Durban – With healthcare costs in South Africa growing at around 10%, levels well beyond inflation, and with most medical schemes announcing annual plan increases of between 8% and 9% for 2020, consumers are left with a dilemma as they try to manage their increased cost of living.
This is according to a report on 2020 global medical trend rates, released by multinational insurance company Aon.
"Employer-provided medical benefit costs in South Africa are forecast to rise 10% in 2020, outpacing the annual general inflation rate by 4.6%," said Gavin Griffin, Aon’s executive head for employee benefits.
With a rise in the cost of living and a drop in income due to Covid-19-related salary cuts, consumers are left with one option: buy down.
However, buying down in a medical scheme means that your benefits and options will also be reduced.
This has thrown the spotlight on the dire need for gap cover insurance, to ensure that consumers are not slapped with arduous out-of-pocket expenses for in-hospital treatments as they search for alternatives.
Martin Rimmer, CEO of Sirago Underwriting Managers, said in a statement on Wednesday: "Cheaper medical scheme options provide fewer benefits and more restrictions related to accessing benefits.
"Buying down could leave you exposed to onerous out-of-pocket expenses if you don’t have gap cover to protect you from shortfalls that exist between the agreed medical scheme rate and the rate that the health-care provider charges."
According to Rimmer, shortfalls also exist on "comprehensive" options.
"In fact, even on comprehensive options, shortfalls still exist as a shortage of specialist skills and lack of supply-side regulation on pricing means that health-care providers determine their own fees, which typically fall well beyond medical schemes rates," said Rimmer.
The Sirago CEO then explained that medical costs are one of the largest costs the South African consumer faces, and the poor state of the public health system is a driving factor.
"The reality is that medical scheme cover can cost 20% or more of monthly disposable household income. It is clear that medical schemes costs are eating into a much greater share of monthly household income than ever before," he added.
"Given the disastrous state of the public healthcare system, private healthcare is an expensive but essential safety net that consumers who can afford it understandably do not want to live without," explained Rimmer.