WORDS ON WEALTH
Personal Finance has always advocated medical scheme cover over short-term medical insurance because of the built-in consumer protections offered by the Medical Schemes Act, and we still do. However, medical scheme cover is becoming unaffordable for more and more South Africans.
Since the government cracked down some years ago on short-term insurers parading as medical schemes – through the so-called “demarcation regulations'' – there is now greater clarity on what constitutes medical scheme cover and what doesn’t. New short-term products for low earners are now filling a much-needed gap, particularly in the employee benefits space.
Gary Feldman, executive head of healthcare consulting at NMG Benefits, says medical scheme membership has become unaffordable for a large percentage of the South African population. “In the last five or six years, we have seen a stagnation in the membership of medical schemes, and the number of schemes has declined, from 27 open schemes 12 years ago to 17 today.”
Medical schemes by definition are required to cover the prescribed minimum benefits (PMBs) – benefits relating to the treatment of specified life-threatening conditions and cover for emergency procedures – on all their options. Feldman says cover for the PMBs alone costs between R600 and R700 a month per beneficiary, pushing even the cheapest medical scheme options out of reach of many.
Cover for workers
While medical scheme cover is effective for covering “big-ticket” procedures in private hospitals, the health insurance products now being offered to lower-earning employees focus on primary health care: day-to-day access to general practitioners, opticians and dentists within designated networks of service providers, as well as covering prescribed medicines and blood tests. Because these products don’t cover the PMBs, and have no cover or limited cover for in-hospital procedures, they are affordable for lower earners (from about R700 for a family of four per month), particularly if their premiums are subsidised by the employer, Feldman says. Such employees would need to – and are generally happy to – rely on state facilities for serious conditions requiring hospitalisation, but their day-to-day medical needs are taken care of.
The group risk setting has its advantages: risks are pooled and rates are lower. “The big advantage of doing it via an employer group – and we’ve seen huge growth in this space – is the subsidisation that employers can provide.”
The benefits for employers are substantial, Feldman says. “If you have an employee who has to rely on state-run day clinics or hospitals for even minor ailments like a cold, it’s a day out of work. With primary health cover, the employee can make an appointment, see the doctor at a certain time, and ultimately be in and out within half an hour. They get their medication and are on the road to recovery, which helps productivity.”
Feldman, who recommends that those who can afford it should have medical scheme cover, says the primary health care products will fill an important gap in the market until the government’s National Health Insurance system (NHI) is finalised and implemented – and that day may be further away than anticipated because of the many challenges it poses.
Paul Cox, managing director at the Essential Group of Companies, which includes health insurance provider EssentialMED, reckons that better access to good-quality primary health care is essential in building a more resilient, healthier, more productive population.
“Around 80% of the population relies on public primary care services. However, poor resourcing, poor quality of care, inability to access clinic services after normal work hours, a lack of equipment and even medicines at state facilities often see people forgo their primary health care needs. It is certainly not unheard of to have patients relying on the public health services waiting all day for something as seemingly simple as a GP visit or having a repeat chronic prescription filled, only to be turned away due to a lack of human resources or medicines, or clinic operating times that simply do not cater for the working class. Another significant challenge is the loss of income that a patient could face if they are taking an entire day’s leave to undergo a simple health check-up.”
Change of focus
Cox says the neglect of primary and preventative care ultimately leads to more serious and costlier health conditions to treat, and often a poorer prognosis for the patient. “Health insurance plays a fundamental role in facilitating access to quality primary health care for people who would otherwise have to rely on an overburdened and inefficient public health service,” says Cox.
“We are seeing the demand grow for health insurance benefits that focus on day-to-day, primary health care needs, not only from individuals, but increasingly from employer groups who recognise the impact that strained quality and access to public health services has on worker productivity and morale. Given the massive fiscal challenges the country faces, cuts in healthcare provision are already playing out and will only serve to exacerbate the challenges faced by people who rely on the public health services,” says Cox.
He says we need to shift our current curative-oriented health service to “a more pre-emptive, preventative one based on empowering people to take better control of their health outcomes”.