The cost of medical scheme membership forms a substantial part of most families’ monthly expenses.
Year after year, this expense and the accompanying increases are not taken too kindly.
The contribution increases for open medical schemes for 2017 are averaging 10.3%. The explanation given by most schemes is the extraordinary high medical inflation due mainly to the high cost of service provider fees, an increase in the cost of benefits claimed as PMBs, an increase in the utilisation of risk benefits, the rising burden of disease, new medical technology and medicine, as well as the ageing membership profile of members.
Despite the fact that collective groans from members are heard for only a few weeks after the annual announcement of the schemes’ increases, the majority of South Africans appear to have passively accepted the status quo. The search for a new scheme that may offer similar (or even better) benefits at a more affordable rate remains little more than an item on their to-do list.
Remembering that we pay for our weekly / monthly groceries, our school fees, etc. in money and not in percentages, the tables below provide examples of the actual Rand value increases of a few no-network hospital plans of some of the open medical schemes in South Africa over the past four years.
Keep in mind that the average increases as reflected in Table 1 doesn’t mean that it is / was the same increase across all benefit options – it is / was the median over all the benefit options.
Table 1: Average contribution increase (%) of medical schemes calculated from 2014 to 2017.
|Medical Scheme||Average Contribution Increase (%) (2014 – 2017)||Medical Scheme||Average Contribution Increase (%) (2014 – 2017)|
|Genesis Medical Scheme||5.5%||Bestmed Medical Scheme||9.6%|
|Sizwe Medical Fund||8.0%||Discovery Health Medical Scheme||9.7%|
|Keyhealth||8.2%||Bonitas Medical Fund||9.9%|
|CompCare Wellness Medical Scheme||8.4%||Medihelp||10.0%|
|Suremed Health||8.7%||Topmed Medical Scheme||11.0%|
|Momentum Health||9.0%||Fedhealth Medical Scheme||11.1%|
|Medshield Medical Scheme||9.3%||Resolution Health Medical Scheme||11.8%|
When taking the current 2017 monthly contribution for an average family (2 adults; 2 children) and discounting it by the average contribution increase of the respective schemes, as reflected in Table 1 above, one is able to obtain a helicopter view of the Rand value of the annual price increases for the respective schemes for the period 2014 to 2017.
Table 2: Total Rand value of medical schemes’ increases between 2014 and 2017
|Medical Scheme||Annual contributions 2017||Annual contributions 2014||Total Increase 2014 to 2017|
|Genesis Medical Scheme||R31 800||R27 081||R4 719|
|Keyhealth||R37 740||R29 793||R7 947|
|Suremed Health||R40 560||R31 580||R8 980|
|Sizwe Medical Fund||R45 600||R36 199||R9 401|
|Bestmed Medical Scheme||R39 492||R29 997||R9 495|
|Bonitas Medical Fund||R41 568||R31 316||R10 252|
|Medihelp||R46 800||R35 162||R11 638|
|CompCare Wellness Medical Scheme||R54 432||R42 733||R11 699|
|Discovery Health Medical Scheme||R50 448||R38 214||R12 234|
|Topmed Medical Scheme||R45 792||R33 483||R12 309|
|Medshield Medical Scheme||R53 100||R40 666||R12 434|
|Resolution Health Medical Scheme||R48 840||R34 950||R13 890|
|Momentum Health||R62 184||R48 017||R14 167|
|Fedhealth Medical Scheme||R58 284||R42 502||R15 782|
Source: http://www.brokertools.co.za/ (2017 contributions)
A family of four on Genesis Medical Scheme, with an average contribution increase of 5.5%, will pay R4 719 more for their annual medical aid contributions in 2017 than what they have paid in 2014. Similarly, a family of four on Momentum Health, with their average contribution increase of 9.0%, will pay R14 167 more in 2017 than what they have paid in 2014.
The above table and example clearly illustrates a very important concept, namely that consumers should not only focus on their schemes’ announcements of annual increases expressed as a percentage, but rather, they should consider the Rand value of their increases. The reason for this argument is based on the fact that different schemes have different cost structures in place in similar benefit options. 10% of R100 is R10, but 10% of R200 is R20. Still 10% but a very different outcome in monetary terms.
Makes you think, doesn’t it?
Please note that the information provided herein is for information and comparative purposes only and is not advice in any form or intended to flout or in any other way compromise the conditions set out in the Financial Advisory and Intermediary Services Act’s General Code of Conduct insofar as comparing different financial products with each other is concerned.