Third wave hits medical aid funds
The medical aid fund industry recorded a loss ratio of 115.1% in the second quarter of 2021, indicating that its total expenditure exceeded its income from contributions.
Jo-Maré Duddy – The medical aid fund industry in Namibia suffered an overall loss of nearly N$139.9 million in the second quarter of this year as especially hospital, medicine and pathology claims surged during the third Covid-19 wave.
The industry had to settle overall claims of more than N$1.2 billion, the latest report by the Namibia Financial Institutions Supervisory Authority (Namfisa) showed yesterday. Compared to the same three months in 2020, this is an increase of nearly N$329 million or 38%.
“Claims expenditure increased during the quarter under review due to the third wave of Covid-19 which resulted in medical aid fund beneficiaries utilising more healthcare benefits, including hospital and pharmaceutical care benefits,” Namfisa said.
Funds’ overall loss for the three months ended 30 June 2021 is by far the biggest second-quarter loss suffered by the industry on record, according to Namfisa’s website.
The third wave only peaked in July.
CLAIMS
Nearly N$410.5 million was paid out in hospital claims during the period under review, about N$113 million or 38% up from the comparable quarter in 2020. Around N$199.5 million pharmacy claims were settled, up some N$40.9 million or 26% year-on-year (y/y). Claims from specialists rose by around N$31 million or 29% to nearly N$138.6 million.
In total, medical aid funds paid out about N$98.4 million to general practitioners, a y/y increase of nearly N$18 million or 22%. Pathology claims shot up around 60% y/y to more than N$74.6 million. About N$60.5 million was settled as radiology claims, which rose 24% y/y.
According to Namifisa: “The industry reported an average claims ratio of 104.6% during the second quarter of 2021, which was higher than the 88.8% reported for the previous quarter, and also higher than the 77.9% reported for the corresponding quarter of 2020.”
“Claims related to hospital admissions, medicines dispensed by pharmacists and visits to general practitioners and specialists were reported at 70.5% of total healthcare expenditure during the quarter under review, slightly higher than the 69.1% reported for the previous quarter,” it added.
STATS
The industry recorded a loss ratio of 115.1%, indicating that the industry’s total expenditure exceeded its income from contributions for the quarter under review. In the corresponding three months in 2020, the figure was 88.1%.
“The high value of claims were a result of the third wave of Covid-19, an outlier event that is not anticipated to continue in future quarters,” Namfisa said.
It continued: “The impact of other illnesses such as colds, flu, and the impact of these illnesses on other ailments along with elective procedures will be monitored once Covid-19 preventive measures are relaxed and normality is resumed.”
The cash coverage ratio of the industry at the end of June was 0.3, compared to 0.6 at the end of March this year. The cash coverage is the number of months for which the industry can pay claims from its existing cash and cash equivalents.
The second quarter ratio showed that the industry had cash and cash equivalents that were not sufficient to settle one month’s worth of claims as at 30 June.
“However, this does not pose a significant threat to the industry’s viability. The industry held sufficient liquid investments to disinvest in order to settle claims where cash resources are insufficient,” Namfisa said.
LIQUIDITY
The industry’s liquidity gap – the difference between its current assets and its current liabilities – in the second quarter was positive. Current assets exceeded current liabilities by N$1.7 billion at the end of June.
The industry reported a decrease in current assets because of a reduction in cash and cash equivalents due to higher claims and non-healthcare expenses that were paid during the quarter, while current liabilities increased during the second quarter of 2021.
According to Namfisa, these changes in current assets and liabilities resulted in a liquidity ratio of 4.6:1 as at 30 June, compared to 5.0:1 as at 31 March. A liquidity ratio ranging between 1.5:1 and 3:1 is considered ideal, hence the industry reported a favourable liquidity ratio.
The industry’s solvency ratio - total assets versus total liabilities - was 4.8:1 as at 30 June, which was lower than the ration of 5.4:1 reported as at 31 March.
