the costing of prescribed minimum benefits
Post on 13-Jan-2016
29 Views
Preview:
DESCRIPTION
TRANSCRIPT
Centre for Actuarial Research
The Costing ofPrescribed Minimum
Benefits
January 2003
Centre forActuarial Research
PMB Study Data
Data from Medscheme Data Warehouse Data covers 2001 calendar year, extracted in July 2002 Data fully run-off, no adjustment for IBNR 90 options 31 schemes 18.071 million beneficiary months of data Average exposure of 1,505,917 beneficiaries
Centre forActuarial Research
Cluster Analysis and Applicability to
the Industry
Centre forActuarial Research
Cluster Analysis Different clusters experience different benefit utilisation,
costs and disease profiles. Provider behaviour differs by cluster, even within the same hospital facility.
Four distinct clusters: High contains options with older, 'whiter' members with
high utilisation; Medium-older contains options with medium utilisation
and older members; Medium-younger contains options with medium
utilisation and younger members; and Low contains options with younger, 'blacker' members
with low utilisation.
Centre forActuarial Research
Cluster Analysis
8.8%
9.6%
10.1%
71.6%
High
Medium-older
Medium-younger
Low
Centre forActuarial Research
Cluster Analysis Study contains more Low cluster beneficiaries than the
industry. For industry comparisons, use Weighted industry price.
This uses 50% of the costs of the Low cluster and 100% of the other clusters.
Low cluster is more relevant to the emerging low-cost option environment.
High cluster is used to give an upper limit to the PMB price. Would only be applicable to a few high utilisation options.
Centre forActuarial Research
Cost of PMBs
Centre forActuarial Research
Claim Value by Status
Centre forActuarial Research
55.1%
12.8%
32.1% Included
Not Classif iable
Out
Centre forActuarial Research
Centre forActuarial Research
Proportion of Total Cost of PMBs by Disease Chapter
Centre forActuarial Research
CNS9.5%
Eye3.9%
ENT1.6%
Respiratory10.5%
Cardiac12.8%
GIT12.2%
HSP3.2%
MS/Trauma6.3%
Skin/Breast3.4%
Endocrine2.2%
Genitourinary2.7%
Gynaecology4.5%
Obstetrics - Neonate17.3%
Mental Illness3.2%
Other2.6%
Haem-Infect3.9%
Centre forActuarial Research
Centre forActuarial Research
Average Cost of PMBs by Disease Chapter
R 0
R 2,000
R 4,000
R 6,000
R 8,000
R 10,000
R 12,000
R 14,000
R 16,000
R 18,000
R 20,000
CN
S
Eye
ENT
Res
pira
tory
Car
diac GIT
HS
P
MS
/Tra
uma
Ski
n/B
reas
t
Endo
crin
e
Gen
itour
inar
y
Gyn
aeco
logy
Obs
tetr
ics
- N
eona
te
Hae
m-In
fect
Men
tal I
llnes
s
Oth
er
Tota
l
Av
era
ge
Co
st
Centre forActuarial Research
Centre forActuarial Research
Cost of PMBs by Age
Centre forActuarial Research
Incidence All Ages
Incidence of PMB Admissions by Age
97.6850
0
50
100
150
200
250
300
350
400
450
0-1
1-4
5 -9
10-
14
15-
19
20-
24
25-
29
30-
34
35-
39
40-
44
45-
49
50-
54
55-
59
60-
64
65-
69
70-
74
75
+
All
ag
es
Inc
ide
nc
e
0
50
100
150
200
250
300
350
400
450
0-1
1-4
5 -9
10-
14
15-
19
20-
24
25-
29
30-
34
35-
39
40-
44
45-
49
50-
54
55-
59
60-
64
65-
69
70-
74
75
+
All
ag
es
Inc
ide
nc
e
Centre forActuarial Research
Average Cost of PMBs by Age
Centre forActuarial Research
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
0-1
1-4
5-9
10
-14
15
-19
20
-24
25
-29
30
-34
35
-39
40
-44
45
-49
50
-54
55
-59
60
-64
65
-69
70
-74
75
+
All
ag
es
Av
era
ge
Co
st
R9 127
Average Cost for All
Ages
Centre forActuarial Research
Raw PMB Price by Age (pbpa)
Centre forActuarial Research
R 891.56 pbpa
Average Price for All
Ages
R 0
R 500
R 1,000
R 1,500
R 2,000
R 2,500
R 3,000
R 3,500
R 4,000
R 4,500
R 5,0000
-1
1-4
5-9
10
-14
15
-19
20
-24
25
-29
30
-34
35
-39
40
-44
45
-49
50
-54
55
-59
