Medical schemes object to levy rise of nearly 25 percent

May 18, 2011

By Laura du Preez (Personal Finance)

The Council for Medical Schemes has increased the levy that schemes must pay to fund its activities by 24.8 percent, despite objections from medical scheme representatives who pointed out that the increase was “excessive” and many times the inflation rate.

Schemes will be expected to pay the first instalment of the levy, which is ultimately funded by your contributions, this month.

The annual levy will increase from R18.29 to R22.83 per member per year. It is used to fund the activities of the Council for Medical Schemes, which regulates medical schemes and other roleplayers in the medical scheme industry.

Schemes were invited to comment on the increase when it was first published as a proposed increase, some individual schemes and administrators, as well as the body that represents a number of schemes and their administrators, the Board of Healthcare Funders (BHF), objected to the increase.

The BHF pointed out that the increase was six times the inflation rate and would make the pressure imposed by the council on schemes to contain their non-healthcare costs and their contribution increases “untenable”.

The BHF says medical schemes are required to justify their non-healthcare costs when these exceed 10 percent of their annual budget and they are required to justify their contribution increases when these are in excess of the inflation rate plus three percent, while they have little control over 90 percent of their budget, which funds your healthcare costs.

Momentum Medical Scheme Administrators said “it would seem unreasonable for the Council for Medical Schemes to take issue with scheme increases being above the consumer price index (CPI) when its own increase passed on to schemes annually is three to four times the CPI rate”.

Last year the increase in the levy was 11 percent.

The BHF also said the levy increase was much higher than that for which schemes had budgeted – one scheme said it had budgeted for a five-percent increase.

In his replies to the schemes, however, Dr Monwabisi Gantsho, the Registrar of Medical Schemes, says the total cost of regulation of schemes amounts to 0.092 percent of total contributions, and the increase in the levy will have an insignificant effect on non-healthcare costs.

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