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HEALTH INSURANCE

Medical aid membership on the rise as amalgamations shrink the number of schemes

Medical aid membership on the rise as amalgamations shrink the number of schemes
(Photo: Leila Dougan)

Alexander Forbes Health’s 2022/23 Medical Aid Insights publication has revealed that although the number of registered medical schemes continued to decrease over the past year, the number of principal members had increased by the end of 2021.

Between 2000 and 2021, the number of medical schemes halved from 144 to 73. This was driven by two factors: the difficulty sustaining smaller schemes and the significant amount of management time needed for an employer-based restricted scheme. However, over the same period, there was a 60% growth in principal members (1.5 million more) and a 36% growth in beneficiaries (2.4 million more).

Paresh Prema, Alexforbes’ branch head: actuarial and technical advisory services, says that by the end of 2021, principal membership grew by 0.84%.

“It is important to point out that this increase in membership followed a decline of 1.56% in 2020. Similarly, the number of beneficiaries increased by 0.5% in 2021 compared to a decline of 1.15% in 2020,” he says.

The increase in membership in the 2021 financial year can be attributed to two of the largest schemes in the industry – Discovery Health Medical Scheme and the Government Employees Medical Scheme (Gems) – which grew by 22,499 and 22,578 principal members respectively. By the end of 2021, Discovery’s market share was 33% while Gems’ market share was 19%.

The bad news is that there is a concerning trend where the proportion of older members has increased over the past 16 years, while the proportion of younger members has decreased.

Prema points out that for medical schemes to remain affordable and accessible, they need a balance of membership at all ages. He warns that medical schemes need to take steps to ensure that medical scheme coverage remains affordable and accessible to younger members in order to manage claims.

CompCare was the oldest scheme, with an average beneficiary age of 42.2, while Polmed remains the youngest scheme with an average beneficiary age of 28.6.

Solvency ratio of schemes

In 2021, 11 of 17 open schemes and 53 of 57 restricted schemes achieved a net surplus, compared with a net surplus for all open and restricted schemes in 2020.

“This shows that the Covid-19 pandemic actually resulted in schemes having improved results in 2020,” Prema says.

In 2021, the average solvency for all schemes increased to 46.7% from 44.6% the year before. The solvency ratio of open schemes increased from 38.7% in 2020 to 39.6% in 2021. The solvency level for restricted schemes increased from 52.5% in 2020 to 56.2% in 2021.

Alexander Forbes Health also uses a sustainability index to assess the combined impact of key performance statistics on the sustainability of a medical scheme. The medical schemes are ranked from highest to lowest to show their relative sustainability. The index aims to provide a comparative assessment between schemes.

In 2021, the industry saw a 17.4% improvement in the index score, with restricted schemes showing an improvement of 19.3% while open schemes showed an improvement of 15.8%. The index shows that the largest increase for 2021 was for Polmed, which improved its 2021 score by 23.2%, closely followed by Gems with an increase of 21.3%.

The open schemes trailed by a small margin, with Sizwe Hosmed improving their score by 19.8%, followed by Bonitas with 18.9%. Polmed is the highest ranked out of the restricted schemes, followed closely by Samwumed, Bankmed and LA Health. Medshield is the highest ranked out of the open schemes, followed closely by Sizwe Hosmed and Fedhealth. BM/DM

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