According to the Medical Schemes Act, 131 of 1998, section 33:
(1) A medical scheme shall apply to the Registrar for the approval of any benefit option if such a medical scheme provides members with more than one benefit option.
(2) The Registrar shall not approve any benefit option under this section unless the Council is satisfied that such benefit option:
- includes the prescribed benefits;
- shall be self-supporting in terms of membership and financial performance;
- is financially sound; and
- will not jeopardise the financial soundness of any existing benefit option within the medical scheme.
In terms of the above, it is clear that all options within a medical scheme should be self-supporting and must be financially sound.
In an analysis of the three bigger schemes in the market, based on the Council for Medical Schemes Annual Report for 2022/23, it is apparent that the richer benefit options and the lower options tend to make losses. This is, however, not true to all medical schemes, but we can apply the principle in general.
Analysis of the three bigger schemes in the market:
Discovery Health:
- Executive Option: (richest benefit option)
- 7 652 members
- Net healthcare result:
- Annual loss: R318 454 000
- Loss per beneficiary per month: R1 734
- KeyCare Plus: (lesser richness of benefit option)
- 210 342 members
- Net healthcare result:
- Annual loss: R1 272 210 000
- Loss per beneficiary per month: R292
- Essential Saver (mid-range richness of benefits)
- 167 092 members
- Net healthcare result:
- Annual profit: R688 767
- Profit per member per month: R161
Bestmed Medical Scheme:
- Pace 4: (richest benefit option)
- 1 828 members
- Net healthcare result:
- Annual loss: R44 879 000
- Loss per beneficiary per month: R1 434
- Beat 1: (lesser richness of benefit option)
- 9 997 members
- Net healthcare result:
- Annual loss: R7 509 000
- Loss per beneficiary per month: R31
Bonitas Medical Scheme:
- BonComprehensive: (richest benefit option)
- 4 256 members
- Net healthcare result:
- Annual loss: R118 506 000
- Loss per beneficiary per month: R1 379
- Bonstart: (lesser richness of benefit option)
- 4 570 members
- Net healthcare result:
- Annual profit: R13 579 000
- Profit per beneficiary per month: R223
However, when we look at the profitincreases given through by medical schemes, they often rather give average increases through across all options, as opposed to different increases per option based on the financial performance of each option.
An analysis of the 2023 increase declared on the three schemes above, shows us the following:
Discovery Plan Options Increase:
Bestmed Plan Options Increase
Bonitas Plan Options Increase
Closing remark
Of the three schemes analysed, it is only Bonitas that has given through increases based on the performance of each option. It is also important to note that all schemes have Actuaries who will look at a longer-term pricing strategy and will also take other factors into account, such as reserves levels, age per option, etc.
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