60
-64
65
-69
70
-74
75
+
All
ag
es
Centre forActuarial Research
R 0
R 1,000
R 2,000
R 3,000
R 4,000
R 5,000
R 6,000
0-1
1-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75+
TotalHighMedium-olderMedium-youngerLow
Raw PMB Price by Age and Cluster (pbpa)
Centre forActuarial Research
Centre forActuarial Research
Adjustments to the Raw Price of the
PMB Package
Centre forActuarial Research
Adjustments to Raw Price Uncertainty in Definition of the PMB Package
Recoding the OUT Group Recoding the NC Group
Costs of hospital management programme Costs of hospital and related claims administration Costs of chemotherapy and dialysis Costs related to HIV/AIDS Estimate of the cost of ambulatory care Costs of ambulatory administration Reduction for cost of delivery in the public sector
Centre forActuarial Research
Full Price of PMB Package
Four components : In-patient PMB package price based on full data in
study (high degree of certainty) Portion of price for which uncertainty exists in PMB
definition (proportion to include of NC and OUT) Margin added for ambulatory costs Non-healthcare costs.
Note: Prices should not be used blindly in pricing work. Contact a professional for assistance.
Centre forActuarial Research
Full Price of PMBs (excl CDL)
R 0.00
R 500.00
R 1,000.00
R 1,500.00
R 2,000.00
R 2,500.00
High Medium-older
Medium-Younger
High andMedium
Low TotalStudy
WeightedTotal
Per
Ben
efi
cia
ry P
er
An
nu
m
Non-healthcare costsAmbulatory packageUncertainty in PMB definitionIn-patient PMB package
R1 343.43
R1 479.04
R2 432.41
R1 100.08
R2 010.90
R1 489.49
R1 956.01
Centre forActuarial Research
Centre forActuarial Research
Conclusions
Centre forActuarial Research
Improvements to PMB Definition
All stakeholders need an unambiguous definition of the PMB package.
The Council for Medical Schemes is requested to reconsider the definition of PMBs in the Regulations and to include clear diagnosis and procedure codes in an amendment as soon as possible.
Tighter definition of PMBs would ensure more focussed attention on accurate coding from providers and administrators.
Attention should be given to the nature of the chapters and to bringing them in line with clinical practice or a particular coding standard.
Centre forActuarial Research
Comprehensive Crosswalk
Provides a powerful tool for rapid application of PMB status to hospital admissions based on ICD-10 coding
Strongly recommend that this should be made freely available to other medical schemes and administrators, in order to improve their understanding and management of PMBs.
Recommend utilising this tool, or one developed from this work, to define and manage the PMB package in future.
Centre for Actuarial Research
The Costing of the Chronic Disease
List
January 2003
Centre forActuarial Research
Registration of Beneficiaries for Chronic Medicine
Other Chronic Conditions
22.9%
CDL Conditions
77.1%
Centre forActuarial Research
Diabetes Mellitus Type 1 & 210.6%
Epilepsy2.6%
Asthma12.2%
Osteoarthritis3.4%
Other 18 conditions7.6%
Anti-Coagulating Therapy
4.9%
Hypothyroidism5.1%
Hyperlipidaemia12.5%
Hypertension37.3%
Coronary Artery Disease
3.8%
Prevalence of CDL Registrations
Centre forActuarial Research
Centre forActuarial Research
Beneficiaries Registered for CDL Conditions
1 disease62.5%
2 diseases25.0%
3 diseases9.2%
4 or more diseases
3.3%
Centre forActuarial Research
Cost of Each CDL Condition
Centre forActuarial Research
Average Cost per Case
Centre forActuarial Research
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000
Addison's DiseaseAnti-Coagulating
AsthmaBipolar Mood Disorder
BronchiectasisCardiac Failure
CardiomyopathyChronic Obs. Pulmon.
