Worldwide, healthcare and medical aid costs, both public and private, have continued to increase year on year. While some of that escalation is due to natural inflationary forces, much of the increased expense arises from advances in medical technology such as computer-aided tomography, magnetic resonance imaging, and the high cost of purchasing, operating and maintaining the necessary equipment. Providing affordable medical aid is an obvious way to help counter the rising costs. However, finding ways to minimise the premium price without compromising a scheme’s benefits can pose a few challenges for healthcare funders.
In South Africa, the challenge of maintaining affordability is exacerbated by high unemployment figures, and the fact that many workers receive only a subsistence wage. People in these categories must continue to rely on the overburdened and underfunded public state health service without access even to the most affordable medical aid. For them, their best hope is that the promised national health insurance scheme will prove effective in reinstating the public healthcare sector’s formerly enviable services.
The current financial difficulties have affected many of those who previously would not have hesitated to invest in the best private healthcare cover available. Instead, many have chosen to downgrade to cheaper options that leave them responsible for more of their day-to-day expenses in an attempt to limit their monthly spending. That said, more than 9 million people are currently members of an affordable medical aid scheme nationwide.
Fund managers have tackled the problem of limiting premium prices in various ways. In some cases, they have achieved this by trimming some of the less used benefits to create cheaper products that focus more on providing cover for the more costly contingencies. One particularly cost-effective option based on this principle is the hospital plan. Restricting cover to those occasions on which the member is hospitalised and leaving all other healthcare expenses for the member’s account has enabled the nation’s fund managers to offer the most affordable medical aid option to date.
Hospital plans were initially aimed at young singles with good general health but limited incomes. However, the compulsory inclusion of cover for prescribed minimum benefits that includes the full cost of diagnosis, treatment and care for 25 chronic diseases has made this a viable option for many more individuals and families with limited means.
Medshield has succeeded in developing some of South Africa’s most affordable medical aid products by appointing a network of preferred service providers, thus reducing the underlying cost of private healthcare.
