The cost of Medical Schemes in South Africa is staggering, and prices keep on rising. This year, the average increase in monthly contributions is way above consumer price inflation (CPI). Coupled with rising costs are dwindling benefits.
So what’s causing the very high cost of basic medical cover – and is it really necessary to keep on contributing to a Medical Schemes scheme?
Why Medical Schemes is so expensive
The medical inflation rate is almost double the consumer inflation rate. More troubling are predictions of a further rise in 2019.
Several factors are contributing to higher premiums, not least of which is the sorry state of South Africa’s economy.
What has caused this spike in inflation? A combination of three factors.
Preventable lifestyle diseases are eroding the Medical Schemes available resources at an alarming rate. Factor in a sharp reduction in the number of healthy people who are joining Medical Schemes, and there’s less money to fund the rising tide of chronic condition claims. The solution? A sharp year-on-year increase in member contributions.
Aging memberships base
Due to fewer and fewer young people opting for Medical Schemes, the average membership base is aging. Age equates to more frequent, and higher Medical Schemes claims, hence a rise in contributions across the board.
Medical Schemes fraud
According to a recent report, Discovery Health – one of the country’s leading Medical Schemes providers – recovers or prevents fraud valued at around R400 million every year. That’s only the detected fraud. The result is that all members have to pay more to cover the costs of the wholesale looting.
What’s the alternative?
The reality is that there is no alternative to Medical Schemes. You can take a chance and go it alone but consider that 90 percent of existing Medical Schemes members simply could not afford private health care.
Are you able to pay for heart bypass surgery, or the latest and most effective cancer treatment; procedures that can easily cost between R500,000 and R2.3 million?
The real cost of public healthcare
A low-cost alternative is public healthcare. But if you do choose to go for surgery or treatment at a government hospital, be prepared to endure waiting lists, long queues, a lack of properly trained personnel and even unsanitary conditions.
The fact is that the public healthcare system in South Africa is on its knees. There’s a general lack of supplies, equipment, staff and, more importantly, respect or care for patients.
Pay more for less: late joiner penalties
If you decide to relinquish your Medical Schemes only to re-join the same, or a different, Medical Schemes scheme a year or more later, you’ll be penalised through a heavy “late joiner” fee.
Penalty bands are calculated according to the time you have been without cover after a certain age. At the end of the day, you’ll pay more for the same benefits you enjoyed before opting out.
Medical expenses increase with age
One sure bet is that your medical expenses will increase with age. You may need regular blood pressure and cholesterol tests, hormone replacement therapy, pap smears, prostate examinations and tests for diabetes and heart disease. Other common requirements are knee and hip replacement surgeries, CT scans and colonoscopies.
If you don’t have Medical Schemes cover, you’ll have to pick up the tab yourself. That tab can easily run into tens of thousands of rand.
Is there a solution?
Currently, there’s no clear solution – but if you are on Medical Schemes or looking to join a scheme, there may be ways to reduce the costs. Several leading Medical Schemes providers offer low-cost options, providing basic medical cover at more affordable rates.
SOURCE: Independent Financial Consultants