It’ll make you sick: wages can’t keep up with medaid costs
Medical aid premiums outpace salary increases, an annual survey has found
Salary increases have not kept up with annual medical aid premium increases over the past 10 years, putting consumers under increasing pressure.
This is according to broker Jill Larkan, author of the annual GTC Medical Aid Survey.
Each year, Larkan, a healthcare consultant, puts together a detailed report comparing 272 medical aids on price and sustainability. She looks at their long-term prospects and financial stability, as well as their current cost effectiveness for the consumer.
For the first time since starting the survey she looked at how all medical aid premiums on average have increased since 2006, and compared the increases with salary increases.
Larkan said that according to 21st Century business management consultants, the compound increase of the average South African salary between 2006 and 2016 had been 80.2%, compared with an 104.87% increase in medical aid costs.“This clearly demonstrates the pressure that consumers have been under in trying to keep up with healthcare care costs.”
Larkan also looks at which medical aids are best to avoid, because of risk factors affecting their future prospects.
The data to analyse medical aids’ financial stability is publicly available in the Council for Medical Schemes annual report.
Based on their economic fundamentals, Larkan shows that the medical schemes least likely to be around in five years’ time or to have very high premiums, are Resolution Health, Medihelp, Medshield, Spectramed and Selfmed.The Sizwe medical fund also had bad fundamentals, meaning its sustainability and affordability over the long term was questionable.
The least sustainable medical aids had the highest risk factors – small numbers of members, most of whom were old and therefore had lots of hospital claims.
These plans would become more expensive over time to cope with the members’ high health costs.
Then Larkan explained where consumers could get the best medical aids.
The best cheap entry-level plans for low earners were Momentum Ingwe Network and Discovery KeyCare Plus.
The best hospital plan was Bestmed Beat, while the best comprehensive plans that had many day-to-day benefits and good hospital cover were the Discovery Essential plans.
Larkan said that if one looked only at price and not the medical aid’s long-term sustainability, the cheapest plans were the Compcare Networx entry plan and the Fedhealth Maxima comprehensive plans. Fedhealth did well every year in terms of value for money, she said.To properly compare the 272 medical aid plans, Larkan must assume that every medical aid member has gap cover. This is because different medical aids pay various rates for hospital coverage (some have full coverage while others do not), and comparisons can only be made on the assumption that all hospital expenses are fully covered.
Gap cover is a R100-R200 a month insurance policy to cover medical aid shortfall. For those without gap cover it is not possible to accurately compare the medical aids’ plans.
Larkan also noted that medical aid complaints to the regulator skyrocketed in 2016 compared with 2015, according to the latest available data.
But this was mostly because the consumer did not understand what medical aids covered and what exclusions their plan had.
The Healthcare Market Inquiry has just released the results of its four-year investigation into the private sector and found medical aids were “confusing” and consumers “disempowered”.
It suggested a base-level plan for every medical aid to make things much simpler, and accused medical aids of “deliberately” confusing consumers.