The funding of medical cover in South Africa is a highly controversial issue, which involves an assortment of stakeholders. While the government is arranging their National Health Insurance (NHI) model, private health insurance providers and medical aid schemes are watching in anticipation to determine how it will affect them. Meanwhile, it’s business as usual.
Medical aid members are likely to face higher-than-usual contribution increases in 2017, along with greater restrictions in their choice of healthcare providers, according to Insight Actuaries. Open medical schemes reported an overall operating shortfall for 2015 due to higher than anticipated claims. They, however, managed to cushion the effect on consumers going into 2016 by dipping into their reserves, according to a report last week by Global Credit Ratings.
However, after another year of higher than expected claims, the medical schemes were going to have to make changes to ensure their income covered their expenses. According to Insight Actuaries joint CEO Christoff Raath, a warning was sounded at the Board of Healthcare Funders conference in July whereby two of South Africas biggest medical schemes Discovery Health Medical Scheme and Government Employees Medical Scheme told delegates that they had experienced an unexpected spike in claims for medical cover in South Africa.
Raath said that there appears to be a general consensus in the industry that 2016 claims experience is higher than expected. The impression at Insight is that the industry-wide phenomenon driven by high utilisation rather than higher tariffs, and more hospital claims. “Most open medical schemes appear to be affected”, Raath said. The vastness of this effect differs from scheme to scheme, and although what we see is not disastrous, it’s not insignificant.
Companies that provide medical cover in South Africa will be trying to strike the balance between introducing higher contribution increases and implementing tighter managed-care initiatives and greater restrictions in choice of healthcare providers. Raath went on to say that they would also try to lower administrative fees and negotiate hard on tariffs with healthcare providers.
Open medical schemes are due to announce their contribution increases and product changes from late September. Luckily there is an alternative to having to pay such exorbitant fees. A relatively new company called Day1 Health has entered the market with a bang. Day1 Health offers a hospital plan with medical aid benefits at a very affordable rate. This way you can get affordable medical cover without damaging your wallet.