The unprecedented demand for financial assistance created by the novel COVID-19 pandemic has thrust South Africa’s medical schemes into the horns of a dilemma: who do they assist? Providers or their members?

They can’t do both, participants in Friday’s IHRM-hosted webinar were told by Christoff Raath, joint CEO of Insight Actuaries and Consultants, when presenting an updated analysis on the impact of COVID-19 on medical schemes.

“It is simply not possible for schemes to provide assistance to providers and members simultaneously,” he said, alluding firstly to the Progressive Health Forum (PHF)-led proposed capitation plan aimed at keeping private medical practitioners afloat while assisting the public sector with the COVID-19 response – i.e. a guaranteed capitation payment of 70% based on their 2019 claims; and secondly to suggestions that schemes either “freeze contributions” or at most, increase their 2021 contributions by 3,9% as recommended by the Council for Medical Schemes (CMS).

“It is highly unlikely that medical schemes will go for the 3,9% or will freeze and delve into their reserves,” he added, suggesting they would be more likely settle on lower increases of 4% to 5%: “But that will depend on who they decide to provide financial assistance for, members or providers.”

He indicated that all schemes were acutely aware of the financial constraints faced by doctors and providers in general with, for example, the dramatic drop in consultations and “voluntary avoidance of elective healthcare”.

“However, it must be remembered that schemes are trust funds. They belong to the members, so if they are going to provide financial assistance, it should be to their members.

“In that case,” he continued, “if schemes want to go for very low increases, they will have no choice but to limit fee increases to pay GPs for consultations, pathology labs for path tests or for a day in hospital quite aggressively If they want low contribution increase for next year this will necessitate low increases for providers – a very real and tangible debate in medical scheme board rooms at the moment.”

He noted, therefore, that low increases could be partially funded by delving into scheme reserves – “but by doing so would require painful action later on” – and/or by limiting provider increases to the minimum possible – “0% or 2,1% or 3%?”.  Another option would be “cutting benefits dramatically”.

Other areas in which the pandemic was impacting on schemes in addition to healthcare “avoidance”, said Raath, included supply constraints, investment losses and job losses. Job losses among members didn’t appear to be a major problem now –“not many people are resigning from their medical schemes” – but was likely to become more of an issue in time to come as the dust settled on COVID-19 and people start reviewing their financial situations.

“We can expect to see more anti-selective withdrawals then, probably in the next year or so, and this will become a major problem for the schemes.”



Generalising on the impact of the pandemic in his concluding remarks, of significance, he said, was uncertainty: “Significant uncertainty! Even simple, definitive answers right now may be misleading.

“In the case of medical schemes, will current utilisation reductions be offset by a wave of claims? Will South Africa’s cases continue to increase? Will our mortality rate remain on the low side?

“The needs of the member vs the provider – how will schemes approach this?” he asked, adding testing, hospitalisation and “maybe a vaccine in the future” were other challenges facing schemes.

Much, if not all of this depended on the progress of medical research: “Medical research is a slowly-but-surely process. No quick fix in understanding this disease, as we have seen. It will take time but we will get there.”