A must-have for rising out-of-pocket healthcare expenditure

The South African medical scheme landscape faces significant challenges, with stagnant membership growth and increasing out-of-pocket healthcare expenses putting consumers under pressure.

Medical schemes, which operate on a pooling model, are restricted from pricing individuals based on age or health status which has led to fewer young, healthy lives joining the risk pool, straining cross-subsidization models.

Over recent years, medical scheme contribution increases have consistently exceeded CPI growth, prompting many consumers to downgrade their plans, exacerbating their out-of-pocket healthcare expenses. In fact, out-of-pocket healthcare expenditure has surged by an average of 12.5% over the past two years — more than double the rate of inflation. This trend signals a widening affordability gap for quality healthcare.

Source: Council for Medical Schemes Annual Report 2022/2023

It has become increasingly difficult for medical schemes to manage their risk with stagnant membership growth, leading to continuous changes in benefit designs. Despite these shifts, most of the gap cover products currently available in the market were designed more than a decade ago, and medical scheme benefits have changed significantly over this period. As healthcare dynamics evolve, so do consumers' gap cover needs. Unfortunately, most gap cover benefit structures have remained static, leaving consumers vulnerable to financial shortfalls when seeking the care they need.

As we approach the time of year when medical scheme members re-evaluate their benefits after annual contribution increase communication, the importance of selecting a well-designed gap cover solution cannot be overstated. Modern gap cover products should go beyond offering basic shortfall cover by catering for today’s healthcare demands with extended shortfall cover benefits for out-of-hospital specialist fees, maternity costs, out-of-network hospital co-payments, as well as day-to-day expenses.

With medical aid alone no longer sufficient to meet the full spectrum of healthcare costs, choosing an innovative and comprehensive gap cover product is more important than ever before – not only to protect against financial shortfalls but also to ensure continued access to quality healthcare.