Medical scheme costs are fast outstripping affordability with members under pressure to meet increases ranging between 10-15% depending on their benefit plan as of 1 January 2017. Medical scheme increases over the past two decades have shown a steep hyper-inflationary trend, while in many instances levels of cover have reduced in a bid to keep benefit plans affordable.  

In essence, consumers may find themselves paying more for less cover.  These increases are largely being driven by soaring medical service provider fees, a growing burden of disease especially the likes of cancer, diabetes and heart disease.  The increasing utilisation of benefits by members, new medical technology, as well as the regulatory requirement for medical schemes to retain solvency reserves of at least 25% have added to these pricing pressures.   Pressure is also due to healthcare providers, who are likely to increase their fees in 2017 by amounts greater than CPI, which means many South Africans could face more out-of-pocket medical expenses going forward.  

A lack of supply-side regulations – where Medical Practitioners and Specialists are free to charge what they want for services rendered – is also a key driver of soaring costs of private healthcare – and currently the subject of a Competition Commission review of the entire supply chain in the private healthcare sector.

According to Gavin Griffin, Business Unit Head of Aon Employee Benefits, many households are struggling to cope with the growing healthcare cost pressures, but have few alternatives due to the precarious and overburdened condition of most public healthcare facilities. 

“With mounting costs, many are looking at alternatives such as primary care options; downgrading their healthcare cover; changing to a different provider; or in some instances, forgoing cover completely.  While the cost pressures are felt all around, low to middle income earners are hardest hit given the additional cost pressures of living costs, education, transport and so on. In many instances, private healthcare costs can account for up to 30% of monthly household expenditure,” says Gavin.

Important considerations before you change your medical aid cover 

“In reviewing your medical scheme cover, the key is to thoroughly review the benefit richness of the medical scheme option and assess whether the benefits have increased in accordance to the contribution increase that is being levied.  Where costs and benefits on a medical scheme are of concern, you could consider moving to a lower benefit option within the same medical scheme.  By doing so, you can avoid waiting periods that are typically associated with a complete change in medical scheme provider,” explains Gavin. 

“You furthermore, have the opportunity to either, buy-up within the medical scheme to acquire better benefits if your claims history demands it, or to buy-down with the purpose of securing lower monthly contributions.  Most medical schemes only allow a buy-up at the beginning of a benefit period – which means changes will need to be made in December to be effective in January, but would allow a buy-down at any time of the year.  Some schemes would allow a change during the year as a result of a ‘life changing event’, such as an addition to the family,” Gavin adds.

“Before making any change to your healthcare cover, it is crucial to thoroughly investigate and compare your options and benefits to ensure that you are not financially compromised by any change,” he urges.

Typically, medical schemes can be complex and it can be difficult to understand how to compare benefit options which vary so widely; making like-for-like comparisons tricky at best.  “It’s a task best undertaken with the guidance and advice of a professional broker who can do a thorough needs analysis; review your claims history and map this back to your budget.  Based on this information, your healthcare broker can advise on the best plan to ensure that your healthcare needs are comprehensively covered and that any change won’t leave you compromised or facing hefty out of pocket expenses that you cannot afford,” explains Gavin.   

When comparing healthcare and benefit options 

• Never change to another medical scheme or benefit option simply because the contribution is lower than your current option.  You need to compare the actual benefits, exclusions, value adds and service delivery, along with your specific healthcare needs, such as any chronic conditions and the medication you require. Weigh up the cost of different types of cover against the benefits provided – for example a more basic medical scheme might only cover health care costs related to hospitalisation and Oncology only, while day-to-day costs of General Practitioner visits, Optometry and Dentistry for instance would be for your own cost.    Comprehensive cover may include dental and eye care, physio and even ‘natural’ or homeopathic therapies subject to certain limits.
• 100% cover means you’re fully covered right?  This is not the case.  Specialists and in-hospital charges can be up to 400% of the benefits offered by medical scheme. So if your medical scheme only pays out at 100% of tariff, you will be liable for the shortfall or remaining 300% out of your pocket.  This can amount to thousands of Rands and leave you in a serious financial predicament.
• Gap cover policies for medical scheme shortfalls are proving to be invaluable safety nets by covering certain in-hospital and Specialist shortfalls that may occur, at a relatively inexpensive monthly family premium.
• Many consumers are opting for more affordable hospital cover plans only, and then topping up cover with this gap insurance to address any shortfalls that may arise. They then also take on the risk of having to fund any day-to-day expenses for General Practitioner visits, Dentistry, Optometry and so on from their own pocket. An analysis of your claims history and state of your health and your dependants will be important in assessing whether such an option will work for you.
• Out of hospital or day-to-day limits vary dramatically between medical schemes and benefit options.  If your medical savings limits are low, but you have regular visits to the doctor for certain conditions, you could find that two or three consultations with a Specialist will quickly deplete your funds, leaving you to fund any further costs from your pocket, or at least until your self-payment gap, if applicable, has been reached, which could be a few thousand Rand.
• Certain medical schemes limit hospital pay-outs to a certain amount per family per year.  If more than one family member requires hospitalisation in the same year, you could face considerable financial stress.
• Exclusions and waiting periods may apply – joining a new medical scheme, certain waiting periods or exclusions may be applied – these could be from a three months general waiting period up to 12 months condition specific waiting period for certain conditions.
• Designated provider network – many benefit options require that you make use of practitioners and Hospitals designated by the medical scheme as they provide medical services at a fixed rate negotiated with the medical scheme.  If you make use of a Specialist or provider not on the list, for whatever reason, you could face significant co-payments, or in some instances, forfeiture of any cover.

Only after considering your claims history; state of health; and level of cover required by you and your dependants; as well as what level of self-funding you are able, or willing to bear; can you make an informed choice.  It’s a role best undertaken with the guidance and advice of a professional healthcare broker who can do a thorough needs analysis and then investigate the benefits options provided by a reputable medical scheme to meet your needs and budget,” concludes Gavin.