By Laura du Preez: Personal Finance

The Government Employees Medical Scheme (Gems) has signed up its 100 000th principal member, making it one of the five largest medical schemes in the country.This restricted medical scheme for government employees now provides health cover to almost 300 000 people, 40 percent of whom were not members of any medical scheme previously.This means that other schemes have lost about 60 000 members to Gems since January last year.

Gems has grown its membership from 0 to 100 000 in just 14 months by giving government employees incentives to join the scheme.As of July last year, the government has been paying 75 percent of the contributions, to a maximum of R1 900 a month, for employees earning more than R60 000 a year who join Gems.Employees earning less than R60 000 can receive a 100 percent subsidy if they join Gems's lowest-cost option.The government is paying only two-thirds of the contributions up to a maximum of R1 014 a month in 2006 for employees who remain on their existing medical schemes.

The government has chosen to offer incentives rather than force its existing employees to join Gems, but new government employees can access the government subsidy only if they join Gems. As a result of this, more than 800 members are signing up every day.

Dr Eugene Watson, the principal officer of the medical scheme, says the process to elect Gems's first boardof trustees has begun.In line with the Medical Schemes Act, members will elect 50 percent of the trustees on the board of trustees, at an annual general meeting which will be held later this year.
Gems is currently governed by Watson and an interim board of trustees (also known as the steering committee) of 11 government employees who were appointed by Geraldine Fraser-Moleketi, the Minister of Public Service and Administration.

These trustees will remain on the board as the employer-elected trustees, and the members will elect a further 11 trustees."Providing more South Africans with quality, yet affordable, health care is still a challenge for both Gems and the entire healthcare industry. The sector needs to attract new lives, increasing both the size of the risk pool, as well as the inherent clinical risk profile," Watson says. "Enlarging the risk pool will also increase the total revenue generated, which, in turn, will create additional opportunities for all service providers.

This will then create business and employment opportunities," he says.When Gems launched late in 2005 existing medical schemes had about 550 000 government employee members and as many as 488 000 of these members (according to membership data for 2005 from Global Credit Ratings) were in open schemes (those that admit anyone and are not restricted to employer groups). Government employees then made up more than 26 percent of the membership of open schemes.

Tonny Mafu: Business Report

THE number of South Africans with access to private hospitals could double from the current 7 million, according to Network Healthcare Holdings (Netcare). The figure would be boosted by the growing number of high-income earners and as low-income medical aid schemes entered the market and the government introduced initiatives to extend access to health to more people. Netcare chief executive Richard Friedland said private hospitals earned 85 percent of revenue from clients who were covered medical aid members.

He added that the Government Employees' Medical Scheme (Gems), a programme meant to provide medical insurance for government employees at affordable rates, was very attractive to the private hospital industry. A report by Citigroup estimated that the medical aid membership base would grow 13 percent over two years as a result of Gems. This is expected to be the major driver for the private healthcare providers. Gems was estimated to have 75 000 members at the end of last year. It was expected to reach 200 000 by the middle of this year.

The Citigroup report said it was likely that the government would legislate for larger industrial companies to follow up on Gems, which could add about 450 000 members through state-owned institutions such as the SA Revenue Service, transport group Transnet and power utility Eskom.

The advent of low-income medical schemes (Lims) could also add to the number of people accessing private healthcare providers. While the current minimum monthly premium on conventional medical aid schemes is estimated at between R700 and R1 000, the introduction of Lims would drive this down to about R220. Sandra Nyathela, an analyst at Metropolitan, said that if the Lims were modelled on Gems, millions of people could access private healthcare.

Friedland expected the proportion of spending on private healthcare to grow. He said studies in the US had shown that as people earned more, they spent more on private healthcare providers. In South Africa, private hospitals would be late beneficiaries of recent economic growth, Friedland said. Statistics by the Bureau for Economic Research at Stellenbosch University have shown that the emerging "black diamonds" market had spending power of R130 billion. This was growing at 50 percent a year. But Nyathela said emerging consumers might not spend more on healthcare, as they might rank healthcare spend low on their list of priorities.

THE Government Employees Medical Scheme (GEMS), a registered medical scheme specifically for public service employees launched in January 2006, has experienced phenomenal growth, with 300 new members joining per day over the past month. GEMS' Principal Officer, Dr Eugene Watson, says that membership now stands at 20 000 families or 50 000 individuals, forty percent of which had previously not had medical cover, with the sixty other percent having "voted with their feet", moving from other medical schemes. He said that he was excited to see the upsurge in confidence by government employees, adding that GEMS had not only grown substantially, but had shown an increasing daily growth rate for more than 200 consecutive days. He said that members liked what the scheme had to offer, no frills, value for money and, more importantly, real savings.
Watson attributed this growth to the comprehensive rollout of the scheme's communications plan and member enrolment initiatives, as well as growing awareness of the new 75 percent subsidy for government employees. Those who earn more than R60 000 a year receive a 75 percent subsidy up to a maximum of R1 900 a month for a family of 5 on GEMS. Civil servants who are already members of open medical schemes continue to get a subsidy of up to R1 014 a month. A further measure to promote access to GEMS for all employees includes the 100 percent subsidy for which employees earning below R60 000 and joining GEMS' Sapphire option are eligible. Watson said that there are about 325 000 employees in the public sector who earn less than R60 000 a year. Of those, an estimated 200 000 do not currently have any kind of medical scheme cover.