MEDICAL schemes have not really tackled the issue of how to lower medical costs, according to the Registrar of Medical Schemes. The registrar, Dr Monwabisi Gantsho, also told the Board of Healthcare Funders conference that the level of reserves held by medical schemes as a percentage of contribution income has declined over the past year. Gantsho said the Council for Medical Schemes's annual report for 2009, which will be released this week, will reveal that the average solvency level of all schemes has declined from 36.6 percent in 2008 to 32.9 percent last year. The average solvency level of open schemes has declined to 27.4 percent, from 29.8 percent in 2008. Gantsho also said the number of schemes with a solvency ratio of less than the legally required limit of 25 percent of contribution income has increased noticeably. He said schemes were "having difficulty keeping up with increased claims costs - costs per average medical scheme beneficiary increased by 14.6 percent from 2008 to 2009". Open schemes incurred significantly greater operating losses relative to restricted schemes. Gantsho said the council would like to see schemes implementing more cost-containment strategies to minimise the impact of contribution increases on members. He said schemes needed to get more involved in certain aspects of healthcare delivery, to set up individualised networks and negotiate with providers to contain costs.

Gantsho said schemes had predominantly tried to compete by shifting costs on to members and by trying to avoid members who were a high risk, rather than tackling measures to contain costs. The registrar said his office was still fighting to drive down non-healthcare costs in bigger schemes that had economies of scale. He said the council was aware that some schemes designed their options to attract younger, healthier members, leaving older, sicker members no choice but to pay for more expensive options and warned that to prevent this, his office would "scrutinise benefit options more closely before they are approved". Gantsho also told the conference that he planned to take legal action to prevent certain restricted schemes or their affected employers from dumping older and sicker members on to other schemes. To improve the governance of medical schemes, Gantsho said, his office planned to address parliament on the need to reintroduce improved governance measures incorporated in a 2008 Medical Schemes Amendment Bill that was never enacted. The bill was withdrawn from parliament in 2008 to allow the Minister of Health to reconsider it in light of the government's intention to introduce national health insurance.

Laura du Preez: Personal Finance, 28 August 2010