Chronic Renal DiseaseCoronary ArteryCrohn's Disease
Cushing's DiseaseDiabetes Insipidus
Diabetes Mellitus T1&2Dysrhythmias
EpilepsyGlaucoma
HyperlipidaemiaHypertension
HypothyroidismMultiple Sclerosis
OsteoarthritisParkinson's DiseaseRheumatoid Arthritis
SchizophreniaSystemic LupusUlcerative colitis
Total excl. Hemophilia
Average Cost per case
Primary Drugs Secondary Chronic Drugs Other Acute
no cases
R21 013
Single diseases only
Centre forActuarial Research
Centre forActuarial Research
Average Cost per Case
Centre forActuarial ResearchMultiple diseases
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Diabetes, Hypertension
Hyperlipid., Hypertension
Hypertension, Osteoarthritis
Hypertension, Hypothyroid.
Asthma; Hypertension
Anti-Coag, Hypertension
Anti-Coag., Hyperlipid., Hyperten.
Diabetes, Hyperlipid., Hyperten.
Coronary Artery, Hyperlipid.
Top 9 Multiple Diseases
Other Multiple Diseases
All Single Diseases
All CDL Diseases
Average Cost per case
Primary Drugs Secondary Chronic Drugs Other Acute
Centre forActuarial Research
0.3116.94
0.32
0.260.100.49
0.600.07
4.980.43
2.570.44
3.81
2.46
1.630.11
0.860.150.090.19
6.574.43
2.191.491.84
1.281.071.160.83
0.02
0.01
0.03
0.00
0.02
29.88
0 5 10 15 20 25 30
Addison's DiseaseAnti-Coagulating Therapy
AsthmaBipolar Mood Disorder
BronchiectasisCardiac Failure
CardiomyopathyChronic Obs. Pulmon. Disease
Chronic Renal DiseaseCoronary Artery Disease
Crohn's DiseaseDiabetes Insipidus
Diabetes Mellitus T1&2Dysrhythmias
EpilepsyGlaucoma
HyperlipidaemiaHypertension
HypothyroidismMultiple Sclerosis
OsteoarthritisParkinson's DiseaseRheumatoid Arthritis
SchizophreniaSystemic Lupus Erythromatosis
Ulcerative colitisDiabetes, Hypertension
Hyperlipid., HypertensionHypertension, OsteoarthritisHypertension, Hypothyroid.
Asthma; HypertensionAnti-Coag, Hypertension
Anti-Coag., Hyperlipid., Hyperten.Diabetes, Hyperlipid., Hyperten.
Coronary Artery, Hyperlipid.
Incidence per 1000 beneficiaries
Prevalence All
Diseases
Centre forActuarial Research
CDL Package by Age
Centre forActuarial Research
Age of Claiming Beneficiariesfor Selected Diseases
0%
2%
4%
6%
8%
10%
12%
14%
0-1
1-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85+
Pro
po
rtio
n o
f C
laim
ing
Ben
efic
iari
es
Asthma Hypertension Diabetes Mellitus T1&2
Diabetes, Hypertension Other CDL diseases
Centre forActuarial Research
Centre forActuarial Research
CDL Prevalence by Age
0
100
200
300
400
500
6000-
1
1-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85+
All
age
s
Pre
vale
nce
pe
r 10
00
ben
efic
iari
es
Centre forActuarial Research
Average Cost of CDL by Age
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,0000
1-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85+
All
Age
s
Ave
rag
e C
os
t p
er c
ase
pa
Centre forActuarial Research
Raw Price of CDL by Age
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
0
1-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85+
All
Age
s
Pri
ce
pe
r b
en
efi
cia
ry p
a
Centre forActuarial Research
CDL Package by Cluster
Centre forActuarial Research
Raw Price by Cluster
0
100
200
300
400
500
600
700
800
900
1000
High Medium-older
Medium-younger
High andMedium
Additional Low Total
Pri
ce p
er b
enef
icia
ry p
a
All Single Diseases Top 9 Multiple Diseases Other Multiple Diseases
Centre forActuarial Research
Raw Price High vs. Low Cluster
Centre forActuarial Research
0
500
1,000
1,500
2,000
2,500
3,000
0
1-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85+
Pri
ce
pe
r b
en
efi
cia
ry p
a
Total High Low
Centre forActuarial Research
Differences Between Clusters
Age profile differences explain roughly two-thirds of difference in raw cluster prices.
