period?”
Many insurance companies offer severe illness cover. In some instances, there are maximum age limits, and pay outs may also depend on the severity of the illness.

Footnote: In 2011 the number of medical schemes continued to fall -97 medical schemes were registered in South Africa, compared to 100 in 2010 and 144 in 2000. The number of principal members increased by 3.3% to 3 730 565 for 2011, and that for dependants by 2% to 4 795 844 – a total of 8 526 409.
It is, perhaps, interesting that dentists are getting a smaller cut. It shows how the sector is being squeezed, suggesting the profession continues to price itself out of the market by its very high cost of charges for dentistry.
 

Copyright © Insurance Times and Investments® Vol:25.12 1st December, 2012
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