New survey highlights member medical scheme concerns
The trouble with financial services surveys is they tend to ignore the views and experiences of the end user of the product in question. Research companies focus on trustees when talking to the retirement and medical schemes industries and asset managers when investigating the collective investments space. That’s why we welcome the 2010 OMAC Actuaries and Consultants Healthcare Monitor, released at a media conference in Johannesburg, 13 June 2011. The survey is based on intensive face-to-face interviews with 1,002 medical schemes members and beneficiaries. We now have a ground-level picture of the medical schemes industry.
It comes as no surprise that three quarters of survey respondents singled out cost as their major concern. The average survey respondent spent R2, 500 per month on a single-member comprehensive scheme with the payments escalating to between R5, 000 and R6,000 per month for comprehensive cover for a family comprising two adults and one child. Basic cover averaged R840 and R2, 000 per month respectively. Margaret Hulme, Head of Healthcare Consulting at OMAC Actuaries and Consultants believes many of those complaining about the cost of medical cover are on inappropriate benefit options. “It seems that members are adopting a ‘rather safe than sorry’ approach when selecting medical schemes and options, instead of trying to improve their understanding of the product,” she says. A more appropriate benefit option could reduce the cost of cover.
Compulsion not a factor
One of the interesting survey responses relates to the reason members sign up to a medical scheme to begin with. Of the 1,002 respondents 29% had joined a scheme on their own volition, 28% had to belong to a scheme of their choice and 43% had to belong to an employer-specified scheme. Despite 71% of the members surveyed being ‘forced’ to join a medical scheme, only 9% list compulsion as the reason for obtaining cover. The OMAC Healthcare Monitor uncovered two additional behavioural trends early on. First, medical scheme members are particularly loyal to their chosen scheme, with only 7% of respondents changing schemes over the past three years. And second, members are reluctant to shift from the benefit options they choose. Only 1% of respondents had changed options within a scheme over the same period.
OMAC was confident enough to draw cost and benefit conclusions from the approximate 95 persons who changed options within a scheme. Apparently 48% changed for a cheaper option, 22% opted for a more expensive option and 30% chose a similarly priced option. As for benefits, 46% opted for more benefits, 36% for similar benefits and 18% for fewer benefits. However, findings published later in the survey cast aspersion on these responses… Because only 42% of respondents ‘strongly agree’ that they know what they’re covered for, while as many as 30% find the benefit structure of their medical scheme confusing...
The designated service provider concept is misunderstood
OMAC says that cost saving initiatives by schemes, particularly the introduction of Designated Services Providers (DSP), have negatively affected member perceptions. A DSP is a medical practitioners, specialist or provider (hospital or pharmacy) singled out by the medical scheme for use by its members. A member who uses a specialist that’s not on the list will inevitably have to fund part of the specialist’s bills by way of a co-payment. “Members do not like the DSP concept,” says Hulme. “This is not because of any problem with the concept itself, but rather owing to the perceived lack of freedom of choice, particularly where it comes to general practitioners.”
Around half of the members surveyed don’t use their medical schemes’ DSPs. Statistics support that wealthier members are more inclined to choose their own healthcare professionals regardless of cost. Younger members, meanwhile, are more likely to follow the schemes’ recommendations. Member resistance to preferred suppliers could be cause for concern because more and more schemes are stipulating where their members seek assistance. The 2010 OMAC Healthcare Survey, for example, confirms that 40% of medical schemes designate hospitals, 39% point members to preferred general practitioners, 32% dentists, 31% pharmacies and 30% each to optometrists and specialists!
It seems clear from the survey results that medical schemes will have to improve their communications to members. And member guides simply aren’t doing the trick. “Only 44% of the members surveyed indicate they read their member guides thoroughly,” says Hulme. What’s missing – in our view – is face-to-face communication between member and scheme. In the past the healthcare broker could have played an important role in this process. But given today’s cap on broker commissions for selling medical schemes the responsibility for communicating scheme options and benefits falls squarely on the scheme itself.
Editor’s thoughts: After reading the survey the similarities between medical scheme cover and other insurances is staggering. Your clients purchase cover and then forget they have it until disaster strikes! And it’s this ‘I’m covered’ attitude which leads to many ‘disputes’ at claims stage... Has the regulation of healthcare broker commission impacted on your service level to medical scheme members? Please add your comment below, or send it to gareth@fanews.co.za
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