More competition in the private healthcare market is good for consumers, but greater diversity makes it harder for medical scheme members to navigate their options. 

The 2018 GTC Medical Aid Survey, which helps companies, consumers and advisers to analyse and compare medical scheme plans, was released last week. It weighed up all 272 plans in South Africa offered by 21 open schemes and one closed scheme, across various levels of cover. The survey rates schemes according to the likelihood of GTC recommending their products to its clients and ranks the choices available to members.

Analysed purely in terms of premiums – the survey’s micro ranking – Fedhealth was found to hold the most top positions across all the classifications. 

Discovery was ranked first in the macro rankings, which consider a scheme’s overall “health” and longevity in terms of its solvency level, membership growth, net healthcare result and member satisfaction. Discovery also claimed the most top positions among all categories across the combined micro and macro rankings for the second consecutive year.

It’s the wealth and financial advisory firm’s eighth medical scheme survey. In May this year, GTC released its first survey of the gap cover market.

Focus on value

Jill Larkan, the head of healthcare consulting at GTC, said although the overall results were similar to last year’s, “it is encouraging… to see such a variety of participants offering options across all sub-sections of the medical aid spectrum, meaning consumers can confidently access more schemes and plans offering private healthcare and so decrease the burden on the government”.

Medical schemes are offering more manageable premiums, which are perceived as better value, but consumers don’t realise there are fewer benefits. 

“It is now more important than ever for members not only to look at price – which remains the most important consideration for many members under ever-increasing financial strain – while also considering which benefits they are forfeiting for their lower premium,” Larkan says.

Average salaries have not kept pace with medical inflation, which motivates many members to downgrade their cover.

This year’s survey considered average annual salary increases over 10 years against average annual medical scheme premium increases since 2006. “Over this period, medical aid premiums increased by 104.87% cumulatively, while salaries increased by 80.2%, which clearly demonstrates the pressure that consumers have been under in trying to keep up with healthcare costs,” says Larkan.

Complaints to the Council for Medical Schemes increased by 29% during the 2017/18 financial year compared with the previous year, from 1 017 to 4 536. GTC attributed the increase to members’ lack of understanding of the cover provided by their medical schemes. 

What does a plan pay for?

“One of the biggest reasons for members’ unhappiness about a scheme is not knowing what their plan pays for. As there is no standardisation in the medical scheme industry, it is very complicated for members to analyse schemes without the help of experienced professionals.” 

Larkan says medical schemes are becoming more innovative in their product offerings, to differentiate themselves, but more competition means more complexity for consumers. 

Some schemes have tried to differentiate themselvesby choosing unique names for their products, but names such as Cobalt, Summit, Azure and Beat 3 do not describe the type of cover and simply confuse consumers, Larkan says. “It should be made easier. Giving them fancy names is extremely unfair. Members don’t know what they have. It causes unnecessary complications.” 

GTC was encouraged by the number of schemes that were increasing their maternity benefits. “There are generally good benefits for young families, which means they can cover many items – including antenatal classes, maternity scans and consultations – out of the general risk carried by the scheme, without having to dip into their savings accounts.”

However, the lack of cover for preventative care was a concern. “Why should schemes be prepared to pay for the pregnancy but not for the Pill? Why are vaccines for babies and children not being paid for from risk, not medical savings? Every medical aid should pay for these, across the board,” Larkan says. 

She says gap cover has become an “absolute necessity” in today’s market, with the best premiums for limited gap cover available from as little as R63 per family per month.

“It is a common GTC finding that members believe they have cover which they, in fact, don’t, while spending far more on a plan than is actually necessary. The optimum combination of medical aid and appropriate gap cover is often not established.”

Member apathy

Member apathy was also disturbing. Larkan says members don’t attend annual staff presentations, even though plans change significantly. “It’s a totally wrong mindset – members need to start becoming involved.” 

Misdirected premiums and poorly thought-through benefit selection are recurring themes in the research: members don’t pay attention to what they have, even though their needs change over time. “For example, they only realise when trying to claim for dentistry or glasses that they are no longer being covered.” 

The value of a healthcare broker’s services should not be underestimated. Larkan says broker fees for medical scheme cover are extremely low, because they form part of a range of services they provide, and they offer a professional service and look after their clients’ interests. 

“If you have a broker and you don’t get feedback on a claim, you can escalate, and they will chase it on your behalf and come back with a resolution.” 

Online methods might increase competition, but if you’re trying to cut out a broker, “you’re going to make mistakes, and you’re not going to save on your premiums or get more cover. The cost saving won’t be passed on to the member: it simply goes back into the scheme’s holdings”.

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