“This indicates that the industry’s total assets amounted to just under five times its total liabilities, which the Authority deems satisfactory. Moreover, the industry held the majority of its assets in liquid investments, hence the industry was deemed to be liquid and solvent as at 30 June 2021,” Namfisa said.
The industry had to settle overall claims of more than N$1.2 billion, the latest report by the Namibia Financial Institutions Supervisory Authority (Namfisa) showed yesterday. Compared to the same three months in 2020, this is an increase of nearly N$329 million or 38%.
“Claims expenditure increased during the quarter under review due to the third wave of Covid-19 which resulted in medical aid fund beneficiaries utilising more healthcare benefits, including hospital and pharmaceutical care benefits,” Namfisa said.
Funds’ overall loss for the three months ended 30 June 2021 is by far the biggest second-quarter loss suffered by the industry on record, according to Namfisa’s website.
The third wave only peaked in July.
CLAIMS
Nearly N$410.5 million was paid out in hospital claims during the period under review, about N$113 million or 38% up from the comparable quarter in 2020. Around N$199.5 million pharmacy claims were settled, up some N$40.9 million or 26% year-on-year (y/y). Claims from specialists rose by around N$31 million or 29% to nearly N$138.6 million.
In total, medical aid funds paid out about N$98.4 million to general practitioners, a y/y increase of nearly N$18 million or 22%. Pathology claims shot up around 60% y/y to more than N$74.6 million. About N$60.5 million was settled as radiology claims, which rose 24% y/y.
According to Namifisa: “The industry reported an average claims ratio of 104.6% during the second quarter of 2021, which was higher than the 88.8% reported for the previous quarter, and also higher than the 77.9% reported for the corresponding quarter of 2020.”
“Claims related to hospital admissions, medicines dispensed by pharmacists and visits to general practitioners and specialists were reported at 70.5% of total healthcare expenditure during the quarter under review, slightly higher than the 69.1% reported for the previous quarter,” it added.
STATS
The industry recorded a loss ratio of 115.1%, indicating that the industry’s total expenditure exceeded its income from contributions for the quarter under review. In the corresponding three months in 2020, the figure was 88.1%.
“The high value of claims were a result of the third wave of Covid-19, an outlier event that is not anticipated to continue in future quarters,” Namfisa said.
It continued: “The impact of other illnesses such as colds, flu, and the impact of these illnesses on other ailments along with elective procedures will be monitored once Covid-19 preventive measures are relaxed and normality is resumed.”
The cash coverage ratio of the industry at the end of June was 0.3, compared to 0.6 at the end of March this year. The cash coverage is the number of months for which the industry can pay claims from its existing cash and cash equivalents.
The second quarter ratio showed that the industry had cash and cash equivalents that were not sufficient to settle one month’s worth of claims as at 30 June.
“However, this does not pose a significant threat to the industry’s viability. The industry held sufficient liquid investments to disinvest in order to settle claims where cash resources are insufficient,” Namfisa said.
LIQUIDITY
The industry’s liquidity gap – the difference between its current assets and its current liabilities – in the second quarter was positive. Current assets exceeded current liabilities by N$1.7 billion at the end of June.
The industry reported a decrease in current assets because of a reduction in cash and cash equivalents due to higher claims and non-healthcare expenses that were paid during the quarter, while current liabilities increased during the second quarter of 2021.
According to Namfisa, these changes in current assets and liabilities resulted in a liquidity ratio of 4.6:1 as at 30 June, compared to 5.0:1 as at 31 March. A liquidity ratio ranging between 1.5:1 and 3:1 is considered ideal, hence the industry reported a favourable liquidity ratio.
The industry’s solvency ratio - total assets versus total liabilities - was 4.8:1 as at 30 June, which was lower than the ration of 5.4:1 reported as at 31 March.
“This indicates that the industry’s total assets amounted to just under five times its total liabilities, which the Authority deems satisfactory. Moreover, the industry held the majority of its assets in liquid investments, hence the industry was deemed to be liquid and solvent as at 30 June 2021,” Namfisa said.
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