BHF360° | DECEMBER 2021
INSIDE healthcare
Benefit enhancements
and digital innovations Technological innovations to help medical schemes protect the health of their beneficiaries By Leo Dlamini Bestmed Medical Scheme
T
he COVID-19 pandemic has altered the landscape of many industries, including medical schemes. In response, medical schemes have had to consider technological innovations to help protect the health of their beneficiaries during healthcare consultations and various other interventions, including assistance with depression and anxiety.
Claims ratio trends The Council for Medical Schemes (CMS) requires all South African medical schemes to have a minimum reserve level of 25% to ensure solvency in the event of a sudden and/or unexpected increase in claims. For the 2020 financial year, most schemes recorded lower claims ratios, well below the industry average of the prior five years, and therefore better financial results for the year.
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Medical schemes have had to consider the best ways in which to use their reserves to meet their beneficiaries’ healthcare, as well as financial, needs. An important consideration for many schemes is that the buffers accumulated until 2020 would most probably be sufficient to cater for near-term risks; however, over the long term economic challenges consequent on the COVID-19 pandemic may strain an already stagnant industry. As at 31 December 2019, Bestmed exceeded this requirement with a solvency ratio of 35.4% and remained financially stable with a claims ratio of 86.8%. As at 31 December 2020, Bestmed had again exceeded the CMS’ requirement with a solvency ratio of 47.3%. The claims ratio was 76.7%, due to a decline in claims for general and elective procedures. During 2021, Bestmed experienced an increase in claims, resulting in a higher claims ratio. Leo Dlamini, CEO and PO of Bestmed, states: “The scheme
B O A R D O F H E A LT H C A R E F U N D E R S
is seeing an increase in the utilisation of funds for general and elective procedures similar to, if not more in certain instances than, that of the preCOVID-19 period. The claims trend that we’ve seen over the last four months is likely to continue, thereby normalising the utilisation of funds.”
Average annual increases and benefit enhancements Medical schemes need to consider the cost of COVID-19 over and above general claims, which could have a significant impact on their contributions versus utilisation ratio. If claims begin to exceed contributions, a healthy reserve pool is essential for a scheme to absorb higher claims. According to the South African Reserve Bank, Bestmed is one of few large schemes that have kept their annual increase below 5%. Bestmed’s average weighted contribution increase for 2022 is 3.9% across all benefit options. The scheme has managed to keep increases low not only because the claims ratio for 2020 was low, but because the scheme already had healthy reserves prior to the COVID-19 pandemic and its administration costs have been managed prudently.
