Top marks for Cape Medical Plan
The 2006/7 annual report for the Council of Medical Schemes (CMS) is hardly light reading, but within the 175 pages of facts and figures there is plenty of evidence that Cape Medical Plan is secure, growing prudently and ensuring that members' money is actually spent on health care. Here are a few of the highlights coming out of the report, as we see them:
CMP is well-cushioned against risk.
A medical aid's cushioning lies in its solvency ratio, which is based on the size of its cash reserves. The regulator prescribes a 25% solvency ratio; some of the country's largest medical aids are only now beginning to attain this. Cape Medical Plan's solvency ratio is 142.4% - that's 5.5 times the minimum, and the second highest in the industry.
CMP is growing carefully.
In order to continue to protect members against the costs of ill-health, medical aids need to grow their membership and income in such a way that this growth does not add unduly to existing risks and costs. In 2006/7 total medical aid membership grew by just 1.3% and contribution income by 8%. Many medical aids saw a decline or stagnation in membership during the review year. However, CMP reported a 9.6% increase in membership and a 15.5% increase in income. In other words, growth needs were met without increased cost to existing members.
CMP spends more of members' money on health.
Providing health cover differs from widget-making where the more widgets made, the lower their unit cost, which favours larger widget makers. The CMS report reveals no significant cost advantage to members of larger medical aids. In fact, the reverse seems to hold: big medical aids tend to spend less of members' premiums on medical cover and more on layers of administration, salaries, brokers and advertising. Every rand that goes to brokers and other non-medical categories is a rand not going to medical care. Because CMP is relatively small, and member-owned, a greater proportion of its income goes to health care. Furthermore, the benefits offered by CMP are at least equal to the scope and quality of those offered by the bigger, more expensive schemes.
The full report is available at www.medicalschemes.com