The Namibia Financial Services Supervisory Authority (NAMFISA) has imposed a temporary cap on some medical funds’ annual contribution increases, limiting it to a single-digit percentage, with a maximum increase of 9.99%.
The non-banking sector regulator said move is in response to the escalating challenges posed by rising medical aid contribution rates.
NAMFISA CEO Kenneth Matomola expressed concerns about the compounding effect of annual contribution increases and benefit reductions, highlighting potential affordability issues for medical aid in the long term.
“The decision comes on the heels of the Registrar’s observation of significant variances between actual and forecasted solvency numbers over the past 3 to 4 years, often absorbed by members through contribution rate and benefit limit adjustments,” he said.
NAMFISA has given medical aid funds until March 20, 2024, to submit additional contribution increase applications along with realistic medium-term strategies to address fund sustainability.
“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,” he said.
“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 prioritizes affordability and sustainability. This initiative aligns with NAMFISA’s mission to regulate and supervise financial institutions in the public interest.”
The NAMFISA CEO urged funds and administrators to implement measures that will streamline processes while reducing costs.
“Recognizing the urgency to curb escalating contribution rates, NAMFISA calls on medical aid funds to engage in renegotiations with both medical and non-medical service providers. Additionally, the Authority acknowledges the potential of technology to enhance efficiencies in the industry, urging funds and administrators to embrace automation, modernization, 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,” he said.
“As the medical aid fund industry approaches 2024, NAMFISA underscores the importance of bold actions, innovative thinking, and collaborative efforts.”
This comes after NAMFISA in September raised concerns about the financial stability of the country’s medical aid industry.
According to NAMFISA’s Annual Report for the financial year ending in March 2023, the medical aid industry reported a net deficit, primarily attributed to an adverse claim experience due to the ongoing health impacts of COVID-19 on some beneficiaries.
Meanwhile, the average solvency ratio for open medical aid funds declined to 28.4% as of December 31, 2022, down from 38.4% at the end of 2021. The solvency ratio for closed funds decreased dramatically from 472% to 39.8% during the same period.
A Namibian Competition Commission (NaCC) study revealed a concerning 320% increase in the cost of private healthcare services in Namibia between 2005 and 2021.
