Tuesday, 07 December 2021

More consumers migrate to health insurance as medical scheme membership becomes increasingly unaffordable

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Health insurance provider, Wesmart has seen a 400% uptake in membership in the past eighteen months. Health insurance is increasingly in demand by consumers who simply cannot afford the high price of medical scheme cover but cannot take the risk of not having any access to quality healthcare at all. Health Insurance is an invaluable alternative solution. The benefit of health insurance is that it provides a range of options on cover from basic options that offer either primary care or hospital cover only, to options that are more comprehensive combining both in and out of hospital benefits. 

“Health Insurance helps consumers across many spectrums, including those opting out of medical scheme memberships due to affordability challenges and those who simply have no access to traditional healthcare funding models. Depending on the option taken, a basic accident and health insurance plan would cover you for basic primary medical care such as day-to-day consultations with general practitioners and acute and chronic medication. More comprehensive plans provide cover for defined hospital events within stated annual benefit limits. The reality is that only a very small percentage of South Africa’s population – around 17% - are covered by medical scheme benefits¹. Millions more simply cannot afford these benefits, but still want some sort of protection and access to quality healthcare for their primary healthcare needs, and especially for emergencies and accidents that may require hospitalisation and stabilisation,” explains Oupa Melato, Sales and Distribution Manager of Wesmart Financial and Administration Solutions.

Wesmart provides a wide range of Health Insurance options and holds an exemption in terms of the Demarcation Regulations from the Council for Medical Schemes (CMS) under exemption number DM1122.The focus is on offering options to both private individuals as well as SMME and corporate employer groups. Wesmart is underwritten by GENRIC Insurance Company Limited.  

“We are seeing a sharp increase in enquiries for health insurance predominantly for emergencies and accidents, as well as for primary health care for the likes of day-to-day GP visits and medication. These enquiries are coming from employer groups who want to provide employees with a safety net and access to care, especially given the pandemic experience, to individuals who have never had health insurance previously but are concerned about relying on the overburdened public sector for their healthcare needs, as well as consumers who are downgrading their medical scheme cover due to financial constraints,” explains Melato.

Why is health insurance cheaper than medical scheme membership?

It is important to understand the difference between health insurance and a medical scheme and how they function and what they cover, respectively. Here’s a comparison of the two:

Health Insurance Medical Scheme
Health insurance is governed under the long- or short-term insurance acts, sometimes under both. Medical schemes are governed by the Medical Schemes Act and directly by the Council for Medical Schemes.
Health insurance does not cover Prescribed Minimum Benefits (PMBs), nor is prescribed to by PMB legislation.  Rather, health insurance can specify its benefits and pays out a defined or fixed amount towards them – from a doctor’s visit, to medication, to a hospital procedure, emergency, or accident, up to a fixed sum defined in the policy. This means you don’t have the hard upfront cost for a set of PMBs that you may never actually end up using or needing. Medical aids must provide full cover for a list of treatments and conditions called PMBs and this is a major cost driver. These PMBs include 270 in-hospital, life-threatening procedures and 26 listed chronic conditions and these must be covered at cost for all members. This means members pay for these benefits, whether they use them or not.
Providers manage the costs of cover and keep the premiums affordable by working with a designated network of healthcare providers, providing cover for these defined events and conditions – say for example a GP or dentist consultation – and by ensuring that acute and chronic medication adheres to a set formulary. It is more affordable than medical aid but offers less in-hospital cover and usually defines the cover for certain types of illnesses, injuries, or procedures according to the member’s health insurance plan. Medical scheme benefits are managed within categories and limits. They also typically have much higher overall annual limits on private hospitalisation. These factors combined mean that the starting cost of the package of minimum benefits often puts it out of reach of millions of South Africans.
Health insurance products may also include personal accident risk cover such as disability and loss of limbs cover, inability to work, salary protection as well as cater for death and funeral cover. Medical aid is just that - it may not contain any additional products or features that fall outside of the act.
Health insurance benefits are usually paid directly to the insured, who is then responsible for paying their respective service providers. Medical schemes prefer to pay the providers but can also pay members directly.
Health insurance can be used in conjunction with the medical aid scheme to cover any possible shortfalls that may be incurred. Medical schemes often have shortfalls due to the difference between the medical scheme rate and the rate at which providers charge.
Health insurance pays benefits according to a policy schedule. Medical schemes are tariff and protocol driven.

More comprehensive health insurance options also offer the day-to-day benefits and certain hospital events, including private emergency hospital stabilisation benefits. Cover is provided to a set limit for specific events and conditions – and obviously the more comprehensive options with hospital benefits will cost more than a primary care benefit option that covers day-to-day doctor’s visits.

“A significant benefit is that certain health insurance benefit options also provide for preventative care which is a big advantage of being covered. Most people without health insurance postpone going for annual check-ups or health screenings, if at all. Having access to preventative care helps doctors detect an illness early, and early detection can minimise the severity of an illness and possibly even save your life. More comprehensive health insurance options provide extra peace of mind by providing access to 24-hour emergency medical services and ICU benefits.

“Health insurance gives consumers access to quality private healthcare quickly and affordably, ensuring that a health event doesn’t become both a health and financial crisis. Whether you’re an individual looking for a cost-effective solution that understands that you are healthy and don’t need all the “bells and whistles”, a family that needs an affordable solution that meets your growing needs or an employer that needs a viable healthcare solution for employees, health insurance provides an invaluable solution where medical scheme benefits are simply not affordable,” concludes Melato.

References:

1 – Statistics SA. General Household Survey 2019.  Available from:  https://www.statssa.gov.za/publications/P0318/P03182019.pdf[Accessed 25 Nov 2021]

This article does not constitute as financial advice. T’s and C’s apply. For more information visit http://www.wesmart.co.za  

Wesmart Financial and Administration Solutions (Pty) Ltd is an authorised Financial Services Provider (FSP: 45769) underwritten by GENRIC Insurance Company Limited (FSP: 43638). GENRIC is an authorised Financial Services Provider and licensed non-life insurer.

Published in Health and Medicine