How to deal with skyrocketing medical aid premiums
CAE TOWN – Last Week, Discovery Health Medical Scheme, SA’s largest open scheme announced a 9.2 percent weighted increase in premiums. It follows the 7.9 percent of 2018 and the 10.2 percent of 2017.
However, Discovery certainly isn’t the only medical insurer hiking prices in the region of 10 percent per year. Driven by rampant medical inflation, increases in chronic conditions, and crumbling state healthcare, all private Medical Aids are raising premiums by similar amounts.
“As we face up to the challenges of medical inflation, South Africa certainly isn’t unique,” says Turnberry Risk Management Solutions, chief executive Tony Singleton.
“A number of new breakthrough treatments are being introduced to the market. Last year alone, we saw a number of new biological cancer drugs reaching consumers. While these are wonderful advances in caring for those with chronic conditions, new medicine comes at a far higher cost than more established treatment,” he explains.
He says that some of the other key drivers of medical inflation include:
- The 1 percent VAT increase and its knock-on effect throughout the medical industry
- Shortages of specialist doctors
- New medical appliances and technologies coming at high cost to hospitals and specialists
- Increases in the costs of medical supplies and pharmaceuticals
- Increase in doctors’ indemnity insurance costs
“In South Africa, the problem is then further aggravated by the rand-dollar exchange rate, as our currency continues to lose ground in recent months, as well as the state of our worsening public hospitals – which continue to push families into private healthcare, despite struggling to afford it.”
Singleton notes that the Turnberry team regularly hears stories of people taking out loans just to afford medical treatment.
The widening gap
The latest round of Medical Aid increases reinforces the importance of Gap Cover. Co-payments levied by the medical schemes on specific procedures and tests tend to increase at the same percentage as one’s overall monthly premiums, and the medical expense shortfalls experienced by members is likely to only grow in 2019.
“Gap Cover provides that peace-of-mind that, even though these shortfalls may be increasing, you as a consumer don’t have to worry about paying from your own pocket,” he explains.
In fact, the Competition Commission's report from late 2017, which “found that the biggest driver behind the unexplained costs was in-hospital care.” By having Gap Cover to support in-hospital medical expense shortfalls, consumers are going a long way to insulating themselves against price shocks.
What else you can do
Yet as we prepare for Medical Aid annual increases well above inflation for the foreseeable future, just what else can consumers do?
Singleton explains that we can essentially approach it from two perspectives:
The first is to look at changing your Medical Aid package.
“Although these decisions must always be in consultation with your broker or financial advisor, we often find that if consumers simply cannot afford the increases in their Medical Aid package, that they should review their medical aid option and taking care with their financial advisor to ensure that the correct Gap Cover option is aligned to their medical aid choice.
“For many people, this is the best way to stretch their budget and get the greatest value, while protecting themselves against the possibility of crippling medical expense shortfalls.”
He says the second approach is to participate more actively in your Medical Aid scheme – to ensure you derive the most possible value from it. This includes:
- Understand and make use of the rewards programmes that are available
- Don’t ‘over-utilise’ your benefits (by getting unnecessary tests or procedures)
- If you see any medical fraud happening report it to your Medical Aid scheme
- Take steps to decrease your chances of being diagnosed with certain chronic conditions
“Ultimately, it all comes down to the way we lead our lives. So, if we know we have limited day-to-day benefits, then spend a small amount on getting the flu vaccine, and ensure you're eating nutrient-rich wholesome foods. This is a whole lot better than having to go to doctors and buy expensive medication.”
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