Presentation on Bonitas Medical Fund
to
The Health Portfolio Committee
June 2010
Prepared by:
Gerhard van Emmenis: Acting Principal Officer
Agenda
1. Overview of Bonitas Medical Fund
-
History
-
Financial Overview
-
Available options
-
Healthcare Expenditure breakdown
-
Caring for the sick
2. Legislative Considerations in the Medical Schemes Environment
-
Health related Legislation
-
Current Medical Scheme’s Environment
-
Problem with Optional Membership
-
Legal Environment
-
Problem with PMB’s ‘At Cost’
-
Tariff Increases
-
Practical Issues
3. Summary
Overview
History
•
Established in 1982 primarily for Black civil servants;
•
2/3rds of current membership base are black
•
Covers approximately 8% of al medical schemes lives (1.4% of total SA
population)
•
•
Current membership base consists of approximately:
•
270 000 members; and
•
630 000 beneficiaries
3rd party Administrator and Managed Care provider: Medscheme
Financial Overview
2010
Expected contributions:
R 6.8 billion
Expected healthcare expenditure:
R 5.8 billion
Reserves:
Around R2 billion (solvency ratio around 35%)
All scheme profits accrue to Fund
Available Options
OPTION
TYPE OF OPTION
% OF
LIVES
Average
Contributions
per family per
month
Standard
Traditional
65%
R 2,511
Primary
Traditional (< benefits than
Std)
21%
R 1,649
BonSave
New generation option with
savings
8%
R 1,741
BonComprehensive
Top option, richest benefits,
with savings
1%
R 4,123
BonEssential
Hospital plan launched in
2010
0%
R 1,614
BonCap
Capitated low-cost option
5%
R 565
Healthcare Expenditure breakdown
HOSPITAL
9%
MEDICINE
8%
38%
9%
PATHOLOGY AND RADIOLOGY
MEDICAL SPECIALISTS
9%
DENTAL AND OPTICAL
10%
GENERAL PRACTITIONERS
16%
OTHER
Caring for the sick
•
Has cared for over 35 000 HIV patients
•
Currently over 15 000 members receiving Antiretroviral Therapy
•
Paid for around 150 000 hospital admissions in 2009
•
Around 115 000 patients with chronic conditions are cared for

3 Main chronic conditions:
-
high blood pressure;
-
high cholesterol; and
-
clotting disorders
Legislative Considerations in
the Medical Schemes
Environment
Health related Legislation
Medical Schemes Act 1998: Introduced open enrolment, community rating
and PMB’s
• Draft Medical Schemes Amendment Bill (ON HOLD)
-
Risk Equalization Fund
-
Basic benefits package
-
Low Income Medical Scheme
• National Health Amendment Bill (ON HOLD)
-
Proposed bargaining framework for tariff setting
-
PMB’s: service providers cannot charge > agreed tariffs
Current Medical Scheme’s Environment
•
Around 8 million lives covered
•
Annual contributions of R85 billion (2009)
•
Total reserves of around R27 billion
•
Claims increases consistently greater than CPI
•
Need compulsory membership to widen coverage
Problem with Optional Membership
3.5
Relative Risk
• Upward sloping curve: risk
Males
3
Females
2.5
increases significantly with age
2
(note female maternity hump)
1.5
• Community rating relies on young
1
0.5
subsidising old
0
Age
0
10
20
30
40
50
60
70
2.5%
% of Beneficiaries
• Problem is not enough young
2.0%
people want to join medical
1.5%
schemes – dips from age 20 to 35
1.0%
• Note – dips less for females
Males
0.5%
because of maternity: anti-
Females
0.0%
Age
0
10
20
30
40
50
60
70
selection
Solution: Need compulsory membership for community rating to work:
introduce financial penalties for young people earning above certain threshold
Legal Environment
Court case around ‘grey’ health insurance products:
CMS lost, now sales of GAP products on the increase (against principle of
community rating)
This will only make more younger people opt out of medical schemes
environment
Solution: Ban GAP insurance products clearly in legislation
Problem with PMB’s ‘At Cost’
Intention of Medical Scheme’s Act could not have been to allow claims with
no limit
Potential impact of having no ceiling on PMB costs is massive
(20% - 30% extra claims)
Issue is a drain on resources
Solution: Need DOH to amend Act so that there is clarity - need clear ceiling
on PMB claims
Tariff Increases
Competition commission means no collective bargaining with providers (in
particular hospitals)
Result has been high claims inflation in last few years
Solution: Amend legislation to allow collective bargaining in health
environment
Practical Issues
Contribution increases need to be set by August each year
This is so as to get Council for Medical Scheme approval before launch of
new benefits and contributions in October/November
Problem is DOH only releases NHRPL late in year (& after contributions have
been set)
Means schemes have to make assumptions around NHRPL increases:
introduces unnecessary risk into contribution setting process
Solution: DOH to give NHRPL increases for 1 Jan of next year in July of
previous year (even if draft)
Summary
Summary
Bonitas funds healthcare for over 600 000 people
To address issues around membership of medical schemes:

Introduce compulsory membership (above certain income threshold)

Ban GAP insurance
To address issues around the price of healthcare

Put clear ceiling on PMB’s “At Cost”

Allow schemes to bargain collectively with providers
Practical issue

DOH to give NHRPL increase mid-year
Questions
&
Comments
Thank you