The Namibia Financial Institutions Supervisory Authority (Namfisa) last week placed a temporary cap on selected medical aid increases as part of proactive measures to secure the long-term sustainability of the domestic medical aid fund industry. The authority’s intervention comes amidst revelations of a report by the Namibia Association of Medical Aid Funds (Namaf), calling for urgent intervention to rescue the ailing industry.
“In response to the escalating challenges posed by rising medical aid contribution rates, Namfisa is dedicated to member well-being and industry sustainability, and has implemented a temporary cap on some funds’ annual contribution increases, limiting it to a single-digit percentage (maximum increase of 9.99%). The industry has been given until 20 March 2024 to submit additional contribution increase applications, along with realistic medium-term strategies to address the sustainability of the funds,” reads a Namfisa statement issued by spokesperson Victoria Raimond.
Namfisa’s decision was preceded by an observation of significant variances between actual and forecasted solvency numbers for medical aids over the past three to four years, often absorbed by members through contribution rates’ and benefit limit adjustments.
The entity stated that concerns were raised regarding the lack of realistic and measurable medium-term strategic plans during the 2024 Rule Amendment Approval process, questioning the credibility of certain medical aid funds’ solvency forecasts.
“Amidst the backdrop of rising healthcare costs, we invite medical aid funds to explore innovative solutions for alleviating financial burdens on individuals and families, urging collaboration with medical service providers and administrators to establish a new pricing equilibrium that prioritises affordability and sustainability. This initiative aligns with Namfisa’s mission to regulate and supervise financial institutions in the public interest,” stated Namfisa chief executive officer, Kenneth Matomola.
Namfisa is specifically concerned about the compounding effect of annual contribution increases, while benefit reductions raise concerns about the affordability of medical aid.
“If unmonitored, this trend could render medical aid highly unaffordable over the long-term, exacerbating challenges faced by the industry. Namfisa emphasises the need for transparency and accountability, encouraging the adoption of the International Classification of Diseases, Tenth Revision coding structure by 2025. This standardised coding system will improve transparency, accuracy in pricing, enable granular trend analysis, enhance fraud detection, and support initiatives to reduce over-servicing,” the authority stated.
Namfisa has, therefore, called on on medical aid funds to engage in renegotiations with both medical and non-medical service providers in recognition of the urgency to curb escalating contribution rates.
The authority has also acknowledged the potential of technology to enhance efficiencies in the medical aid industry, and has urged funds and administrators to embrace automation, modernisation and data analysis technologies.
“These advancements can streamline processes, improve fraud management and reduce administration costs, ultimately enhancing the experience for members and service providers,” Namfisa continued.
The authority has also called upon medical aid funds, service providers, administrators and stakeholders to embrace new measures to collaboratively work towards creating a new pricing mechanism which prioritises sustainability, affordability and transparency.
As at 30 September 2023, Namfisa regulates and supervises N$1.9 billion in total assets for the medical aid insurance industry, consisting of eight funds, with a membership size of over 214 000.
Meanwhile, The Namibian last week reported that a Namaf presentation to one of the medical aids emphasised that the majority of Namibian medical aid companies face insolvency in the absence of urgent intervention. Namaf reportedly stated that only 3% of Namibian medical aids are currently financially-sound.