Anthea Towert: Alexander Forbes Health
DIAGNOSIS: KEY TRENDS IN THE
MEDICAL SCHEMES INDUSTRY
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Medical Schemes in Numbers
6,000,000
100
Number of Beneficiaries
80
70
4,000,000
60
3,000,000
50
40
2,000,000
30
20
1,000,000
10
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Beneficiaries in Open Medical Schemes
Number of Open Medical Schemes
Beneficiaries in Restricted Medical Schemes
Number of Restricted Medical Schemes
Number of Medical Schemes
90
5,000,000
1,600,000
2013 Principals
Principal Member Growth
2013 Dependants
Dependants Growth
1,400,000
Number of Lives Covered
1,200,000
Highest percentage
growth driven by
amalgamations with
Sappi and Minemed
25%
15%
1,000,000
5%
800,000
600,000
400,000
200,000
-
Reduction in
membership
corresponds with a
reduction in family size
-5%
-15%
-25%
Percentage Growth from 2012 to 2013
Membership by Medical Scheme
Market Share
Discovery
GEMS
2014: Afrox, Altron, PG Bison
2013: IBM, Nampak
2012: Edcon
2010: Afrisam, Umed
2004: AngloGold
29%
2%
2012: Medihelp Pensioners
2010: Medcor
27%
21%
16%
28%
30%
54%
All Restricted
Medical Schemes
(excl. GEMS)
2001 to 2012:
Net Reduction of 29
Schemes
All Open
Medical Schemes
(excl. Discovery)
2001
2006
24%
2012
43%
26%
2001 to 2012:
Net Reduction of 18 Schemes
Importance of Age
Average Age impacts RISK
For each year a scheme
ages, we expect claims to
increase by ±2%
Individual Claims
Family Claims
0
5
10
15
20
25
30
35
Age
40
45
50
55
60
65
70 +
40
35
36.0
33.3
32.0
37.8
37.2
38.0
38.0
33.0
31.0
30
29.7
Average Age
25
3.2
20
15
10
0.6
0.9
2.1
2.8
2.6
0.8
-0.4
-1.0
-4.0
5
0
2013
Relative Change
10
8
6
4
2
0
-2
-4
-6
-8
-10
Relative Change in Age
Average Age of Beneficiaries
Claims Ratio Trend
Risk Claims as % of Risk Contributions
110%
105%
100%
95%
90%
85%
80%
75%
70%
2000
2001
2002
All Medical Schemes
2003
2004
2005
2006
2007
Open Medical Schemes
2008
2009
2010
2011
Restricted Medical Schemes
2012
Risk Claims by Scheme
85% Line
2013 Claims Ratio
100%
R 1,200
95%
R 1,000
R 800
90%
85%
80%
R 600
R 400
75%
70%
R 200
65%
R0
60%
Risk Claims Ratio
Average Claims per Beneficiary
Average Claims PBPM
R 1,400
Non-Healthcare Expenditure Trend
20%
18%
NHE as a % of GCI
16%
14%
12%
10%
8%
6%
4%
2%
0%
2000
2001
2002
All Schemes
2003
2004
2005
Open Schemes
2006
2007
2008
2009
Restricted Schemes
2010
2011
10% Line
2012
R 500
18%
R 450
16%
R 400
14%
R 350
12%
R 300
10%
R 250
8%
R 200
6%
R 150
R 100
4%
R 50
2%
R0
0%
Administration Expenses
Managed Care
Broker Fees
Bad Debts
NHE as a % of GCI
NHE as a % of GCI
NHE per Member per Month
Non-Healthcare Expenditure by Scheme
Percentage of Gross Contribution
Income
Allocation of Contribution Income
110%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
-10%
Medical Savings Account
Non-Healthcare Expenditure
Healthcare Expenditure
Contribution to Reserves
Solvency Trend
70%
60%
% Solvency
50%
40%
30%
20%
10%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Prescribed Minimum Solvency
All Open Medical Schemes
Restricted Medical Schemes (excl. GEMS)
All Medical Schemes
All Restricted Medical Schemes
Solvency by Scheme
60%
15.0%
Solvency in 2013
50%
25% Line
Change
10.0%
40%
5.0%
30%
0.0%
20%
10%
0%
-5.0%
-10.0%
Three-Year Change
2013
Medical Schemes Index
Membership Growth
Average Age of Beneficiaries
Size of Scheme Relative to Market
Operating Result
Accumulated Funds per Beneficiary
Actual Solvency Level compared to 25%
Trend in Solvency Level
200
25%
180
20%
160
15%
140
10%
120
5%
100
0%
80
-5%
60
-10%
40
-15%
20
-20%
0
-25%
% Change in Index from 2012 to 2013
Index Value
Medical Schemes Index Results
200
25%
180
20%
160
15%
140
10%
120
5%
100
0%
80
-5%
60
-10%
40
-15%
20
-20%
0
-25%
% Change in Index from 2012 to 2013
Index Value
Medical Schemes Index Results
200
25%
180
20%
160
15%
140
10%
120
5%
100
0%
80
-5%
60
-10%
40
-15%
20
-20%
0
-25%
% Change in Index from 2012 to 2013
Index Value
Medical Schemes Index Results
200
25%
180
20%
160
15%
140
10%
120
5%
100
0%
80
-5%
60
-10%
40
-15%
20
-20%
0
-25%
% Change in Index from 2012 to 2013
Index Value
Medical Schemes Index Results
Concluding Remarks
• Continued scheme consolidation
• Stable overall financial position
• BUT medical scheme face unique challenges in build-up to NHI
• Demarcation regulation
• Competition Commission Inquiry
• Inflexible regulatory landscape
• Regulatory reform urgently needed to ensure affordability and sustainability
• Review of PMB regulation
• Review of Solvency calculation
• Risk Equilisation
• Governance reform
• Collaboration is the key to success!
THANK YOU