Thorn in the side: affordability

When it comes to healthcare, “affordability” is the word on everybody’s lips. Despite numerous efforts by the industry, it has not yet found achievable results to meet the needs of the South African market.

Despite key industry players combining their experience and intellect by setting up a task team with government to find industry-wide solutions, the solution to affordability has remained elusive.

How to successfully achieve a long-term solution at all levels, how to balance affordability against legislation, and how to structure it effectively to bring the previously uninsured into the fold?

Government’s strong emphasis on accessibility and affordability for all South Africans has positioned this issue as a priority for all industry players. Regrettably, over-regulation has tended to slow down any meaningful progress in this area.

Lower cost trend

“Not only is affordability an issue for low-income earners, but we are seeing a general trend in the industry of people buying down to lower cost options,” says Thokozani Magwaza, CEO of Sechaba Medical Solutions, the recently rebranded Sizwe Medical Services.

“Consumers are definitely more cost conscious than in the past. While previously the majority of scheme members selected the higher options, the majority of people now choose the middle and lower end options. The trend of new members joining medical schemes is also definitely at the lower end of the product range.

“The buying down shift from higher to lower products within schemes is a very distinct trend and so when the issue of affordability is tackled it should not only be at entrance level, but must be addressed holistically as a blanket issue of concern at all levels across the industry.”

Costs are double the affordable level

Magwaza says when a survey was conducted last year around pricing for the Lower Income Medical Scheme (LIMS), it was found that people in the low-income market spend on average R120 out of their own pocket on private healthcare.

The product that was subsequently priced for LIMS taking the current PMB requirements into account, was around R235 per life per month – double the cost.

Regulation hurdles

Legislation has not only affected the affordability aspect of healthcare, but also the complexity of the industry as a whole.“The increase in regulations has made an already complex industry almost impossible for the man on the street to understand.

Medical aid members are clearly overwhelmed by all the changes evidenced by the increased number of calls at call centres. This means that more pressure is placed on administrators to not only keep their staff updated and trained on latest developments, but also to ensure service levels are kept up to standard as more calls flood in.

Shift in focus

“In order to cope with increased regulation, fund administrators need to have systems that can cope with, and adapt to, the continued onslaught of legislative changes. As the demand on systems increases, so the focus has shifted from pure capability to flexibility and seamless transformation.”

“There seems little debate that in order to survive, medical aids in South Africa will require systems with the necessary flexibility to meet the stringent demands of legislation moving forward.

Without a competent system that can seamlessly adapt to its environment, schemes will not be able to cope with legislative demand,” concludes Magwaza.