The Pros and Cons of Hospital Plans in South Africa
Making adequate provision to cover the cost of healthcare is of vital importance to almost everyone and, in most countries, the government and local authorities attempt to provide a wholly or partially subsidised service for their citizens. However, in South Arica, this is an obligation that has become increasingly more difficult to sustain in the face of rising costs, increased demand and a tax base that is now severely limited by wholesale unemployment.
This, in turn, has meant that many of those who once depended upon the state health service must now turn to the private sector for their treatment and need to invest in options, such as hospital plans or one of the more comprehensive medical aid products, to help them meet the far higher costs involved. Each of these alternatives, however, comes with its own pros and cons and for many of the country’s citizens, it is likely to be the relative monthly cost of these options that will have the most influence upon their choice.
Most medical aid schemes offer a wide range of products and the majority of these will be fairly comprehensive in terms of the benefits that they offer members. In practice the only significant downside to this form of cover is that its monthly premiums are far higher than those of the many hospital plans that have now become available in South Africa.
In the latter category, those products offered by the nation’s long- and short-term insurance companies are invariably the cheapest. However, since all forms of insurance cover, whether for house contents, vehicles or healthcare, rely upon shared risk, policyholders must expect that any benefits to which they are entitled are certain to be limited by the sum that they are prepared to pay as a monthly premium. In the case of the insurance companies, the sole benefit amounts to a fixed daily sum, unrelated to actual healthcare costs and paid only while the policyholder is hospitalised. In practice, these products are more accurately described as hospital cash plans.
Medical aid schemes in South Africa now offer similar products, but these have the advantage of benefits that are directly related to the cost of treatment. Although also only applicable during periods as an in-patient, this type of product is designed to cover anything up to 100% of all costs incurred during a member’s confinement. Another advantage of this option, when purchased from a medical aid, is that it is subject to the provisions of the Council for Medical Schemes (CMS). It must therefore provide cover for all prescribed minimum benefits (PMB) defined by the Medical Schemes Act, even though these may not have been the reason for admission. Insurance companies are not governed by the act and are therefore under no such obligation.
Despite their affordability, hospital plans are simply not suitable for everyone. Medical aid schemes in South Africa intended them, primarily, for young, single individuals with good general health but limited incomes. They offer peace-of-mind in the event of an accident or major surgery for those who can manage to pay cash for the odd GP visit or prescription.
At KeyHealth, however, we have gone the extra mile with an affordable product that adds several year-round benefits to the usual hospital plan.