Other differences are probably due to a combination of “the four P’s”: variation in Prevalence rates of important conditions; Presentation or manifestation of conditions; Provider choice (GP vs. specialist and the
management or prescribing habits of each); and benefits available within the health care Plan.
Centre forActuarial Research
Adjustments to the Raw Price of the
CDL Package
Centre forActuarial Research
Adjustments to Raw Price
Haemophilia Removal of three diseases from final Regulations Cost of diagnosis and medical management Adjustment for compliance Adjustment for limits Adjustment for co-payments Costs of chronic medicine management programme Costs of administration Reduction for cost of delivery in the public sector
Centre forActuarial Research
Full Price of the CDL Package
Centre forActuarial Research
Full Price of CDL Package
Four components: Medicine component, based on full data in study (high
degree of certainty) Portion of price for which uncertainty exists until
package is fully defined and allowance for impact of package being mandatory
Amount added for medical management costs Non-healthcare costs.
Note: Prices should not be used blindly in pricing work. Contact a professional for assistance.
Centre forActuarial Research
Full Price CDL Package
R 0
R 250
R 500
R 750
R 1,000
R 1,250
R 1,500
High Medium-older
Medium-Younger
High andMedium
Low Additional TotalStudy
WeightedTotal
Pe
r B
en
efi
cia
ry P
er
An
nu
m
Non-healthcare costs
Medical management est.
Uncertainty in CDL
CDL Medicine Package
Centre forActuarial Research
Conclusions
Centre forActuarial Research
Price in Mandatory Environment
Expect change in member and provider behaviour from existing environment.
Uncertainty exists in price until package is fully defined. Have included an effective 30% margin on medicine
component of CDL package. Consortium opinion that collective margin of 30% on
medicine component is sufficiently conservative to cover this uncertainty in the pricing.
Centre forActuarial Research
Need for Mandatory Package
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,5000
1-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85+
All
Age
s
Pri
ce
pe
r b
en
efi
cia
ry p
a
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,5000
1-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85+
All
Age
s
Pri
ce
pe
r b
en
efi
cia
ry p
a
Community rated price
Centre forActuarial Research
Need for Mandatory Package
Real danger that open schemes will pursue more aggressive self-seeking behaviour and limit chronic medicine benefits to discourage older members and improve their community rate relative to their competitors.
Substantial broker activity and churning of members worsens this incentive.
A mandatory minimum package of chronic medicine and management benefits is essential for reducing opportunistic behaviour by some schemes.
Centre forActuarial Research
Further Policy Issues
Membership of medical schemes needs to be compulsory, rather than voluntary, for medium to higher income groups to stabilise the system.
A risk equalisation system between medical schemes, based on the Prescribed Minimum Benefit package will reduce the opportunistic profiting from risk selection still further.
Centre forActuarial Research
Composition of the CDL List
Brief did not extend to consider diseases outside of the draft list and whether any should have been included.
Need for a process of chronic disease prioritisation in medical schemes in order to inform the rationing process in future.
Centre forActuarial Research
Definition of CDL Package
Draft of Treatment Guidelines for Chronic Disease List Conditions
Based on Standard Treatment Guidelines and Essential Drugs List published by DoH in 1998.
Appoint task team for documenting and maintaining treatment algorithms for CDL conditions.
Actuarial and pricing expertise to estimate the price of the algorithms. Iterative process of refining algorithms.
Project manager to ensure process completed in time for pricing in August 2003 if implementation is 1 January 2004.
Centre forActuarial Research
Complementary and Traditional Medicine
Serious concerns about the implications of legislating the algorithms for CDL conditions.
Only one approach to treatment will receive funding from medical schemes: entrenchment of an allopathic approach to treatment, largely based on drug interventions.
Hard won legal freedoms to operate must not be negated by preventing funding of complementary medicine and African traditional medicine for CDL conditions.
Allied Health Professions Council with 11 modalities. Consumers will increasingly question health plans. Inclusion unlikely to be simple and debate will be vigorous.
Centre for Actuarial Research
The Impact of PMBs on Affordability
January 2003
Centre forActuarial Research
Approach to Affordability
Compare price of components of PMB package to reported benefits and contributions of medical schemes. Industry level Scheme level Option level
Compare price of PMB package to published contribution tables for open scheme options. Focus on low-cost options.
