With the threat of recession looming, brokers need to be aware that consumers are bearing the brunt of increasing prices and a weaker rand, that may lead to them moving to a cheaper medical aid option with less coverage. Dr Bobby Ramasia, principal executive officer of Bonitas Medical Fund, cautions strongly against choosing a medical aid plan based on solely on your pocket. “The best medical aid option is one you can afford which best covers the healthcare needs of your family. Choosing the right medical aid option is really balancing a member’s financial circumstances on the one hand with the family’s health status on the other. If members choose the least expensive option, they may find that their benefits run out before the end of the year and that claims are not being paid. Members will then have to begin paying for medical expenses from their own pockets.” But why is healthcare inflation rising at such an alarming rate? Dr Ramasia says that “Healthcare inflation still outpaces general economic inflation in South Africa and while the jury is out in the form of market inquiry into the private healthcare sector, fingers are being pointed at all role players from private hospitals and specialists to medical schemes. While the former are all about the bottom line, medical schemes are not-for-profit. However, as contributions grow every year so has criticism.” According to the Council for Medical Schemes (CMS), the market has not been successful in attracting young, healthy people. Younger adults are less prone to chronic health conditions like diabetes or hypertension, lifestyle diseases that adversely effect of the pool of contributions. The increasing age of beneficiaries is also a concern. The CMS reported that average beneficiary age increased from 31.9 years in 2013 to 32.1 years in 2014. Schemes with an ageing membership base generally experience an increase in claims cost in excess of inflation on account of higher usage of benefits. Bonitas Medical Fund estimates that members claim approximately 2 per cent more each year. Almost all chronic conditions have shown an upswing over the past few years. These conditions are included on the list of prescribed minimum benefits (PMBs) that need to be paid in full by all schemes. The full weight of this has to be borne by schemes as the prices healthcare providers charge to treat these chronic conditions are not regulated. Schemes are then forced to pass on these costs to members in the form of higher contributions. At the same time, there have been particularly steep increases in the cost of specialists and hospitals, which together account for more than 61 per cent of total claims paid. This is further compounded by the over-reliance of some specialists on modern technology and tests which only add to the cost of treatment. Runaway healthcare costs have various contributing factors, many of which are beyond the influence of schemes. This leaves schemes with no option but to negotiate individually on all price increases with service providers, blocking the development of a more efficient and cost-effective healthcare sector. But what then is the best approach for medical schemes to take? Dr Ramasia explains, “Bonitas continues to explore and implement solutions to limit contribution increases as far as possible so that our members can still afford quality healthcare cover. Managed care interventions, family practitioner upskilling and partnering with quality service providers are crucial to cost-containment.” Please contact Namhla or Judy in our Health Department, email health@daberistic.com , if you have any queries about Vitality or Medical Aid Source: FA News
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January 2025
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