Increases in medical aid rates worry CMS

January 9, 2012

by Londiwe Buthelezi

The Council of Medical Schemes (CMS) said the envisaged 2012 medical schemes contribution increases were “worrying”.

The regulator said medical schemes appeared to be transferring inappropriate cost increases to beneficiaries.

In its last circular last year, which evaluated contribution increase assumptions for 2012, the regulator maintained that the reasonable weighted contributions increase assumption should range between 4.3 percent and 5.3 percent, as the recently published November 2011 consumer price index (CPI) was 6.1 percent.

The average increase that medical schemes announced for their 2012 contributions last year was 7.4 percent.

The CMS said the average of contribution increases being 2.1 percentage points higher than the maximum recommended increase, was “a worrying observation”.

The regulator has argued that contribution increases in excess of the CPI created affordability challenges for beneficiaries and was the reason why some members opted out of their medical aids even when they needed it most.

“CMS has observed the positive correlation between contribution increases and downward migration of beneficiaries to cheaper benefit options or deregistration of dependents regardless of the member’s health status,” it said.

The regulator said its recommended 4.3 percent to 5.3 percent increases had taken into account key economic and demographic indicators and had viewed any change in these to be negligible if schemes managed utilisation by beneficiaries cost effectively.

Since 2010, the CMS has embarked on a process of strict interrogation of medical scheme contributions and cost increases.

Read the full article in ~uBusiness Report#www.iol.co.za/business/business-news/increases-in-medical-aid-rates-worry-cms-1.1207915~

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