Compare price of PMB package to income levels of existing members and potential members of medical schemes. Impact of employer and per capita subsidies.
Centre forActuarial Research
Price of the PMB Package
Centre forActuarial Research
Price of Complete PMB Package
R 0
R 500
R 1,000
R 1,500
R 2,000
R 2,500
R 3,000
R 3,500
R 4,000
High Medium-older
Medium-Younger
High andMedium
Low TotalStudy
WeightedTotal
Pe
r B
en
efi
cia
ry P
er
An
nu
mNon-healthcare costsCDL Medicine PackageAmbulatory PMB packageInpatient PMB package
Centre forActuarial Research
Private Sector PMB Packageper beneficiary per annum
Price pbpa in 2001 Rand terms
HighHigh and Medium
Low Total StudyWeighted Industry
Inpatient PMB package R 1,994.95 R 1,591.46 R 867.47 R 1,073.31 R 1,188.01
Ambulatory PMB package R 477.24 R 416.72 R 308.12 R 339.00 R 356.20
CDL Medicine Package R 1,154.35 R 805.33 R 286.33 R 421.58 R 499.09
Non-healthcare costs R 170.96 R 141.97 R 89.55 R 104.82 R 113.47
Complete PMB package Private Sector
R 3,797.50 R 2,955.48 R 1,551.47 R 1,938.71 R 2,156.78
Centre forActuarial Research
Non-Healthcare Expenditure on PMB Package
Non-healthcare Expenditure as a Proportion of …
HighMedium-
olderMedium-Younger
High and Medium
LowTotal Study
Weighted Total
Total Inpatient package 3.9% 4.0% 5.0% 4.3% 5.4% 4.9% 4.7%
Total Outpatient package 2.3% 2.3% 2.7% 2.4% 2.7% 2.6% 2.5%
Total CDL package 5.9% 6.8% 6.8% 6.4% 7.8% 7.3% 7.2%
Complete PMB package 4.5% 4.7% 5.4% 4.8% 5.8% 5.4% 5.3%
Well below Registrar’s benchmark of 10% of total expenditure
Centre forActuarial Research
R 0
R 500
R 1,000
R 1,500
R 2,000
R 2,500
R 3,000
R 3,500
R 4,000
High Medium-older
Medium-Younger
High andMedium
Low TotalStudy
WeightedTotal
Pe
r B
en
efi
cia
ry P
er
An
nu
mPrivate sector costTotal CDL packageTotal Outpatient packageTotal Inpatient package
Public Sector Complete PMB Package
Centre forActuarial Research
Public Sector PMB Packageper beneficiary per annum
Price pbpa in 2001 Rand terms
HighHigh and Medium
Low Total StudyWeighted Industry
Total Inpatient package R 1,465.44 R 1,173.53 R 648.89 R 798.05 R 881.17
Total Outpatient package R 251.27 R 207.78 R 129.64 R 151.85 R 164.23
Total CDL package R 708.76 R 520.56 R 237.08 R 311.83 R 354.66
Complete PMB package Public Sector
R 2,425.48 R 1,901.87 R 1,015.61 R 1,261.73 R 1,400.07
Centre forActuarial Research
Price of PMB Package by Age
0
2,000
4,000
6,000
8,000
10,000
12,000
0
1-4
5-9
10-1
4
15-1
9
20-2
4
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85+
Mis
sing
All
ages
Pri
ce p
bp
a
Total CDL package
Total Outpatient package
Total Inpatient package
Complete PMB packagePublic sector
Centre forActuarial Research
Price of PMB Package by Age
Note that for all age bands over 40, the PMB price by age exceeds the community-rated PMB price.
This explains the incentive open schemes have to attract and retain younger and healthier members.
