Should young people seeking cover wait for national health?

With South Africa’s proposed National Health Insurance (NHI) solution firmly on the table, many young and healthy employees are asking whether to fork out for private healthcare cover or simply wait for NHI...

The “wait and see” attitude of the young and healthy could prove their undoing. Andre Jacobs of Aon Hewitt points out that NHI will likely be implemented over a period spanning 14 years, during which time the entire healthcare industry will undergo a much needed overhaul.

He says there are six reasons young employees should not delay in seeking private cover:

1. Insurance is a prepaid activity where one purchases cover before it is needed. Although it is correct to assume that the aged are more prone to illness than younger people, this may not be true in individual cases. There are enough examples of young people in need of expensive health interventions. Medicine is not an exact science and we cannot predict at what age we might fall ill.

2. Younger people are more prone to accidents. Individuals without medical scheme cover will need to make use of the already strained public healthcare system in the event of serious accident-related injuries.

3. A 25 year old who chooses to wait for NHI to be implemented will be 39 years old by the time it is fully operational. A private medical scheme would charge this individual a “late joiner” penalty with the result his or her contribution would be higher than other scheme members with similar benefits. There is no indication that this penalty would apply to NHI, but it would certainly impact on the private sector options available to the individual at a later stage.

4. In the event that the young person contracts a chronic disease or cancer before NHI is implemented, the disease will not be covered for 12-months due to the legislated waiting periods that medical schemes may impose. This could lead to a severe deterioration of health or additional expense.

5. Where employers provide a subsidy for medical scheme contributions the employee will forfeit assistance in terms of funding for medical scheme membership or medical expenses.

6. In the event that a young couple plans to start a family they will have to cover the cost of delivery out of pocket, or deliver the baby at a public hospital. If the baby is premature or has a birth defect, the cost of treatment could run into millions. Without access to private cover the young couple will place the future care of the baby in the hands of a strained public healthcare system.

Cost effective options

Jacobs acknowledges that young people are cost sensitive: “Comprehensive cover is expensive and will, for most young South Africans, be unaffordable. However, there are a range of cost effective options available to young people.

Network options, for example, which limit the member to specific healthcare providers and hospitals, still offer adequate cover for hospitalisation and extensive cover for daily ailments. These options are affordable and often scaled to an individual’s income.

An end to freedom of choice

“The only drawback of a network option is that choice of provider is restricted. Some individuals find this prohibitive and prefer not to be dictated to in terms of their medical provider. In a NHI environment, freedom of choice will not exist either,” says Jacobs.

A final word of advice for young people is to ensure that their “activity” risks are properly assessed. “Extreme sports are often excluded from medical scheme cover,” he says. “Consultants should complete a needs analysis to ensure that the chosen medical scheme option is suited to the young person’s lifestyle.”