Debt stress impacts heavily on healthcare systems

01 October 2009 Andre Snyman, Consumer Assist

The rising incidence of debt stress has serious implications for players in all sectors of the healthcare industry.

There is a myth that health is counter-cyclical or recession proof, in other words, the greater the financial crisis, the sicker people become and the more they need medical care.
The truth is that consumers are more likely to abandon medical aids and 'buy-down' to cheaper plans, and then struggle to pay bills when medical cover runs out. They are also more likely to question the need for surgery and time off work.

Increased health problems

And yet consumers scrutinising their medical aid costs are likely to be among those most affected by stress-related health problems.
Research from the USA shows those with debt stress have at least three stress-related illnesses:
* 27% had ulcers or digestive tract problems (compared with 8% of those with low levels of debt stress).
*44% had migraines or other headaches (compared to 15%).
*29% suffered severe anxiety (compared to 4%).
*23% had severe depression (compared to 4%).
*6% reported heart attacks, double the rate for those with low debt stress.
*More than half, 51% suffered from back pain.

Affecting performance

People with high stress levels are also likely to be irritable and have trouble concentrating. Sleeplessness is a common indicator, as evident from the timing of the hits on our ConsumerAssist website - visitors drop to almost zero between 10pm and midnight, then rise sharply after midnight and are very high between 4am and 5am.

As the largest umbrella organisation of debt counsellors in South Africa, ConsumerAssist is now offering its debt counsellors free psychological counselling, to deal with the immense strain they endure while counselling an increasing number of highly distressed clients, some of whom are suicidal.
And employers are experiencing high absenteeism. As a case in point, BMW brought in debt counsellors to assist employees and saw absenteeism drop 34%.

Impact on healthcare providers

More sick patients do not necessarily result in wealthier doctors. Luis da Silva, managing director of Healthbridge, an information technology company which ensures fast payment of medical bills said: "We see doctors who can't even afford to replace old computer equipment because they are experiencing cash flow problems. Traditionally bad debt in medical practices starts in the second half of the year as funds expire for some medical aid members, but doctors and patients are experiencing significantly more financial stress this year."

Shireen Hassiem of the National Student Financial Aid Scheme, a government body that awards student loans, comments that a general practitioner, who incurred study fees of R222 000 for their tuition at around two percent above prime, would have to earn R300 000 per annum to pay off their studies over nearly 12 years.

Brokers can play a role

South Africa is moving toward a National Health Insurance policy. Whether this will remove the debt crippling government hospitals, or worsen it, remains to be seen. Certainly for today's broker the challenge is to help consumers find ways to keep their medical insurance by providing a basket of options and ideas, including debt counselling to get out of debt.

Quick Polls


As National Treasury mulls a two-bucket retirement system, mandatory contributions and preservation, regulation 28 is being amended to allow up to 40% of retirement fund assets to be invested in SA-based infrastructure… Which of the following retirement fund ‘tweaks’ would you consider most beneficial to your clients?


Give fund members emergency access to retirement savings
Let fund members invest 40% in infrastructure
Let fund members invest 40% offshore
Mandatory preservation when resigning from a fund
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