By: Hertha Ekandjo
Namibia’s medical aid funding industry is facing significant financial strains attributed to operational losses recorded by many medical aid funds, causing industry concerns.
The cumulative reserve levels of all medical aid funds is also a cause for concern as it has surpassed the prudential reserve limit of 25% of the gross annual contribution.
This was revealed by Stephen Tjiuoro, the Chief Executive Officer of the Namibia Association of Medical Aids Fund (Namaf).
Tjiuoro said it is concerning that Namibian medical aid funds have been running deficits, covering the shortfall from their reserves.
The combined reserve levels are now standing at 23.83%, as per Namibia Financial Institutions Supervisory Authority (NAMFISA) 3rd quarter Industry Report 2023.
Tjiuoro emphasised the recommended ratio for funds, allocating 85% to healthcare costs/claims, 10% to administration expenses, and 5% towards reserves/investments.
To restore balance, medical aid funds may need to implement substantial contribution increases for 2024.
Tjiuoro outlined these increases, including a standard National Consumer Price Index increase of around 5%, provisions for aspects like ageing and technology creep by around 3%.
“A provision for closing the operating gap over an assumed three-year period of around 3.5% per annum for the next three years (the gap is around 10% currently), and a provision for rebuilding reserves of about 3% per annum,” explained Tjiuoro.
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