Council for Medical Schemes releases Preliminary Industry Trends 2022 report

20-10-23 / Sisanda Ndlovu

Council for Medical Schemes releases Preliminary Industry Trends 2022 report

Pretoria - The Council for Medical Schemes (CMS) has released its Preliminary Industry Trends, comprising of demographic information, benefits paid and the financial performance of the medical schemes industry.

In its report, the CMS said the number of medical schemes in South Africa went down to 72 in 2022. The number of lives covered by the remaining schemes increased to 9.04 million, an increase from 8.94 million in 2021.

Despite these increases, the Council said the percentage of the population covered by medical schemes declined from 16% in 2000 to 14.92% in 2022.

The medical scheme population aged, as the average age of members increased to 34 in 2022, compared to 33.6 in the previous year. Females had a higher average age of 35.1, while males had an average age of 32.6. The pensioner ratio also increased from 9.0 in 2021 to 9.3 in 2022.

Large schemes increased slightly, while medium and small schemes decreased. Some schemes grew by 5% or more, while others fell by over 5% or even more than 10%.

"Total healthcare expenditure on benefits paid in 2022 increased to R224,1bn, a 9.2% increase from the previous year's R205,3bn. Risk benefits paid accounted for 90.7% of total benefits paid, at R203,3bn, while savings accounted for 9.3%, at R20.8bn.

"Claims paid per average beneficiary per annum (pabpa) increased by 3.5%. Risk benefits paid per beneficiary increased by 3.6%, and the average amount spent from medical savings accounts pabpa also increased by 3.4%. Between 2015 and 2022, there was a 17.3% increase in total benefits paid, translating into an annual average increase of 2.3%," said Council said.

Demographic characteristics and benefits paid

In 2022, medical schemes utilised their built-up reserves to fund their operations. For every R100 received in contributions, R2.92 of reserves were utilised to fund the R93.96 paid in claims and the R8.96 non-healthcare expenditure.

A total of R210.76bn was collected in risk contributions from members (2021: R204.69bn), and expenditure on relevant healthcare services was reported at R198.04bn (2021: R186.15bn).

The Council said schemes continued to implement below inflation increases during 2022: the increase in risk contributions pabpm was 2.56%, rising from R1 911.95 in 2021 to R1 960.92 in 2022 (compared to CPI of 6.9%).

"Medical schemes saw higher claims in 2021 due to pent-up demand, leading to increased utilisation. Risk claims pabpm rose to R1,842.54 from R1,738.73, an increase of 5.97%. The claims ratio, therefore, increased from 2021's 90.94% to 2022's 93.96%; this resulted in a net healthcare deficit of R6.16bn (2021: surplus R820.52 million).

"The medical scheme industry was financially sound, with industry solvency of 47.21%, exceeding the minimum required solvency level of 25.00%," the council concluded.