Centre forActuarial Research
Complete PMB Packagefor family of four per month
Price per family per month (2001 Rands)
HighHigh and Medium
Low Total StudyWeighted Industry
Total Inpatient package R 556.37 R 466.84 R 291.98 R 345.27 R 373.29
Total Outpatient package R 98.28 R 84.98 R 59.00 R 66.93 R 71.09
Toal CDL package R 338.95 R 259.47 R 138.33 R 176.00 R 195.94
Complete PMB package Private Sector
R 993.59 R 811.28 R 489.31 R 588.19 R 640.33
Complete PMB package Public Sector
R 638.26 R 525.01 R 321.15 R 383.75 R 416.76
Centre forActuarial Research
Affordability Relative to Reported
Benefits and Contributions
Centre forActuarial Research
Beneficiaries 2001
Open Schemes67.9%
Restricted Schemes
28.3%
Bargaining Council
Schemes3.8%
Source : Registrar’s Returns 2001
Centre forActuarial Research
Total Benefits
Centre forActuarial Research
1,462
2,043
3,627
4,4884,833 4,591
R 0
R 500
R 1,000
R 1,500
R 2,000
R 2,500
R 3,000
R 3,500
R 4,000
R 4,500
R 5,000
PM
B L
owC
lust
er
PM
B In
dust
ryW
eigh
ted
PM
B H
igh
Clu
ster
Ope
n S
chem
es
Res
tric
ted
Sch
emes
All
Reg
iste
red
Sch
emes
Pe
r B
en
efi
cia
ry p
er
An
nu
m
Source : Registrar’s Returns 2001
Centre forActuarial Research
Centre forActuarial Research
Total Contributions
Centre forActuarial Research
4,877 5,192 4,971
599433
549
1,551
2,157
3,798
R 0
R 1,000
R 2,000
R 3,000
R 4,000
R 5,000
R 6,000
PM
B L
owC
lust
er
PM
B In
dust
ryW
eigh
ted
PM
B H
igh
Clu
ster
Ope
n S
chem
es
Res
tric
ted
Sch
emes
All
Reg
iste
red
Sch
emes
Pe
r B
en
efi
cia
ry p
er
An
nu
m
Savings Contributions
Pooled Contributions
Source : Registrar’s Returns 2001
Centre forActuarial Research
Centre forActuarial Research
Non-Healthcare Expenditure
752
496
676
--
-
169
110
11390171
5
R 0
R 100
R 200
R 300
R 400
R 500
R 600
R 700
R 800
R 900
R 1,000
PM
B L
ow
Clu
ste
r
PM
B I
nd
ust
ry
We
igh
ted
PM
B H
igh
Clu
ste
r
Op
en
Sch
em
es
Re
stric
ted
Sch
em
es
All
Re
gis
tere
d
Sch
em
es
Per
Be
nef
icia
ry p
er A
nn
um
Other Non-Healthcare
Administration and Managed Care921
501
786
Source : Registrar’s Returns 2001
Centre forActuarial Research
Centre forActuarial Research
Public Sector
Centre forActuarial Research
1,551
2,157
3,798
5,475 5,625 5,520
1,400
2,425
R 0
R 1,000
R 2,000
R 3,000
R 4,000
R 5,000
R 6,000
PM
B L
ow
Clu
ste
r
PM
B I
nd
ust
ry
We
igh
ted
PM
B H
igh
Clu
ste
r
Op
en
Sch
em
es
Re
stric
ted
Sch
em
es
All
Re
gis
tere
d
Sch
em
es
Per
Be
nef
icia
ry p
er A
nn
um
Private Sector
Public Sector
1,016
Source : Registrar’s Returns 2001
Centre forActuarial Research
Centre forActuarial Research
Total Benefits pbpm by Scheme 2000
21
26
32
26
23
51
29
99
128
42
187
87
344
203
36
40
10
76
501
205
335
0 100 200 300 400 500
Clothing Industry Health Care Fund (Cape Town)
Clothing Industry Medical Benefit Scheme (FS & NC)
Clothing Industry Medical Benefit Society (Northern Areas)
Clothing Industry Sick Benefit Fund (Natal)
Knitting Industry Medical Benefit Society (Northern Areas)
Bargaining Council for the Building Industry (Kimberly)
Building Industry Medical Aid Fund (Bloemfontein)
Building Industry Medical Aid Fund (Eastern Cape)
Building Industry Medical Aid Fund (Gauteng)
Building Industry Medical Aid Fund (Western Cape)
East London Building Industry Medical Aid Fund (ELBIMAF)
Autoworkers Medical Aid Fund (Automed)
Motor Industry Medical Aid Fund (MIMED)
Hairmed
Natal Hairdressers Sick Benefit Fund
Furniture & Allied Workers Sick Benefit Society(S.W.D.)
