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I cannot afford medical scheme membership, is health insurance an option to secure access to private healthcare?

16 April 2024 GENRIC Insurance Company Limited
Carl Moodley

Carl Moodley

Millions of South Africans simply cannot afford the high cost of medical scheme membership, while many others are finding it more challenging to maintain their medical scheme benefits as financial constraints climb in a subdued economy marked by high inflation, rising interest rates and decreasing employment.

It’s a double-edged sword as consumers are loathe to lose access to private healthcare in their time of need, especially as the quality of public healthcare services decline under huge burdens in terms of overcrowding, long waiting lists, reduced budgets and a serious shortage of resources from healthcare professionals and specialists to chronic medication.

Health Insurance is an affordable alternative solution that provides a range of cover options from basic primary care only options for your day-to-day needs, hospital only options, accident and emergency care, as well as more comprehensive options combining both day-to-day and hospital benefits.

“Demand for basic health insurance plans that cover basic primary medical care such as day-to-day consultations with general practitioners, dentistry, optometry, acute and chronic medication have seen significant growth in the last three years, accelerated as the state of public healthcare facilities has declined. At the same time interest in more comprehensive plans that provide cover for defined hospital events within stated annual benefit limits is also growing,” explains Carl Moodley, Chief Information Officer of GENRIC Insurance Company Limited, underwriters of GENRIC Health Insurance.

The most important difference between health insurance and medical aid is what they cover you for and there are distinct differences. A medical aid benefit provides for comprehensive health coverage according to prescribed minimum benefits (PMBs), while health insurance pays out a defined amount for specific health events or conditions as defined in your policy. They both play an important role, providing solutions for consumers to access quality healthcare, and who have specific needs and affordability criteria to consider.

Why is health insurance cheaper than a medical scheme membership?
One of the reasons why a medical scheme membership is expensive is that medical aids must provide full cover for a list of treatments and conditions called Prescribed Minimum Benefits (PMBs) which is a major cost driver. These PMBs include 270 in-hospital, life-threatening procedures and 26 listed chronic conditions and these must be covered at cost for all members. This means members pay for these benefits, whether they use them or not. While this means that medical scheme provide much wider and more comprehensive cover for more conditions, it is this ‘base’ cost for the PMBs that typically puts medical scheme access out of reach for most lower to middle income earners. In fact, many medical scheme members may in fact never even need to claim for a PMB event in their lifetime.

Health insurance is regulated under insurance and medical scheme regulations, however not to the same extent as medical schemes. Health insurance can specify the benefits and conditions covered and pays out a defined or fixed amount towards them – from a doctor’s visit, to medication, to a hospital procedure, emergency, or accident, up to a fixed sum defined in the policy. Health Insurance benefits are typically modular in design, so you can build up your cover for what you want covered as an absolute minimum – for example, day-to-day cover for GP visits, dental, optometry and pathology to cover your primary healthcare needs, to more comprehensive cover for hospital events and maternity benefits.

GENRIC provides examples of some of its hospitalisation claims paid during 2023 to illustrate how the cover works:
• Golden Hour Policyholder (accident and emergency cover) – R225 000 was paid out under the accidental injury benefit for a child who suffered second degree burns. Although the maximum incident limit was reached (R225 000 per insured per event for accident in-hospitalisation) the policy covered over 90% of all the incurred costs, and the child had access to private healthcare. The policyholder was able to negotiate with healthcare providers for a discount and terms for the final settlement.
• Comprehensive Advanced Policyholder – this policyholder suffered an accidental injury resulting in a knee replacement being required. The policy paid out R219 660.96 and covered all the costs for this event. In addition to this, the insured was also covered for post-rehabilitation physiotherapy up to R10 000.
• Comprehensive Advanced policyholder - this policyholder was diagnosed with a bladder tumour, with the policy covering R100 000 of the medical bills. The insured would be liable for any additional costs over and above the R100 000 threshold. This cover option provides for R100 000 per insured per event for the in-hospital illness benefit, as well as R250 000 per insured per event for the in-hospital accident benefit.

