Membership of medical aid funds (or health insurance funds) is gradually becoming less affordable as salaries are usually increased in line with inflation and not medical inflation, according to the Namibia Financial Institutions Supervisory Authority in its 2018 annual report.
The report said, “This is troubling since the cost of membership of a medical aid fund and medical aid fund expenses continue to rise at a rate higher than inflation.”
The 2018 financial year saw total healthcare expenditure climb by 7.7% to N$3.5bn. Healthcare expenditure, which is influenced by the annual inflation in medical costs, has consistently exceeded the Namibia Consumer Price Index (NCPI) for the past five reporting years to 2018. This could lead to private healthcare cover for the average Namibian citizen becoming unaffordable in the years to come, says the annual report, which also notes though that in recent periods, the gap between the two indicators has narrowed.
The number of principal members of the funds declined by 1.6% to 81,490 between 2017 and 2018. The total number of dependents reduced by 0.01% from 2017 levels to 103,282 during 2018.
Nevertheless, the total number of beneficiaries in the country increased slightly from the previous reporting period namely by 0.2% to 195,805 as at 31 December 2018.
As an indicator of future burdens, the increase in the total number of beneficiaries was a result of a year-on-year rise in the number of pensioners enrolled in medical aid funds. Pensioner beneficiaries accounted for 5.6% of all beneficiaries at 31 December 2018. Their number increased by 4.4% to 11,033 as at the end of 2018, compared with 10,568 pensioners at the end of 2017.
Compared with the previous reporting period, in 2018 gross contributions received rose by 5.5% to N$4.0bn ($269m). The amount of claims in 2018 was 85.6% of contributions or around $3.45bn.
On average, gross contributions over the past five financial years have increased by 11.8 %, while claims over the same five-year period grew at a higher rate, namely 12.1%. In 2018, the increase in claims outpaced that of contributions, resulting in a lower net surplus than the previous reporting year. Nonetheless, the claims ratio has remained well below 100% over the last five years, with the highest ratio of 86.1% experienced during the 2016 financial year. Contributions were thus sufficient to settle healthcare expenditure, with excess funds available to cover non-healthcare expenses and contribute to building reserves.
Overall, the medical aid funds industry in Namibia has remained well capitalised, reporting a net surplus during the 2018 calendar year,
Furthermore, the industry is deemed financially sound as it maintained a level of reserves above the minimum prudential requirement of 25.0%.
According to the annual report, there were nine active medical aid funds operating in the country at the end of 2018.