SAHR 2007 - Health Systems Trust

In summary, while gross contributions per beneficiary per
annum were R7 928 (down 1.4%), gross claims were R6 694
(up 5.2%) and gross non-health expenditure was R1 144 (up
2.8%). This last expenditure category had stabilised substantially,
after very large increases in previous years (in excess of
20% per annum from 1998 to 2001).
Upward trends of differing magnitude in non-health expenditure
were again noted in the 2006-7 report:
➤ “Administration expenditure in all medical schemes
rose by 7.3% to R5.9 billion in 2006 from R5.5 billion in
2005”.
➤ “Expenditure on the management of benefits – the
so-called managed care fees grew by 9.6% to R1.4
billion”.
➤ “Brokers were paid an additional 7%, raising these fees
to R983 million from R917 million in 2005”.
➤ “Total non-healthcare expenditure (i.e. administration
fees plus fees paid for managed care and broker fees)
rose by approximately 3.7% to R8.3 billion in 2006 from
R8.0 billion”.
Another concerning trend is the increase in the proportion
of claims funded from medical savings accounts. The
2006-7 report from the CMS stated that “When adjusted
for inflation, risk contributions and claims have increased by
43.9% and 39.9% since 1997, respectively. Medical savings
accounts contributions and claims have, on the other hand,
risen by 185.6% and 250.0% respectively since 1997. These
figures show that schemes are increasingly shifting benefits
from the risk pool into the medical savings accounts, in other
words, members are increasingly funding more benefits on
an out-of-pocket basis.”
The annual report of the Hospital Association of South Africa
[Health Annals 2006] represents the industry’s view of its
performance, and in particular whether inflation in this area
is driven by excessive profits. As expected, much is made
of the contribution of increased utilisation, changes in casemix
and technological advances on the total costs in this
industry.
Expenditure on medicines is noted as declining. Obtaining
more information on this large component of the total
private sector spend is complicated by the number of actors
involved. One source is the reports of medical scheme
administrators, such as Mediscor. The following points are
taken from the Mediscor Medicines Review 2005:
➤ the gross cost per beneficiary for medicines in 2005
was R1 541;
➤ although medicines utilisation was increased in 2005
(to 10.3 items per beneficiary), the average cost per
item decreased by 20% to R96;
➤ the use of generic (interchangeable multi—source) medicines
increased to 40.2% by volume, and the average
cost per generic medicine item decreased by 21%.
An area of concern for medical schemes is the requirement
for coverage of the Prescribed Minimum Benefits (PMBs)
(including the list of chronic, ambulatory conditions) from the
risk pool. To some extent, this can be seen in the therapeutic
groups which Mediscor listed as the major contributors to
overall spend. The top 5 groups were (% contribution):
1. anti-hypertensives (11.6%);
2. hypolipidaemic agents (5.8%);
3. anti-depressants (5.0%);
4. acid reducers (4.2%); and
5. beta-lactam antibiotics (4.2%).
It is worth noting that the true prevalence of the “chronic
diseases” in the private sector market is not known with any
accuracy. Although the CMS reported on the prevalence of
the 25 prescribed chronic conditions which are required to
be covered by medical schemes, noting that reports were
obtained from 87.8% of schemes, it stated that “[t]his data
should therefore be interpreted with great caution”. A more
comprehensive analysis of chronic disease prevalence from
medical scheme data was done for the Risk Equalisation Fund
(see section on non-communicable and chronic diseases).
Mediscor reported that 9.9% of the beneficiaries of the
schemes they administered claimed for a prescribed chronic
condition. The most common were (percentage prevalence
in brackets):
➤ hypertension (6.4%);
➤ hyperlipidaemia (3.3%);
➤ diabetes mellitus type 2 (1.5%);
➤ asthma (1.0%);
➤ diabetes mellitus type 1 (0.3%).
The rationality of medicines use in the private sector must,
however, be questioned when consideration is given to the
therapeutic groups that represent the most prevalent claims
(prevalence in brackets):
➤ combination analgesics (49%);
➤ cough and cold preparations (49%);
➤ beta-lactam antibiotics (46%);
➤ non-steroidal anti-inflammatory agents (30%);
➤ anti-histamines (20%).
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