Updated: 19 March 2024
Medical aid members, older and sicker
A deep dive into Discovery’s claims data facilitated by its’ Head of Clinical Excellence, Dr Noluthando Nematswerani, reveals how South Africa’s diseases of lifestyle and triple burden of disease are contributing to medical inflation.
That’s besides other drivers like poor regulatory control of the private sector by government, (leading to excessive consultant tariffs), upcoding by healthcare providers and a glaring lack of permissible low-cost benefit medical aid options.
The average age of Discovery Health’s members has increased from 32,3 years old in 2008 to 36,8 in 2023, according to its own data. Twice as many younger people now suffer from chronic conditions than did 15 years ago.
Discovery’s chronic conditions claims have increased from 15% to 28% between 2008 and 2023, with those affected getting younger and younger. Nine percent more people died with co-morbidities over the last twelve years. (rising from 39% in 2011 to 58% in 2023).
A fundamental tenet of viable medical schemes is that younger, healthier members subsidise older, more sickly members, so this ageing membership does not bode well for medical schemes across the board.
Nematswerani says that with ‘greater affordability pressures,” members are switching to more affordable plans with fewer benefits and lower cost delivery models. Higher end comprehensive benefit plans were seeing a decline in enrolment while mid-range plans with hospital benefits were continuing to grow, albeit with a slower trajectory.
Next generation digital and network-based plans (like ‘Smart’) were growing fast, albeit off a lower base.
She says Discovery’s Keycare entry level plan is declining marginally but still has 400 thousand members in spite of R1 billion operational losses incurred annually. She puts this down to competitive pricing by other schemes drawing members away.
Ever-rising medical inflation and government inaction on multiple levels are combining to weaken medical aids in advance of an all-encompassing NHI. Nematswerani says leading funders are not panicking but concentrating their efforts on creating more affordable access to quality care.
“Even with the NHI you must have sustainable benefits and care. The public healthcare service is crumbling, in spite of several islands of excellence. They need to get this right, plus include private sector expertise going forward. Relegating us to complementary services under Section 33 of the NHI bill means they don’t see the private sector as part of the broader healthcare system,” Nematswerani said.1
She described the NHI as ‘a long-term journey,” (many health economists and expert observers predict 20 years to full implementation) – I mean Nicholas Crisp (the NHI chief), hasn’t even got proper staff in place, nor an advisory board,” she said.
Discovery was planning for long term sustainability and would focus on, “what is relevant and right for our members now. We’re hoping that as time goes by there will be a meeting of minds and eventually both sectors can work together and realise proper healthcare for South Africa.”
Speaking on other drivers of medical inflation, she said high-cost drugs were projected to increase by a further R1 billion by 2025, mainly as a result of oncology medicine prices and usage. Driven by oncology and chronic high-cost drugs, treatment prices rose by 7,5% and 10% respectively per annum between 2013 and 2022, with all other drugs accounting for a 5,4% hike over the same period. Discovery’s actuaries have projected that the medical aid will spend R0,96 billion more on high-cost medicines by 2025.
Medical schemes are not for profit mutuals where all healthcare costs are funded by member contributions. Any increase in medicine costs ultimately result in higher member contributions.
She went on to outline Discovery’s health technology assessment process before talking about value-based care aligning payers and providers on outcomes that delivered superior value.
“The best way forward lies in true partnerships that share value between all stakeholders,” she asserts.
Nematswerani explains that the triad of healthcare provider, consumers and funder is the shared value aspiration, leading to lower cost and greater access by more people, higher value (better clinical outcomes and patient experience). Ultimately, a stronger health system promotes innovation and broader access to high quality, affordable healthcare.
Asked about how Discovery views innovation in health care funding, she said the first question to ask is, “whether it solves a problem and is sustainable.”
“Then we see if it widens access to healthcare, is culturally appropriate and whether it works across boundaries. It must involve the local population, be evidence based, cost effective and of high quality, affect change and be collaborative,” she adds.
In our role as a funder and disrupter in healthcare access and delivery, we optimise resources by optimally managing resources through funding high quality healthcare that is safe, clinically appropriate and cost effective. We attempt to achieve affordable premiums, ensure long term sustainability, and offer financial protection for members.
“We must develop and sustain partnerships that enable access to affordable, quality healthcare and medicines. We make smart decisions about which technologies to fund to ensure quality and sustainability of healthcare. We achieve the highest possible health gains (outcomes) for patients, measured against the total cost of care.”
“To sum up, for us value equals quality over cost which equals outcomes and patient experience over direct and indirect costs.”
Doctor behaviour was the biggest driver of patient funding costs with hospitals being the doctors’ biggest beneficiary, with some holding shares in them, which drove perverse incentives.
Late last month, in a cyber conference on outcome measurements and reporting, Carol Garner, executive chairperson of the Case Manager Association of SA, said some of the things she and her colleagues found, “makes your hair stand on end.”
She said the lower the hospital bed occupancy rate, the fuller the ICU was. The newer the hospital, the fuller the ICU was.
Data showed that the average number of healthcare providers per ICU patient was five, with blood gases done three times per day and daily pathology tests and multiple scans and images, “whether they like it or not.”
Nematswerani said ICUs were the highest cost drivers in hospitals.
Asked whether doctors were doing enough to support underfunded patients, she said this was the brokers job, but conceded that negotiating the options offered by 71 medical schemes ‘is extremely difficult”.
She was unaware of any cyber tools being available to make this job easier.
“There’s no way an ordinary member of society can understand all the different medical schemes. Navigating it all is hard.”
She said regulatory reform would best contribute to lowering medical inflation, with the ‘hugely exposing,” single exit price of drugs urgently in need of change, embracing all stakeholders.
When it came to the controversial Prescribed Minimum Benefits (a huge driver of medical scheme costs,) she said doctors seemed to think, “PMB’s fund everything and anything,” which was patently not the case.
She issued a strong contextual warning around patient care debates in the current environment, saying, “everything right now is being driven by politics and the elections.”