Natal Furniture Workers Sick Benefit Society
Electrical Industry (Cape)
MEDCOR
Overall Exempt
Overall Registered
Sch
em
e
Rands pbpm
Clothing Industry
MEDCOR
Furniture Industry
Hairdressing Industry
Motor Industry
Building Industry
Electrical Industry
Low cluster PMB contribution for public sector in 2001
Exempt Scheme Benefits 2000
Source : Registrar’s Returns 2000
Centre forActuarial Research
Affordability Relative to Published
Contribution Tables
Centre forActuarial Research
Options Available to Benchmark Family
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
Op
tio
ns
Contributions per family per month
R 640.33 per month Weighted industry PMB package for a family of four
Source : CARE Monograph
Centre forActuarial Research
Centre forActuarial Research
Primary Care Network Options
843
638
728
966
730
824
657
576
780
904
732
480
841
810
672
635
321
489
0 100 200 300 400 500 600 700 800 900 1,000
Fedsure Larona PrimeCure
Ingwe PrimeCure
Ingwe CareCross
Medihelp Nucleus
Medimed PrimeCure
Medimed ECIPA, UDIPA
Metropolitan Primary Plus
MSP/Sizwe PrimeCure
MSP/Sizwe Ecipamed
MSP/Sizwe MediCross
NMP PrimeCure
Protector Health Primary
Protector Health Primary Plus
Provia SilverCure
Spectramed Spectra Alliance
Topmed Bophelo Network
Vulamed Standard
Low cluster PMB Public Sector
Low cluster PMB Private Sector
Contribution per family per month
280
Source : CARE Monograph
Centre forActuarial Research
Centre forActuarial Research
Affordability Relative to Income
Centre forActuarial Research
47.1%
5.4%5.0%
7.4%
5.0%
13.5%
8.2%
4.6%3.7%
R0
Don't know or missing
R1-R799
R800-R1 800
R1 800-R2 499
R2 500-R4 999
R5 000-R9 999
R10 000+
Refuse
Income Levels Medical Scheme Beneficiaries
Source : OHS 1999
Centre forActuarial Research
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
0
1-4
5-9
10
-14
15
-19
20
-24
25
-29
30
-34
35
-39
40
-45
45
-49
50
-54
55
-59
60
-64
65
-69
70
-74
75
-79
80
-84
85
+
(bla
nk)
Refuse
R10 000+
R5 000-R9 999
R2 500-R4 999
R1 800-R2 499
R800-R1 800
R1-R799
Don't know or missing
R0
Centre forActuarial Research
Income Profile Medical Scheme Beneficiaries
Source : OHS 1999
Centre forActuarial Research
Centre forActuarial Research
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
R0
R1-
R79
9
R80
0-R
1 80
0
R1
800-
R2
499
R2
500-
R4
999
R5
000-
R9
999
R10
000
+
Ref
use
Don
't kn
ow o
r m
issi
ng
Potential
Part of a medical scheme
Part of a medical scheme
Potential SHI
Public Sector
Centre forActuarial Research
Possible SHI Income Earners
Source : OHS 1999
Centre forActuarial Research
Conclusions
Centre forActuarial Research
Conclusions on Affordability
Comparing actual benefit expenditure and contributions to PMB package: at industry level, PMB package was well covered.
There should thus be no upward pressure on contributions from Prescribed Minimum Benefits.
Comparing published options prices to PMB package: showed conclusively that the current packages on offer by open schemes were way in excess of the price of the PMB package for the industry. In some cases the prices were four or five times the price of the PMB package.
Centre forActuarial Research
Conclusions on Affordability
The conclusion must be that there is substantial room to reduce the current benefit offerings in the industry to something closer to the price of the PMB package plus an additional amount for routine primary care.
The industry needs to critically examine benefit offerings for 2004 and begin the designs with a focus on the PMB package.
Centre forActuarial Research
Policy Issues
Centre forActuarial Research
Understanding of PMBs It has become apparent during this research that the
introduction of Prescribed Minimum Benefits with effect from 1 January 2000 has barely impacted the industry.
Very few schemes are able to isolate PMB expenditure from other benefits.
