SA’s medical schemes industry in good shape – Alexander Forbes

Picture: iStock

Picture: iStock

A trend noticed in the medical industry is that family size has consistently declined over the last 17 years.

Healthcare consultancy Alexander Forbes Health says South Africa’s largest medical schemes, both open and restricted, have sufficient reserves to pay their claims.

The latest edition of Diagnosis, Alexander Forbes Health’s annual publication that analyses key trends in the medical schemes industry from 2000 to 2017, says the number of medical schemes reduced to 80 in 2017, driven by amalgamations and liquidations.

The growth in principal members slowed to 0.5% from 2016 to 2017, compared to growth of 1% from 2015 to 2016.

Family size has consistently declined over the last 17 years, a trend senior actuarial specialist at Alexander Forbes Health Zaid Saeed attributed to the affordability of medical aid cover.

“For those in formal employment private medical cover is usually a condition of service, but in a struggling economy, members are removing one or more of their children from cover before cancelling their own membership,” Saeed said.

Saeed said operating results in the industry seem to follow a three-year cyclical pattern.

The industry had been consistently generating operating deficits since 2014 but this trend reversed in 2017.

“Overall, the demographic profile and financial strength of the industry remain stable,” Saeed said.

The Alexander Forbes Health Medical Schemes Sustainability Index, which tracks key performance metrics of medical schemes, shows that among restricted schemes, Polmed was the top performer over a 10-year period, although it was not the top performer for 2017.

The scheme achieved an operating deficit for 2017 and saw a decline in its level of reserves.

Transmed has consistently been one of the worst performers on the index because of its sustained loss of membership, worsening demographic profile, low solvency ratio and persistent operating deficits.

The index is calculated from a base year of 2006 and considers a scheme’s membership size, membership growth, average beneficiary age, operating results, accumulated funds per beneficiary, and trends in the scheme’s solvency levels.

“In the open schemes industry, the sustainability index for the top 10 schemes has improved since 2006, meaning that the medical schemes industry has become stronger,” Saeed said.

– African News Agency

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