Presentation on Bonitas Medical Fund to The Health Portfolio Committee June 2010 Prepared by:...
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Transcript of Presentation on Bonitas Medical Fund to The Health Portfolio Committee June 2010 Prepared by:...
Presentation on Bonitas Medical Fund
to
The Health Portfolio Committee
June 2010
Prepared by:
Gerhard van Emmenis: Acting Principal Officer
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
Agenda
• 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
History
2010
All scheme profits accrue to Fund
Financial Overview
Expected contributions: R 6.8 billion
Expected healthcare expenditure: R 5.8 billion
Reserves: Around R2 billion (solvency ratio around 35%)
Available Options
OPTION TYPE OF OPTION% OF LIVES
Average Contributions per family per
month
Standard Traditional 65% R 2,511
PrimaryTraditional (< benefits than Std) 21% R 1,649
BonSaveNew generation option with savings 8% R 1,741
BonComprehensiveTop option, richest benefits, with savings 1% R 4,123
BonEssentialHospital plan launched in 2010 0% R 1,614
BonCap Capitated low-cost option 5% R 565
38%
16%10%
9%
9%
8%
9% HOSPITAL
MEDICINE
PATHOLOGY AND RADIOLOGY
MEDICAL SPECIALISTS
DENTAL AND OPTICAL
GENERAL PRACTITIONERS
OTHER
Healthcare Expenditure breakdown
• 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
Caring for the sick
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
Health related Legislation
• 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
Current Medical Scheme’s Environment
• Upward sloping curve: risk
increases significantly with age
(note female maternity hump)
• Community rating relies on young
subsidising old
• Problem is not enough young
people want to join medical
schemes – dips from age 20 to 35
• Note – dips less for females
because of maternity: anti-
selection
0
0.5
1
1.5
2
2.5
3
3.5
0 10 20 30 40 50 60 70
Re
lati
ve
Ris
k
Males
Females
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0 10 20 30 40 50 60 70
% o
f B
en
efi
cia
rie
s
Males
Females
Age
Age
Solution: Need compulsory membership for community rating to work:
introduce financial penalties for young people earning above certain threshold
Problem with Optional Membership
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
Legal Environment
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
Problem with PMB’s ‘At Cost’
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
Tariff Increases
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)
Practical Issues
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
Summary