Many families without any cover at all, are looking to insure against a worst-case scenario and want cover for accidents and emergencies where time and access to immediate care is of the essence. The Golden Hour In-Hospital Accident Benefit provides accident-only cover at under R425 per month for a family of four (2 adults and 2 children). A more comprehensive benefit like Comprehensive Advanced which provides cover for Accident hospitalisation, Illness Hospitalisation, Maternity and Casualty, as well as day-to-day cover for GP consultations, optometry and dental benefits up to fixed sums, comes in at around R2750 per month for a family of four, for a solid set of benefits that you are most likely to need and use in your lifetime.

“The reality is that the cost of even an entry level, core private medical scheme benefit which provides only hospital cover and no day-to-day care, starts at around R1600 pm for a main member, R1600 for an adult dependant, and around R800 per child, putting the monthly premium at almost R5000 for a family of four. This is out of reach for millions of workers, and for SMEs who may want to provide such benefits for their staff but simply cannot afford to. This would also mean that day-to-day health care costs would still need to be self-funded as it is not covered under a core hospital plan – which makes the burden of healthcare costs even more onerous.

“Health insurance steps in to provide cover for the most pressing of needs where medical scheme membership is simply not available, but consumers don’t want to be reliant on deteriorating public health services for their most pressing needs – from a GP visit, getting your chronic medication, to a tonsillectomy, to treating a broken limb as a result of an accident,” explains Carl.

Here’s a comparison of the two:

Health Insurance

Medical Scheme

Health insurance is cover for possible unforeseen events within a stated benefit structure.

A Medical scheme pays for services as prescribed within the scheme-specific rules and is controlled through stringent risk protocols.

Health insurance specifies its benefits and pays out a defined amount towards them.  Health insurance does not cover Prescribed Minimum Benefits (PMBs), nor does it prescribe to the PMB legislation. You do not have the hard upfront cost for a set of PMBs that you may never use.

Medical aids have to provide full cover for a list of Prescribed Minimum Benefits (PMBs) - this is a major cost driver. These PMBs include 270 in-hospital, life-threatening procedures and 26 listed chronic conditions which must be covered at the cost that the healthcare provider charges.

Health insurance covers health events at fixed or specific amounts as contained within the specific policy schedule – for example R30 000 for maternity confinement regardless of the delivery method. The stipulated benefit is unrelated to the actual cost of medical services, but pays out a specific sum based on the insurance cover you signed up for. Health insurance typically does not cover extensive hospital benefits and is usually limited to accidents and emergencies and specified hospital events, at set benefit limits. If healthcare provider costs exceed these limits, the insured will need to pay the difference.

Medical scheme benefits are managed within categories and limits. They also typically have much higher overall annual limits on private hospitalisation. These factors combined mean that the starting cost of the package of minimum benefits often puts it out of reach of millions of South Africans.

Health insurance can be used in conjunction with the medical aid scheme to cover any possible shortfalls that may be incurred. For example, a member on a core hospital plan with a medical scheme can take a primary care health insurance benefit to cover their day-to-day, out-of-hospital healthcare needs.

Medical schemes often have shortfalls due to the difference between the medical scheme rate and the rate at which providers charge. Members often take out additional gap insurance to cover these shortfalls.

Health insurance pays benefits according to a policy schedule and is regulated under the Short-term and Long-term Insurance Acts.

Medical schemes are tariff and protocol driven and regulated under the Medical Schemes Act.


“A significant benefit is that certain health insurance benefit options also provide for preventative care which is a big advantage of being covered as most people without any cover postpone going for annual check-ups or health screenings, if at all. Having access to preventative care helps doctors detect an illness early, and early detection can minimise the severity of an illness and possibly even save your life. More comprehensive health insurance options provide extra peace of mind by providing access to 24-hour emergency medical services and ICU benefits.

“Health insurance gives consumers access to quality private healthcare quickly and affordably where comprehensive medical scheme benefits are simply not affordable. Always consult with a healthcare broker who will be able to assess your needs and your budget to work out the best healthcare financial plan for you and your family,” concludes Carl.

Quick Polls

QUESTION

The shocking crime and motor vehicle accident statistics shared during a recent SHA presentation suggests that group personal accident and personal accident cover are a no-brainer. Do you agree?

ANSWER

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