Of even greater concern is how few medical practitioners seem to have heard of PMBs. Thus at the critical interface with patients there is little knowledge of the rights of medical scheme beneficiaries to treatment for the PMB conditions.
It is certainly not in the interests of schemes to educate practitioners and this critical role must be taken on centrally by the Department of Health or the Council for Medical Schemes.
Centre forActuarial Research
Community-rated PMB Price
The comparison of options prices in open schemes for the benchmark family shows a wide divergence of prices.
Members should be facing a common community-rated price for the PMB package and not a price determined by each scheme according to its own demographic profile and illness burden.
Now that a price has been conclusively determined for the PMB package for the industry, this can facilitate work on a risk equalisation mechanism between schemes that covers the benefits in the PMB package.
Centre forActuarial Research
Future Pensioner Philosophy
7%
1%
6%
16%
60%
4%
12%
15%
26%
43%
0% 10% 20% 30% 40% 50% 60%
Eligibility CriteriaChanged
Cap Benefits
Cash or Benefits inlieu of Medical
Cap CompanyContribution
Do Not Offer Benefitsto New Employees
19992001
Source : OMHC Health Survey 2001
Centre forActuarial Research
Vulnerability of Pensioners
From the study findings, it is evident that pensioners are already vulnerable and that they will increasingly find contributions to medical schemes difficult to afford, given that medical contribution increases have exceed pension increases.
Added to this is the changing structure of employee benefits in such a way that future pensioners will be unlikely to have a subsidy for medical benefits in retirement.
The study describes the subsidy issue as a future time bomb and this issue needs to be placed on the agenda now.
Centre forActuarial Research
Impact of Per Capita Subsidy
No subsidyR 800 pa subsidy
R1 000 pa subsidy
No subsidyR 800 pa subsidy
R1 000 pa subsidy
Complete PMB Package Price pmpm in 2001
R 124.26 R 57.59 R 40.93 R 321.15 R 54.48 -R 12.18
Effective price to the member R 124.26 R 57.59 R 40.93 R 321.15 R 54.48 R 0.00
More than R10 000 1.1% 0.5% 0.4% 2.9% 0.5% 0.0%
R5 000 to R9 999 1.5% 0.7% 0.5% 3.8% 0.6% 0.0%
R2 500 to R4 999 3.0% 1.4% 1.0% 7.7% 1.3% 0.0%
R1 800 to R2 499 5.2% 2.4% 1.7% 13.4% 2.3% 0.0%
R 800 to R1 800 8.6% 4.0% 2.8% 22.1% 3.7% 0.0%
R 1 to R 799 27.8% 12.9% 9.2% 71.8% 12.2% 0.0%
Proportion of IncomeMonthly Income Bands
OHS99
Single Adult Family of Four
Centre forActuarial Research
Per-capita Subsidy
The study also attempts to put into context the per capita subsidy mooted in the Taylor Committee report.
It was demonstrated that this subsidy could have enormous impact on the affordability of healthcare for low-income families.
This impact is subject to the final amount of the subsidy and the exact form it will take.
There is no doubt that a subsidy of this nature has a far-reaching impact on affordability of the PMB package for low-income groups and clarity on proposals is now needed.
Centre forActuarial Research
Public Sector Contracting
The price of the PMB package in the public sector, which lies at the heart of affordability for the low-cost options and the Bargaining Council schemes, now needs further work by the public sector itself.
Medical schemes need to know at what price they can contract for the delivery of benefits in the public sector and these contracts need to be facilitated at a national level.
The impact of this additional substantial network to the current hospital networks offered by the private sector should have a galvanising effect on hospital benefit negotiations for 2004.
Centre forActuarial Research
Total Expenditure on Prescribed Minimum Benefits
To put the size of the business in context, total expenditure on the PMB package using the Weighted industry price would have been R 14.573 billion in 2001.
The estimated price for delivery of the package in the public sector would have been R 9.460 billion.
This covers only registered schemes. A further amount of R 0.268 billion would be added to the
public sector total for those Bargaining Council schemes reporting in 2001.
Centre forActuarial Research
A Research Unit of the University of Cape Town
(CARE)
Centre for Actuarial Research
A Research Report Prepared Under Contract for the Council for Medical Schemes
top related