The Namibian Association of Medical Aid Funds has expressed concern over medical aid funds spending more money on claims in comparison to the contributions collected over the last six months.
Its Chief Executive Officer says this is despite the argument that the value of the assets that the medical aid funds hold in reserve was about N$1.7 billion by September 30, 2022, which is adequate to withstand any adverse claims experienced that may result from increased liabilities.
At a media briefing, Stephen Tjiuoro said the growth in healthcare costs over recent years is of concern to the medical aid fund industry.
The Namibian medical aid fund industry is under financial pressure to the extent that the combined reserve levels of all medical funds have breached the prudential reserve limit of 25 percent of the gross annual contribution.
The combined reserve levels now stand at 23.83 percent, below the statutory requirement.
"This is because medical aid funds have been running operating losses and funding the deficit from their reserves, as per the NAMAF article published. The ideal ratio for funds is that 85 percent should be spent on healthcare costs and claims, 10 percent on administration expenses, and five percent on reserve investments.''
He says the effect of the situation is that to bring normality, medical aid funds would be required to implement very high contribution increases for 2024.
This increase is to rebuild reserves by about three percent per year.
"The above translates into a required contribution increase of between 13 percent and 15 percent for 2024. Given the high cost of living and pressure on disposable household income, these increases are not sustainable."
The current financial position, NAMAF says, requires the medical aid funds and other stakeholders to collaborate to find common solutions and avoid casting aspersions at each other.
There has been a historical fight between NAMAF and the Namibia Private Practitioners Fund over the latter's benchmark tariffs.
The tariffs set guideline charges for doctors and other medical providers to follow.