Is There a Disconnect Between Healthcare Consumer Needs and Medical Scheme Offerings?

healthcare consumer needs and medical scheme offerings

In the healthcare space, there appears to be a disconnect between what consumers want and what medical schemes are able to provide. A valid comment?

Dr Andrew Good“Yes, this is a valid comment”, says Dr Andrew Good, Managing Director of Prognosys Actuaries and Consultants.

Participation in open medical schemes has been stagnant for the last decade, despite several closed schemes being absorbed by open schemes and the percentage of the population covered having decreased. This shows that schemes are not meeting consumers’ needs and/or are becoming increasingly unaffordable.

With the debate around NHI hotting up and the future of medical schemes being uncertain given Governments plans, it is important to pause and remind ourselves why medical schemes exist.

We must ask ourselves why South Africans spend hard-earned, after-tax money on private healthcare when we all have access to the public sector health infrastructure. The answer is simple – South Africans prefer not to rely solely on the services available at public facilities and want cover that assists them to defray the costs of accessing treatment at private medical service providers.

As South Africans we have daily reminders as we are load shed that we cannot rely on Government. It is clear we don’t want to rely on Government for health cover. In 2022 medical Scheme members spent R 233 billion on medical scheme cover.

Medical scheme consumers (members) are not a homogenous group. Some consumers have ongoing medical needs that require continuous access to healthcare providers. Other consumers (very often the young and healthy) only need medical cover for unexpected medical care and emergencies. Medical scheme data also shows us that the majority of consumers are looking for cover of unexpected catastrophic medical events and emergencies.

This diversity of consumers’ needs is reflected in the option choices offered by the market for this grudge purchase. If you look at the benefit options available across South Africa’s largest medical scheme for 2024, you can get “essential” cover at around R1,900 per month, but “comprehensive” cover may cost you over R10,000 per month in 2024. Most concerning is that the cost of basic cover continues to increase above inflation, making a consumer’s ability to get cover for unexpected medical events and emergencies even more difficult.

So, what do medical scheme consumers want? And what do they need?

First and foremost, they want medical cover that allows them to choose their doctor and where they are treated.

They also want private healthcare cover that doesn’t interfere with the relationship between them and their treating practitioner.

And lastly, they want medical cover from a financially stable entity, that has solid reserves and a focus on keeping contribution increases affordable (annual increases as close as possible to CPI).

Few medical schemes are living up to this expectation. Once again we are seeing that most medical scheme members are being subjected to double-digit inflationary increases for 2024.

Despite the double-digit increases members are also being subjected to decreasing benefits, forced network participation, and increasing interference from their scheme in who treats them and where they get treated.

Consumers often make the mistake of believing that the cover provided by large schemes would be better for them. Large schemes are heavily reliant and influenced by the insurance companies that administer the schemes. This, in turn, adds an unnecessary layer of costs.

One medium-sized scheme that shows that membership size is not that important is Genesis Medical Scheme. Genesis has kept its contributions in line with inflation and has not made a loss going back at least for the past 25 years. Importantly, Genesis has kept its risk contribution increase to 5% for 2024. Furthermore, the Scheme is the most financially stable open medical in South Africa.

Young and healthy consumers looking for robust cover for unexpected medical events and emergencies should add Genesis to their consideration list.

All medical scheme options are equal but some are more equal than others.

Dr Andrew Good, Prognosys Actuaries and Consultants

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