Cost of medical schemes to rise by almost 10%
With around 79 medical schemes registered with the Council of Medical Schemes (CMS) covering just over 8.9 million South Africans across 21 open schemes and 58 restricted, consumers are advised to carefully review their options when deciding whether to remain on schemes with annual increases said to average around 10% for next year.
Among the bigger schemes:
* Discovery Health has announced its increases at an average of 9.5%, up from 9.2%.
* Bonitas stands at an average of 9.9% up from 8.9%;
* Momentum Health annual increases average to around 8.2%.
* Medshield stands at 9.9%.
Increases in medical aid premiums are mostly driven by increases in the number and size of claims that medical schemes need to pay.
Andi Tooke,head of marketing at independent financial consultancy firm LifeCheq, said premium increases tend to exceed inflation rates based on a number of factors.
“The salaries of health-care professionals account for a large portion of medical costs. Therefore, salary inflation has a greater impact on medical expenses than price inflation,” she said.
“In recent years, the cost of indemnity insurance has risen exponentially due to an increase in the number of lawsuits against doctors and other health-care practitioners. To cover this cost, health-care professionals have had to increase their fees by more than inflation year on year.
“Continuous medical advancements result in treatments becoming available for previously untreatable conditions (increasing the number of medical aid claims) and improvements to existing treatments (increasing the size of claims).”
Tooke said there is also a behavioural aspect to consider: when premiums increase, people tend to feel that they need to claim more in order to justify paying more.
“When this happens en masse, it can have a significant impact on the claims experience of the medical scheme, resulting in further premium increases.”
In its 2018/2019 annual report released on Friday, CMS reported that the total health-care expenditure of benefits paid in 2018 amounted to R173.3billion from the previous year, coming in at an increase of 8%.
CMS said the financial performance schemes remained stable, with average solvency ratios on the increase. The council reported reserves for the financial year under review were reported to stand at R66bn, up from R60bn of the previous year.
“The higher claims ratio for 2018 was a result of various factors experienced by medical schemes, such as increased utilisation, increase in the number of high-cost cases and changes in the demographic profile of others.”
The council noted an increase in expenditure on private hospitals, which it said increased by 3.51% from R61.8bn to R64bn, adding that a bulk of all medical schemes’ total expenditure continued to go to hospitals and specialists, who were paid R43bn for the year 2018.
Also on the increase are out-of -pocket payments made by members, which is the difference between the claim billed by service providers and the amount paid by the scheme, with dispensed medicines accounting for the biggest chunk at 33.5% and the total out-of-pocket expenditure amounting to R32.9bn, up from R31.8bn.
Tooke said the question of affordability of medical aid depends on the kind of plans members choose. CMS reports that among open schemes, there were a maximum of 17 options for members and six for those in restricted schemes.
“Top-of-the-range comprehensive plans can cost in excess of R4000 per month, but most providers offer more basic hospital plans for under R1400 per month (and) reasonably healthy individuals can usually get by with a hospital plan plus gap cover,” she added.
“Comprehensive cover is generally only worthwhile for people who expect to have high annual medical expenses. Even then it is important to run the numbers and check that your plan will actually save you money.
“Another alternative is network plans. These are generally a good deal cheaper, as the medical scheme can negotiate favourable rates from hospitals in its network.
“Due to the vast range of products on the market, getting professional advice can be extremely helpful for choosing a plan that is suited to your needs. It is also important to consider your finances holistically when evaluating the different options.”