I was asked to give some pointers on Medical scheme Health care trends and thought that a good friend and outstanding Actuary and Health consultant Barry Childs of Lighthouse would be the best to assist me with some statistical information. Barry did not let me down and generous assisted me. Well, thanks Barry, and here is the outcome.
Medical scheme health trends 2013
The health industry, like any other, relies on good information to succeed. Trends need to be tracked, risks need to be analysed and threats need to be predicted.
For this industry, however, things are not as clear cut as they are in some others.
We can look at the data provided by medical schemes and we see that hypertension was certainly the most prevalent chronic disease in 2013. But once you start looking at diseases by age, by sex and by race group, you can soon find yourself in very muddy water. The fact is that we don’t have good, consistent, comprehensive epidemiological data to work from.
So is the burden of disease improving or worsening in South Africa? What can we tell from the claim statistics in the last five years; and how did 2013 compare in terms of the longer trends? I chatted to Barry Child of Lighthouse Actuarial Consulting and he pointed out that once again it depends on which section of the population you are talking about, and which diseases.
HIV statistics are a good case in point. For the population as a whole there are signs that HIV is on the decline. But if you just look at the medical scheme population, prevalence is on the increase. We should be able to quantify that by referring to the REF tables, but these have not been publicly updated for a while now.
When it comes to chronic disease, Prescribed Minimum Benefit (PMB) costs also give us a clue to what is happening. Between 2005 and 2010, PMB costs went up by roughly 2% per annum – half due to changing age distributions and half due to increased chronic disease prevalence.
South Africa, like many other countries, sees the biggest spending on healthcare happening in the last year of a patient’s life. These high costs are usually driven by desperation to prolong life, and usually very cost inefficient.
At the other end of the scale, neonatal care can also be extremely expensive. For the system as whole, births are usually the top admission category, followed by pneumonia and other respiratory conditions, followed by gastrointestinal conditions. But it depends on the scheme – some schemes for instance have a high mental illness burden.
The one thing we do know is that chronic conditions appear to be worsening in South Africa, and the result of that will inevitably be felt in our pockets. According to Barry Childs, current estimates range from between 1-2% per year, just because of the worsening risk profile. Heart disease in general is a big cost driver, as part of the larger trend of increases in the so called diseases of life-style. These are the chief drivers of the increase in chronic disease burden and increased cost in the industry.