An essential component of one's well-being is a tailor-made scheme that works for the individual

Medical aid schemes in South Africa have come a long way since their inception some 60 years ago. Increasing competition between the country’s larger and more recognised medical aid and health insurance companies has led to benefits being readily accessible. This development, coupled with South African medical aid members’ increasingly specialised healthcare requirements, has seen companies shifting their focus to that of providing maximum medical coverage on hospital plans, as well as a notable increase in industry competitiveness.

The shift to the current variance in scheme availability has been significant within the South African medical sphere.

Most aid schemes have tailored family health insurance packages aimed at preserving the vitality of a family, while individual men’s and women’s insurance requirements are being addressed through a range of flexible medical aid plans.

However, not all is as simple as often portrayed, with recent reports showing that medical inflation has run at excessive highs over the past five years. It is clear that the undertaking of informed financial decisions in relation to medical aid is no longer an option, but rather a necessity.

As pointed out by numerous experts over the years, effectively managed healthcare presents the only viable solution to South Africa’s healthcare problems.

According to recent findings by analysts Jenny Ramsden and Marlene Heymans, medical inflation has averaged more than 30% a year for the past five years; however, salaries (on which medical aid contributions are based) have climbed by only 10%. This has created a margin that is simply not manageable for the average individual, and a financially crippling one for those supporting a family. It has therefore been left up to the individual to ensure he/she stays ahead of the cost curve.

Medical aid rates in South Africa differ significantly from scheme to scheme. Coverage may start from as little as R400 for a single person, providing in-hospital cover with a chronic medicine benefit to R3 000 per adult member on upper level plans.

Pricing for such schemes often seems exorbitant; however, it can far outweigh the financial burden when an individual actually requires medical care.

With that said, each individual has an increasing amount of influence when it comes to controlling the cost curve of his/her chosen scheme.

One of the most effective ways to ensure one stays ahead of impending cost fluctuations is to take the time to custom tailor a scheme to meet personal health and financial needs.

While many South Africans sign on to whole coverage medical aid packages, a tailored scheme could save the end user significantly. For example, if hospital coverage is deemed important, he/she is able to commit to a hospital plan that will cover all the services provided in a hospital, including the anaesthetist and surgeon.

However, a plan such as this – while notably cheaper than a whole coverage option – does present risk, in that the subscriber would have to be admitted to a hospital as an out-patient, and trauma units are generally not considered a hospital event unless admitted.

Cost-risk exposure can amount, in that the anaesthetist and surgeon charge separately, and have the option of charging anywhere between National Reference Price List (NRPL) and private medical rates, which are on average three times higher than that of the NRPL rate.

Yet another method proving increasingly popular among a financially stringent public is that of a hospital plan with a savings comparison. Schemes such as these provide cover for services rendered in hospital; however, they also provide a member with a limited savings account for day-to-day expenses in the form of medicines, dentistry, etc.

But, as per all other cost-saving options, there is a margin of risk involved. If choosing this in a bid to reduce cost, one must realise that once the savings account is exhausted, the member needs to pay for his/her day-to-day expenses from his/her own pocket.

With that said, in the event that a member does not fully utilise the entire savings available for a year, the remaining balance can be carried forward to the following medical aid year, accruing a useful balance in the future. This presents an enticing case for staying ahead of the cost curve.

Another increasingly popular method being undertaken is the investment in hospital plans with limited day-to-day coverage. These forms of plans include hospital coverage, as well as a limited amount for day-to-day coverage such as consultations and medicines. It has the potential to save the end user significantly, in that this can be in the form of a medical savings account and/or a traditional benefit, giving specific annual limits per provider type.

A method currently proving popular among those looking to tackle inflation is that of a network plan. While this form of saving scheme is generally designed for younger individuals entering the medical aid market for the first time, it is equally popular among those who have a limited medical aid budget.

This scenario, while offering some compelling points toward cost-saving benefits, also provides one of the higher forms of risk attachment, in that it does not carry forward from year to year as savings do – with any unused benefits falling away at the end of each year.

While consumers are not held at ransom when faced with which choice to make regarding medical coverage, an out-of-control inflation scenario coupled with a limited national healthcare system has created a setting whereby medical aid schemes are an integral part of any household budget.

While medical inflation has created a riskier financial scenario for the country’s citizens, the fact remains that it is still up to the individual to educate him/herself as to what can be done to rein in any unneeded spending and risk exposure.

Many analysts feel that the government is faced with two choices in meeting its objective of reducing inflation and providing healthcare to the broad population: nationalisation of the entire industry, or the controlling of private healthcare costs to allow private care to become accessible to those serviced by the state. While these transitions have been implemented effectively in the past, successful African examples of this are few and far between.

It is therefore essential that members of medical aid schemes realise that in order to stay ahead of the medical cost curve, they must be prepared to tailor a scheme to suit individual financial and medical needs.

Adam Currie