The Council for Medical Schemes (CMS) has confirmed a considerable drop in healthcare benefits expenditure with a concomitant solvency increase for medical schemes in its 2020/21 Industry (Annual) Report just released*.

Re-affirming observations made by industry commentators on the state of the medical scheme industry in recent months, the report acknowledges that the COVID-19 pandemic caused a decrease in healthcare utilisation and expenditure in 2020, due to the varying levels of lockdowns and cancellation of elective procedures and services.

Lower utilisation due to the pandemic, therefore, contributed to a combined surplus for all medical schemes of R19.93 billion in 2020 – as against the R1.03 billion surplus in 2019 – while the 2020 industry solvency ratio at 44,55% is almost 10% up on the 2019 ratio (35,61%).

And in keeping with traditional patterns, administration expenditure – the biggest component of non-healthcare expenditure at 83.73% – grew by 3.67% to R14.35 billion from R13.84 billion between 2019 and 2020.

Healthcare expenditure on benefits decreased to R178.04 billion, 3.81% down from the 2019 reported amount of R185.1 billion, while hospital expenditure saw a decline of 8.38% between 2019 and 2020, from 68.4 billion to 62.7 billion. The average amount paid per beneficiary for hospital services also decreased by 8.45% to R7 052.00, while over 92% of this expenditure went to private hospitals.

“There were also less visits to the doctor as the amount claimed by General Practitioners (GPs) decreased by 10.07% from 10.3 billion in 2019 to 9.21 billion in 2020,” the CMS notes in a media release on the Industry Report.

There was an overall decline in the amounts paid toward specialists, hospitals, general practitioners, dentists, and dental specialists, 2.26%, 8.83%, 10.07%, 7.19%, and 5.52%, respectively: “Despite this,” it adds, “hospital visits by GPs saw a 15% increase in cost, with an average of R1 044.94 per event in 2019 to R1 203.43 in 2020, accounting for 14% of the total expenditure on GPs. Out-of-hospital visits costs increased from an average of R404.62 in 2019 to R424.59 in 2020.

“Caesarean sections increased by 7.30% from 651.83 in 2019 to 699.40 in 2020.”

Expenditure on medical specialists decreased by 2.2%, from R13.4 billion in 2019 to R13.1 billion in 2020. The average expenditure per event in-hospital increased by 10.99% from R1 549.13 2019 to R1 719.41 in 2020. The average expenditure per event out-of-hospital increased by 4.28% from R1 185.57 in 2019 to R1 236.31 in 2020.

“True to form,” the CMS explains, “the only specialist service that increased during the period under review was pathology services, which amounted to R11.6 billion in 2020.”

Medicines (and consumables) dispensed by pharmacists and providers other than hospitals amounted to approximately R29.43 billion, representing an increase of 3.73% compared with R28.3 billion in 2019.

Overall, risk benefits paid per beneficiary decreased slightly by 4.31% from R18 791 in 2019 to R17 980 in 2020, and the average spent from medical savings accounts pabpa, increased by 0.04% to R2 029.63.

On COVID-19 specifically, the CMS reports that overall, the industry saw COVID-19 claims to the value of R10.10 billion in 2020: There were 422 894 members of medical schemes infected with COVID-19 in 2020, and out of that number, 383 585 recoveries, representing a mortality rate of 3.02%. These numbers are based on data from 73 schemes, representing 99.84% of medical scheme beneficiaries.

Also pointed out in the media release is that. through various concessions for medical schemes, the CMS allowed for the utilisation of personal medical savings accounts to offset contributions, the relaxation of credit policies, contribution holidays and lower future contribution increases: “As a result, 19 914 members were granted contribution deferrals to the value of R586.90 million, while 16 654 members received relief through their personal medical savings accounts to the value of R180.11 million.”

Other points of note include a drop in number of schemes by two to 76, a drop from 8,99 million beneficiaries to 8,89 million,  and average age of beneficiaries remaining almost constant at 33,4 years.

Prescribed Minimum Benefit (PMB) expenditure, however, rose slightly to R92.4 billion in 2020, accounting for 51.9% of benefits paid in 2020 up from 51.2 % in 2019.

*The CMS Industry Report can be downloaded at

 SOURCE: CMS Media Release