Cancer is one of the greatest challenges facing the world today. This includes the funding of cancer treatment. Dr Jonathan Broomberg, CEO of Discovery Health, expands on this.
The incidence of cancer is increasing rapidly, for reasons that are not fully understood but which appear to be linked to lifestyle.
Discovery Health’s data shows that cancer cases increased by over 45% between 2011 and 2018, with almost 8 500 new cases in 2018 alone. As a result, the Discovery Health Medical Scheme (DHMS) has seen an increase of over 100% in the costs of cancer-related treatment, from R1,5bn in 2011 to over R3,5bn in 2018.
High cost for latest cancer medicines
Encouragingly, new cancer medicines, including biologics and immunotherapy, show great potential to be life-saving, or life-extending. However, these come at an extremely high cost.
For example, a treatment cycle of Keytruda (an immunotherapy treatment for advanced melanoma) costs approximately R1,65 million per treatment cycle. This is more than 250 times the cost of conventional chemotherapy for this condition.
The combination of the increasing incidence of cancer and the rapidly rising costs of its treatment poses a serious challenge for health funders worldwide. This includes government and private health insurers, such as South African medical schemes.
These funders are seeking ways to ensure that patients can access these medicines, while at the same time ensuring that the resulting costs do not undermine the long-term sustainability of the system.
So, how can health funders solve this dilemma?
In theory, if health insurers could apply strict underwriting, excluding those with cancer from cover, either permanently or for a period of time, they could sustainably provide cover for these medicines. But the obvious downside of this approach is that anyone with a history of cancer would be excluded from cover in totality.
In South Africa, medical schemes are governed by strict legislation, requiring them to accept all applicants, regardless of prior health history. Medical schemes thus have a strong social solidarity mandate, providing access to world-class private healthcare and reducing the burden on the public sector, even for new members with serious health conditions.
“One-size-fits-all” approach does not work
Eighty percent of healthcare costs are incurred in the last two years of a person’s life. If people could join medical schemes only when they are sick, they would tend not to join when they are healthy. Thus, threatening the sustainability of medical schemes.
As medical schemes operate as not-for-profit legal entities, owned by their members, they cannot access external capital. This means that claims paid out each year must be covered in full by premiums paid in by members.
In response to this challenge, the Council for Medical Schemes has regulated a set of proven, cost-effective cancer benefits that all members are entitled to. This provides all members with an appropriate and affordable level of coverage for cancer treatment.
But the downside of this “one-size-fits-all” approach is that it cannot cover the more expensive treatments that members may require.
Discovery’s chosen solution
An alternative approach is to provide access to high-cost cancer medicines on a selected number of plans within a medical scheme, and to sustain this higher cost by charging higher premiums for these plans.
The DHMS has chosen this path, which we believe represents a transparent and balanced approach. This solution provides an excellent baseline level of cover across all plans, well in excess of the minimum level prescribed by the regulations.
In addition, the scheme is the only one in the country to offer an Innovation Cancer Benefit on its Executive and Comprehensive Plans. This provides funding for a defined list of high-cost cancer medicines.
DHMS currently provides excellent cancer cover for over 38 000 members with cancer every year.
Full funding is provided for the vast majority of treatments requested, including most chemotherapy and radiation therapy. Over 95% of all claims are paid in full across all plans.
Ruling out ‘anti-selection’
In a recent case, which has been covered in some media, a member requested a high-cost cancer medication, for which the member’s selected plan does not provide cover.
DHMS did not allow the member to upgrade to a plan that would cover the medication. This is because along with the vast majority of other medical schemes, DHMS strictly prohibits plan upgrades after 1 January of each year.
This long-entrenched rule is important to prevent a situation in which members choose lower cost plans, and then can freely upgrade to a higher plan when they need more extensive benefits.
This “anti-selection” would be extremely unfair to those members of the higher plans who pay larger premiums precisely because they want to ensure access to high-cost medicines at some future point in time. It would also threaten the Scheme’s ability to offer any cover for these innovative treatments.
In addition, if this were allowed, it would make no sense for any member to be on a higher plan. All members would rationally choose lower plans and then upgrade as soon as they know that they have a serious illness that requires high-cost treatment. This pattern would have a very negative impact on the long-term sustainability of the medical scheme, and would quickly drive up premiums for members of the Scheme.
MEET OUR EXPERT – Dr Jonathan Broomberg
Dr Jonathan Broomberg has been the chief executive officer of Discovery Health, a subsidiary of Discovery Limited, since July 2010. He qualified as a medical practitioner at the University of the Witwatersrand and he also has degrees in economics from the University of Oxford and the London School of Economics and a PhD in health economics from the University of London.