Three restricted medical schemes have again achieved the highest scores on an index that measures their sustainability.

The scheme for members of the South African Police Service, Polmed, was the top scorer for the third year in a row in the Alexander Forbes Health Medical Schemes Sustainability Index.

Polmed was followed by the restricted scheme for municipal workers, Samwumed, and the scheme for local government employees and their dependants, LA Health.

The index measures a number of key factors that Alexander Forbes has identified as contributing to the sustainability of a scheme. The measures are calculated for the 10 largest (based on membership) open and the 10 largest restricted schemes for the period since 2006.

Restricted schemes admit as members only the employees of a company, or of a group of employers, whereas open schemes admit anyone.

If your scheme scores well on the index, you can take some comfort that it is regarded as well positioned to pay your claims, and that it will not be liquidated or merged with another scheme.

According to Alexander Forbes’s “Diagnosis 2016/17” report, although Polmed had the best score over the nine years since 2006, Samwumed and LA Health showed the greatest improvement to their scores in 2015 – 20 and 15 percent respectively.

The publication states that the improvement in Samwumed’s score was driven by a reduction in the average age of the scheme’s beneficiaries (members and their dependants), a substantial operating profit in what was a tough year for the industry, a substantial increase in accumulated funds and an improvement in its statutory solvency ratio.

Schemes are obliged by law to hold 25 percent of the contributions they collect annually in reserve to ensure they can weather periods of high claims. The percentage held in reserve is known as the scheme’s solvency ratio.

The index measures a scheme’s operating profit, but schemes are not-for-profit entities. Any surpluses after claims and non-healthcare expenses, such as administration, have been paid form part of the scheme’s reserves.

When the average age of a scheme’s beneficiaries decreases, its claims typically decrease, resulting in a higher operating profit and, eventually, lower contributions for members.

The index uses the latest available data, in this case for the 2015 calendar year, which was released in the Council for Medical Schemes’s annual report in September last year.

Alexander Forbes says LA Health scored well on all components of the index, with a good operating surplus, an increase in its solvency ratio, an increase in the size of the scheme and an improvement in the age profile of beneficiaries.

Polmed achieved a small operating deficit for 2015, but still increased its reserves and maintained a solvency level of 51.1 percent, which is significantly above the required minimum of 25 percent, Alexander Forbes says.

Discovery Health Medical Scheme was fourth overall and the highest-rated open scheme. The next-best open scheme was Fedhealth, which was in seventh position overall.

Medihelp was in eighth position, Sizwe was in ninth position, Medshield 10th, Momentum 11th, Profmed 12th, Bonitas 13th, and the Government Employees Medical Scheme was in 14th position.

Liberty and Transmed both experienced a decline in their index values during 2015, Alexander Forbes notes. Liberty was ranked 18th out of the 20 schemes considered.

Transmed once again ranked lowest on the Sustainability Index out of the 20 schemes considered.

Although the index can help you to identify a strong scheme to join, you should take care how you interpret the index, because it takes into account only quantitative factors, not qualitative factors, such as service levels or benefits offered.

In addition, only the top 10 open schemes (out of a total of 23) and the top 10 restricted schemes (out of 60) are rated.