Mbali Khumalo, managing director at Simeka Healthcare, a division of Sanlam Corporate, said at the presentation of Sanlam’s Benchmark 2023 report this week that the research they conducted, had highlighted a concerning trend that South Africans only tend to start focusing on their healthcare after turning 40 – a delay which might be costly in the long-run.
“We are seeing a significant shrinkage in compulsory participation,” she said. “South Africans must make confident choices in every life stage, including the prioritisation of healthcare earlier on to set themselves up for a healthy physical, mental, and financial future.”.
All too often, we find that younger people have different priorities from the older working generation, and understandably so. The current economic climate also leaves many South Africans uncertain and hesitant to commit and set aside funds for medical cover as it is not seen as a top priority when paired against home insurance, healthcare cover, and retirement savings, she said.
But medical aid is a risk cover for unforeseen events, according to cover limits and your premiums are based on how healthy (or not) you are perceived to be. Usually, hospital plans and other health insurance products are cheaper but don’t cover prescribed minimum benefits (PMBs), which are a few hundred conditions classified as PMBs by the Medical Schemes Act, that any scheme registered in the country has to pay for, no questions asked.
All medical aid schemes that are compelled to provide treatment for these conditions are one of the reasons for them being more costly than say a hospital plan or gap cover, and in today’s cost of living crisis, considered a luxury purchase.
But in all seriousness, accidents happen and critical illnesses can be diagnosed at any time, and in South Africa one needs access to private healthcare, and as soon as possible to stand the best chance of survival or avoid permanent scars of disability or adjoining ailments, which our public healthcare system has made many victims of.
The problem is that most people only realise the importance of having medical aid when it’s too late, not when they are healthy and it is easy, but when they get sick or have developed what is considered “pre-existing conditions”. This means that there may be waiting periods and exclusions when one wants to join at that stage or older. Did you know that if you are over 35, late-joiner penalties may apply? And these added costs make health coverage even more expensive and exclusive than it already is, and when needed the most.
According to the Council for Medical Schemes (CMS) 2022 Report, only 14.95% or 8.9 million South Africans are covered by private medical schemes. Over 50% of these beneficiaries depend on their spouse or parents’ cover, and 9% are over 65 or pensioners. That means only about 4.5 million principal members buy medical aid in this country.
Khumalo said healthcare solutions are often unclear and perceived as cost prohibitive. That means many people either bypass coverage or opt for low-cost options at the expense of more comprehensive care.
The Benchmark Report also showed that employees are not taking advantage of employee-assistance programme benefits, including preventative care, early detection, and management. The financial services group says engaging in these measures can help diagnose chronic conditions in time to mitigate their severity.
Sanlam’s findings also revealed that despite South Africa’s youth segment (64% of the country’s population) possessing 55% of SA’s spending power (over R100 billion annually), they invest minimally in healthcare.
The findings also revealed the problem of reduced cross-subsidisation in healthcare between the young, healthy individuals and the older, sicker population. The expectation that the National Health Insurance (NHI) expected to alleviate disparities in healthcare access might not materialise, worsening low voluntary participation rates and potentially jeopardising the well-being of the entire population.
But the Department of Health made a fair point in stating that a small section of the population has access to healthcare, and that intervention is needed to prevent private healthcare providers from charging “exorbitant fees”. For example, under the proposed (NHI), private ambulance operators and hospitals will no longer be able to offload patients because they are poor or their medical funds have run out or their chosen plan does not cover certain severe ailments.
I myself am fighting with Discovery Health, who didn’t want to pay for an urgent pulpectomy for me this week, stating that an abscess in my jaw does not fall within their definition of a “severe condition”. I had to max out my credit card to get the urgent procedure done, and my maxillofacial and oral surgeon is in the process of writing a motivation for a further apicectomy, bone graft and gum transplant. And a bridge, as my jaw is too brittle for an implant. But that is considered cosmetic, and will even be harder to motivate, but the point is, if I don’t get this done by August, I’m going to develop an indent jaw and will increasingly have more trouble eating and talking in future.
So despite the department’s statement that eight out of 10 patients depend on public clinics and hospitals and that the bulk of the country’s doctors, dentists and specialists serve a small section of the population who can afford private healthcare, the truth is not much of the privately covered can afford many of the medical treatment sometimes required to ensure a certain quality of life, and that is despite paying significant premiums for PMBs and the privilege of being allowed admission to a private facility when you are involved in a car accident or if a medical practitioner otherwise sees fit to do so. And that doesn’t include the treatment in the emergency room.
But the NHI might not be the answer the government is looking for, despite, Health Minister Dr Joe Phaahla in his 2023 departmental budget vote, stating that the government was committed to reducing inequality in the current healthcare system, and “the progressive realisation of Section 27 of our Constitution”, which affirms the equality of rights to healthcare and other services. He said the department was busy recruiting experts in specialisations like digital information, healthcare benefits, risk and fraud management, and data analytics which demonstrates some intent to proceed with the implementation of the bill.
Given the scale of state capture and mass looting at state-owned enterprises, South Africans have the right to suspect another disaster in the making, now that the NHI Bill has been approved by the Parliamentary portfolio committee.
Not to mention the mess the government has already made with the UIF (Unemployed Insurance); Workers’ Compensation and Road Accident funds. The latter has been technically bankrupt for years, and there have been calls for placing the UIF under administration.
The South African Medical Association (Sama) told Moneyweb recently that the NHI Bill was developed with disregard to the legitimate concerns and recommendations of experts, and that “trust in the government’s capability to manage the over R500 billion budget efficiently was severely eroded
Adding insult to injury, the NHI proposes government-funded health insurance, with contributions made to the NHI from taxes and employee contributions for the most part. Those currently paying for medical aid will be free to continue doing so, but will not be able to opt out of making contributions to the NHI fund as well. The government will also no longer provide tax incentives for medical scheme contributions.
Trade union Solidarity and the DA are among those threatening to challenge the government on the NHI in the courts.
Meanwhile, both the proposed NHI and the private medical schemes industry continue to face a mountain of logistical issues. Hospitals are already struggling to retain specialised personnel, with a critical skills shortage of 27 000 health professionals in the public sector alone.
Findings from the 2023 Sanlam Benchmark, however, underscored the importance of integrating health into long-term insurance and retirement plans, to overcome some of these obstacles but according to Craig Comrie, CEO at Profmed, this issue cannot be addressed by the proliferation of unregulated health insurance products from the financial sector that “are not medical scheme products”, and provide very little cover to what is needed in this market.
The framework for medical schemes to provide low-cost benefit options will allow medical schemes to outperform health insurance products partially, because schemes are not profit-driven but are owned by their members, while Insurers have shareholders to look after. The current lack of a low-cost benefit option framework is a roadblock for the medical scheme industry which is keen to provide value-based affordable cover for consumers,” Comrie said.
This is why it is critical to understand the fundamental difference between the generous benefits offered by medical schemes and those provided by healthcare insurers. He suggested that the medical schemes regulator release guidelines that allow medical schemes to compete in the low-cost health insurance space. Health insurance products are estimated to cover about 1.2 million individuals in the market, compared to medical schemes that cover 9 million individuals.
Comrie said there is concern about the lack of proper regulation for health insurance products currently available in the market. While a dispensation was allowed by the Council for Medical Schemes to enable these products to be propagated to the market, there is a need for proper regulation to ensure that consumers are protected from being exploited.