Amendments to the medicines regulations have resulted in a decrease in this component of out of pocket expenditure. According to the 2006 IES, consultations to medical practitioners accounted for the biggest payment i.e. 37.0%, followed by expenditure on pharmaceutical products which accounted for 35.0% for both medical scheme and non-scheme members (Figure 23).
submit annual statutory returns to the council and following the auditing of this data, annual reports are compiled and it is these reports that provided the data for this health expenditure review.
There are three different types of registered schemes: open, restricted and Bargaining Council schemes. Open schemes do not make any restrictions as to who may join, restricted schemes are reserved for people employed in a certain profession, trade or industry, like GEMS, and the Bargaining Council schemes which are restricted to low income groups like workers in the clothing industry. There are no unregistered schemes since that would be contravening the Medical Schemes Act No.131 of 1998.
Overall, the number of medical schemes has increased since its origins in 1889 and there has been the creation of more open than restricted schemes. This trend that was observed in the past has subsequently changed. The number of medical schemes that submitted annual
statutory returns to the Council for Medical Schemes has decreased from 2003 to 2006 (Figure 15) and this reduction is probably due to the lack of sustainability of the business of medical schemes as a result of the policy and legislative changes. Therefore, some schemes have been liquidated while others have amalgamated with more sustainable schemes.24
There has been a decrease in all three scheme types submitting Annual Statutory Returns. The rate of decrease in the number of registered open schemes has initially been greater than that of restricted schemes and this is linked to the members’ ability to pay and the affordability of such schemes. There was a decrease of 14.6% in restricted schemes and a decrease of Bargaining Council schemes from 12 to zero (Figure 16). The latter, although they exist, have not submitted any financial information in the last two years i.e. 2005 and 2006. These schemes have therefore been excluded in the data analysis. Such information would have been useful since these schemes cater for the lower income groups and if they are unable to provide for their beneficiaries, these people use the public sector facilities increasing the burden on it.
January 2005 saw the registration of a new restricted scheme for public sector employees, GEMS. GEMS became operational a year later in January 2006 and has since become the largest restricted scheme and the third largest medical scheme in the country.24 This scheme is now compulsory for all new government employees. It offers affordable, basic health cover to all civil servants in the different income groups thereby promoting equity and improving access. Thus, an employee earning a low income, who previously could not have afforded medical scheme cover, can now join the lowest cost option in GEMS without become
impoverished. It also provides a benchmark scheme for the future when mandatory cover of all formally employed people comes into operation.
An average of 70.0% of beneficiaries belonged to open medical schemes across the four years.
However, since the introduction of GEMS, the percentage of principle members and beneficiaries belonging to restricted schemes has started to increase. There was a 7.6%
increase in 2006, when compared to 2005, in the number of beneficiaries belonging to restricted schemes in contrast to open schemes which increased by 3.0% in the same time-period (Figure 19).
The average age of beneficiaries belonging to medical schemes across the four year period was 31.7 years (Figure 20). This young age group is usually economically active and may be able to afford the monthly premiums since they are usually employed. This age group is also less likely to be affected by chronic diseases of lifestyle and therefore are not seen as a” higher risk”
to medical schemes. The number of pensioners, aged 65 years and older, has decreased since 2004 (Figure 21). The reason for this decline is unknown but it may be assumed that this is a natural attrition rate or that pensioners are unable to afford the increases in contributions that
managed care, marketing, advisory service and consulting are for-profit institutions.24 The non- health expenditure was responsible for an overall 15.0% of total (health and non-health)
expenditure by medical schemes from 2003 to 2005 and 14.0% in 2006.
Administration expenditure and managed health care constituted the two largest cost-drivers among the non-health expenditure for the four year period (Table 5, Figure 27). Acquisition costs, which are incurred when schemes initiate, underwrite and sell a membership, would have been the third largest cost-driver among all non-health expenditures but this was not recorded for 2003 and 2006 (Table 5). The reason for this is unclear but may be due to a lack of data submitted by schemes. Broker fees were the next largest cost-driver. Brokers are responsible for introducing members to medical schemes and were legally recognized in 2000. They generally encourage people to join or move across to open schemes since these schemes pay brokers a fee for the introduction of new members. For the financial period under review, the increase in broker fees had exceeded the increase in new members.49 For the same period, impaired receivables or bad debts consistently decreased with the largest decrease of 64.2%
observed in 2006 when compared to 2005.
The burden of non-health expenditure is usually borne by the members of schemes and results in affordability challenges. Monthly premiums include these costs and over the years, these costs have been increasing. This has meant that maintaining a membership with a scheme has become increasingly expensive for the member. The amendments to the Medical Schemes Act of 1998 were promulgated to address some of these challenges by promoting improved
corporate governance among medical schemes.70, 71