NAMFISA takes measures to address rising cost of medical aid contribution rates

The Namibia Financial Services Supervisory Authority (NAMFISA) has embarked on proactive measures aimed at securing the long-term sustainability of the medical aid fund 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.

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. 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 mcollaboration 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.” NAMFISA’s CEO Kenneth S. Matomola stated.

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.

The compounding effect of annual contribution increases, and 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 emphasizes the need for transparency and accountability, encouraging the adoption of the International Classification of Diseases, Tenth Revision (ICD-10) coding structure by 2025. This standardized coding system will improve transparency, accuracy in pricing, enable granular trend analysis, enhance fraud detection, and support initiatives to reduce over-servicing.

As the medical aid fund industry approaches 2024, NAMFISA underscores the importance of bold actions, innovative thinking, and collaborative efforts. The Authority calls upon medical aid funds, service providers, administrators, and stakeholders to embrace these measures and collaboratively work towards creating a new pricing mechanism that prioritizes sustainability, affordability, and transparency. NAMFISA regulates and supervises the N$ 1.9 billion total assets medical aid insurance industry (30 September 2023) consisting of 8 Funds (5 open funds; 3 closed funds) with a membership size of 214 176 (99,669 principal members; 114,507 –dependents). Pensioners -13,524 (included in total membership size).