About 31 000 state pensioners, who were members of an unregistered almost unlimited option administered by Medihelp, have been transferred to Medihelp's most comprehensive option with effect from January 1 this year.
In a statement, Medihelp says it does not expect that the move will result in any contribution increases on the comprehensive Medihelp Plus option at this stage. The National Treasury will continue to pay the pensioners' contributions in full.
The state pensioners, whose average age is 75, will now face some benefit restrictions - particularly those who enjoyed virtually unlimited chronic medicine benefit on Medihelp Plus. They will be limited to R9 000 of chronic medication per beneficiary each year.
The board of trustees of Medihelp has also decided not to take any further legal action at this stage against the government or the Council for Medical Schemes in an attempt to preserve the pensioners' benefits. However, Medihelp's board says it has entered into discussions with the Registrar of Medical Schemes and the National Treasury to find a long-term solution for both the scheme and these members.
The state pensioners were members of the Medihelp 100 option, which entitled them to fairly comprehensive benefits. However, this option was deregistered as an option open to all members at the end of 2003.
The scheme applied to the Council for Medical Schemes for an exemption from the Medical Schemes Act allowing it to register an option exclusively for the pensioners from 2004. The council declined the application on the grounds that there were no exceptional circumstances as required by the Act. An appeal against the decision also failed.
Medihelp then tried to re-register the open Medihelp option, but this request was also denied last July, with the council saying such an option would not be financially viable and would discriminate against the pensioners by ring-fencing them in an option. Ring-fencing the pensioners in an option would deny them the benefits of cross-subsidation from younger members.
Throughout 2004, Medihelp continued to pay claims for the state pensioners as if they were members of the Medihelp 100 option. However, from July last year, the National Treasury stopped paying the cost of the Mehdihelp 100 benefits and has paid a lower subsidy equal to the contributions of the Medihelp Plus option.
The treasury has said it only has a duty to pay contributions to a registered medical scheme option for the pensioners. Medihelp and some of the pensioners have argued that the state should pay for the same benefits the pensioners enjoyed before a 1992 union agreement.
The scheme has been bearing the cost of the difference between the subsidy and the benefits it has been providing. Late last year, Anton Rijnen, the chief executive officer of Medihelp, estimated that the cost to the scheme was between R58 million and R60 million.
Last year, Medihelp attempted to obtain an interdict against the treasury compelling it to continue to paying the costs of providing the comprehensive benefits to the state pensioners.
The interdict was not granted and the scheme also lost a Supreme Court appeal against the Pretoria High Court's decision not to grant this interim interdict.
In its most recent statement, Medihelp's board says that although transferring the state pensioners to the Medihelp Plus option holds some risk for the scheme in terms of age profile and benefit expenditure, Medihelp is renowned for its experience in the effective management of risk.
The trustees also note that the inclusion of the pensioners in Medihelp's current risk pool will benefit Medihelp when the Risk Equalisation Fund (REF) for medical schemes starts operating.
The REF is expected to start operating in 2007 and will equalise the cost of providing certain minimum benefits between schemes. The REF will subsidise the higher cost of providing these benefits in schemes with higher risk members (in terms of factors such as age and prevalence of chronic illnesses).