Rising healthcare costs are the biggest concern for employers, brokers and medical schemes within the healthcare industry, findings from the 2010 OMAC Actuaries & Consultants Healthcare Survey reveal.
They also indicate that medical schemes are still struggling to contain these costs. At the same time members perceive these benefits to be decreasing.
The survey, which consists of a structured questionnaire administered via one-hour, face-to-face interviews with 83 employers, 15 brokerages and 21 schemes, provides one of the most comprehensive views on the South African healthcare industry to date.
“As far as we are aware, a sample this broad has never been surveyed in the healthcare industry before,” says Margaret Hulme, Head of Healthcare Consulting at OMAC Actuaries & Consultants.
The survey shows that open and closed schemes, employers and brokers see the overall cost of Prescribed Minimum Benefits (PMBs) as a major driver of rising healthcare expenses. This was also found to be a major concern in the 2005 survey.
PMBs are a set of 270 medical conditions and 26 ongoing, serious chronic diseases that medical schemes must cover under every option of their offering.
Hulme says that in order to retain their affordability, most schemes have been forced to reduce benefits where possible - such as introducing co-payment structures and reducing other, non-PMB benefits.
“However, members do not perceive the PMBs as valuable enough to offset the reduction in other benefits.”
She says it is of concern that despite all the money spent on PMBs, these are not perceived as valuable by the member.
“This is primarily owing to a lack of members' understanding, with 85% of members surveyed revealing that they do not understand their PMB entitlements, or where to access PMBs.”
She says medical schemes and employers need to be proactive in seeking to maximise member awareness of the worth of PMBs.
Hulme says that member education in general remains an extremely worrying issue.
“The survey shows that although members in general are satisfied with the level of communication that they receive, only 45% of respondents actually read the material thoroughly. Most medical schemes communicate to members via booklets, annual benefit structure information or some form of electronic interface. There is a distinct lack of face-to-face communication - which has been found to yield the best results,” says Hulme.
She also advises schemes to direct their communication towards the providers of healthcare (especially schemes' contracted provider networks) and not only to members.
This is because healthcare providers are easier to educate as they understand the healthcare environment and may be able to influence members to change their behaviour.
Another key finding in the survey is the failure of disease management and wellness programmes to add significant value - in spite of a dramatic increase in uptake by employers.
The implementation of disease management programmes in the workplace increased significantly from 26% of employers surveyed in 2005 to around 90% of employers surveyed in 2010.
The use of wellness programmes increased from 12% in the employer survey in 2005 to 63% of employers using open schemes and 18% of employers using closed schemes in 2010.
In spite of this the medical schemes surveyed did not attribute much value to the effectiveness of these programmes.
Hulme says this is due to inappropriate communication methods being used to educate members about their disease and generate interest in using wellness programmes.
She also feels that providers should be more involved in the process. When asked about current and future industry developments, respondents indicated that the current issues of affordability and regulations such as the NHI are likely to remain challenges in future.
“Schemes are very aware that, if they cannot meet the affordability challenge, the introduction of the NHI could radically alter the format of medical schemes. However, because there is little confirmed detail regarding the implementation of the NHI, the majority of respondents have adopted a wait-and-see approach to the NHI for now,” says Hulme. - I-Net Bridge