Healthcare, whether state-funded or private, is a sector constantly beset by inflation. Not only is there a continuing upward trend in the prices of basic requirements, such as medication, disposables, utilities, food, and laundry services, but steady advances in technology puts pressure on hospitals and clinics to acquire new and costly instrumentation, such as that now used for various types of medical imaging. To compensate, the tariffs they charge patients must also be increased. This, in turn, puts pressure on medical aid schemes to provide affordable yet adequate cover in the wake of these constantly increasing costs.
Once agreed, their premium rates remain applicable for a given year, after which they are free to submit an application to increase their rates to the industry’s regulatory body – the Council for Medical Schemes (CMS). In determining premium increases, each scheme is compelled to consider the possible impact on its members. They rely on the principle of shared risk like insurance companies. It is, therefore, important to maintain a sufficient number of members as, only by doing so, can they ensure the contributions of the majority of non-claimants will be sufficient to cover the cost of claims raised by the minority. Only when their products are affordable can medical aid schemes hope to maintain and grow their membership figures. Over the years, many have failed to do so, and have either been assimilated by rival schemes or been forced to liquidate.
Clearly, to continue creating a successful balance between the premium price and the benefits available to a scheme’s members has required some careful thought. In general, to ensure they remain viable, schemes have responded to this tricky challenge in a variety of ways. The more obvious of these has been simply to curtail some of the benefits. For example, lowering the maximum amount a member can claim for certain contingencies or eliminating selected benefits, such as specialised dentistry can help maintain affordable premiums for medical aid schemes.
One option that has proved quite successful is the hospital plan. Aimed at the young and single with good general health, it provides cover only during periods of hospitalisation, and offers a hedge against contingencies, such as car accidents and emergency surgery, which could otherwise incur crippling costs
As mentioned, membership numbers are crucial, and this has driven some funds to find ways in which to boost those numbers. Incentives, such as discounted gym memberships, movie tickets, and loyalty points are just some of the options that have proved to be effective. It should be borne in mind, however, that while this helps medical aid schemes to remain affordable, these perks must be paid for. Invariably, the only way to do so is for such schemes to curtail some of their core benefits.
Undoubtedly, one of the most successful approaches to this dilemma is that adopted by KeyHealth. Rather than curtailing its members’ benefits, the company has focussed on reducing treatment costs. To do so, it has recruited a network of preferred service providers who, in exchange for captive business, agree to apply preferential rates when treating scheme members. This has not only seen KeyHealth ranked among the most affordable medical aid schemes, but has enabled it to offer some unique and valuable added benefits at no charge.
