Tariff increases reveal fractures in SA medical aid modelThe massive 2017 tariff increases announced by the biggest medical aid schemes is no doubt another body blow for the already cash-strapped South African consumer. But it is also indicative of an industry model that is deeply flawed. Even more concerning is the fact that fee increases are being accompanied by benefit reductions, which essentially means that medical aid consumers will be paying more for less. According to Fedhealth principal officer, Jeremy Yatt, this shows that medical schemes are under more stress than ever. “Unlike other types of insurance, medical schemes get no benefit out of higher fees, as there are no shareholders, dividends or bonuses to be paid out,” he says, explaining that it’s the combination of several elements that is making medical aid so unaffordable. © Antonio Gravante 123rf.com Insurance costs for medical practitioners is risingEspecially in medical fields like gynaecology and neurology, the costs of insurance are sky high for practitioners, as a result of the potential lawsuits involved. Yatt says that as South Africa becomes an increasingly litigious society, the number of malpractice and negligence suits is on the rise, with few of them actually being legitimate. In any event, the increase in legal action ultimately impacts costs for all scheme members. More medical proceduresRelated to the rising insurance costs, Yatt feels doctors practise a fairly conservative kind of medicine where they’re often quick to operate in order to avoid potential medical claims. In addition, the current socio-economic climate means more elective procedures and medical illnesses. All these factors, he says, lead to increased costs for all members of the scheme. Government isn’t on boardIf there were better state hospital facilities, Yatt says that this would mean that medical scheme members could use state facilities, which would cost private schemes less – and so we’d see less supplier-induced demand. He also feels that current plans to introduce a national healthcare system are unaffordable for the country in their current state. Healthcare structure isn’t all-inclusiveIn countries like the United States and India, doctors work as salaried employees of a medical centre, which then charges one overall cost for a procedure. In contrast, the cost of an operation in South Africa is harder to estimate, as different elements like the ward and theatre use, anaesthetist, consulting doctor and surgeon are all charged for separately. With all these separate players involved, it’s harder for medical aid schemes to negotiate lower costs as they’d be able to do with one provider. Rigid laws limit member behaviour managementIn South Africa, medical schemes aren’t allowed to reward or penalise members – for example they can’t lower premiums if a member doesn’t claim for a certain number of years, and they can’t raise them if a member claims too often (which is what car insurers do for example). Because of this industry regulation, there’s no incentive for members to share the responsibility when it comes to their own health. So, what can be done to solve these problems?
Contrary to popular opinion, Yatt feels that while there may be consolidation of some medical schemes in future, this won’t solve the issue around the rising costs associated with them. Unless government and all related role players – including members – start working together to tackle the legislative environment and cost drivers, the cost of medical aid will continue to rise above normal inflation, which will make it even more of a grudge purchase than before. |