Whether they’re cancelling or reducing their level of cover, many South Africans are feeling the pinch when it comes to medical aid. In a recent Sanlam survey, 36% of the almost 5 000 adult respondents said they did not have medical aid, citing affordability and income level as the main reasons for not being covered. Job losses have also meant that many people have lost their employer-supported medical aid.
The result is that millions of South Africans have no medical aid cover at all.
Data from comparison platform Hippo.co.za confirms the trend that South Africans are under-insured when it comes to medical cover. “Medical schemes generally increase their rates by approximately 4% more than consumer inflation annually, resulting in the need for consumers to explore affordable alternatives to remain covered,” says Alexia Graham, Director at Hippo Advisory Services. “The economic environment has also worsened over the two years since the pandemic, which has resulted in an overall contraction of the medical schemes market of 2.1% from 2019.”
While there’s a natural reluctance to reduce medical scheme benefits, more and more South Africans believe they have no other choice. “Consumers are becoming increasingly aware of the need to evaluate their options every year, and to consider better value-for-money plans – either within their existing scheme or a new one,” says Graham.
What options are there for people who want medical cover, but feel they can no longer afford it?
Option 1: Hospital cover with limited out-of-hospital benefits
“Medical schemes are developing new product designs that provide sufficient levels of hospitalisation cover as well as some level of out-of-hospital benefits,” says Graham. “Hospital plans are also relatively popular where consumers have the flexibility of choosing access to any private hospital or a preferred network of hospitals, at a reduced price.”
Option 2: Self-management of out-of-hospital expenses
Many consumers are now opting to manage their own out-of-hospital expenses. “A noticeable industry trend is to ‘buy down’ from costly comprehensive medical aid products to mid-range plans that still offer out-of-hospital cover, but in most cases, are better value for money,” Graham explains. Data from Hippo.co.za suggests a 4.8% increase in sales of such plans between 2020 and 2021.
Option 3: Buy down and take gap cover
This shift to mid-range plans is a sign that consumers are looking for more value from their medical scheme, says Graham. “Our philosophy is to identify the best value-for-money product that suits the consumer’s life stage and needs, rather than only promoting the cheapest product,” she adds. “For example, it is often a better value decision to buy down one’s medical aid option and buy gap cover for the family instead of upgrading plans.”
Hippo.co.za has seen a steady year-on-year increase in the ratio of gap cover policies sold with a medical aid product, rising from 15% in 2018 to 38% in 2022. “This reinforces the suitability of gap cover, combined with a good value medical aid plan, for the average consumer,” says Graham.
Given that South Africa has more than 20 open-market medical aid schemes, each offering a wide range of solutions, medical aid cover need not be an all-or-nothing decision. As Graham puts it: “Although many households felt financial pressure during the pandemic, there is a heightened awareness of the importance of access to and retention of private healthcare cover in these times. And there are also consequences for falling out of the medical aid industry. For example, having no medical aid cover for three months or longer will result in you paying a higher penalty premium should you wish to re-join in the future.”
Bottom line? Before you cancel your medical scheme cover, use a comparison platform to compare what’s available and weigh up your options.
PERSONAL FINANCE