The year ahead threatens to be a difficult one for most South Africans. Finding affordable, high-quality medical aid will be crucial for many in 2023. The last few years have been an exceptional drain on the average family budget. While inflation levels were previously relatively modest, the combined effects of the Covid-19 pandemic and the continuing conflict in Ukraine have left many of the nation’s essential imported goods in short supply, leading to a steep rise in the price of almost everything. A steadily weakening Rand has added further strain to the situation. Unfortunately, like most other industries, the private healthcare sector has also been affected.
Medical schemes can apply to their regulatory body for permission to increase their premiums annually to keep pace with rising costs. However, they can only function effectively with enough members contributing to the cost of claims. Consequently, providing members with the benefits they need while simultaneously attempting to keep premiums affordable can be highly challenging. Nevertheless, the state-funded healthcare service is overburdened and unable to cope with the vast number of patients requiring medical attention. While private doctors and clinics are readily available, most South Africans need financial assistance with the associated higher costs.
How Does Medical Aid Work?
A medical scheme operates on similar lines to a short-term insurance company in that it offers to pay its members a pre-agreed sum for a list of defined contingencies in exchange for a monthly premium. Like the insurers, these schemes must rely on an established statistical principle known as “shared risk” to remain viable. Statistics show that the majority of policyholders or scheme members will make no claims or only relatively minor ones in any given year. Consequently, their premium payments remain available to help meet the more frequent and substantially larger sums claimed by the remainder.
How Does Medical Aid Differ From Short-term Insurance?
In the case of motor insurance, repairs, accidental damage or vehicle replacement are covered to a maximum value, and the policyholder may need to contribute a sum known as the excess. By contrast, a medical scheme must cover its members for innumerable contingencies, for which the cost may vary significantly between service providers. Medical schemes also differ from insurance companies in the following ways:
- A scheme cannot refuse membership: Insurance companies can refuse to cover applicants they believe to be high-risk, such as drivers with a history of multiple accidents. By contrast, a medical aid company must accept all applicants, even if they have a pre-existing illness. Instead, they are permitted to impose a mandatory waiting period before accepting claims relating to the specified condition.
- Schemes may not apply penalties: Typically, a driver who makes an insurance claim will be subject to an automatic premium increase, paying more than other policyholders receiving precisely the same service. Medical schemes must charge all members the same for a given product regardless of their claims history.
- Schemes must provide certain minimum benefits: An act of parliament published in 1998 details a list of prescribed minimum benefits (PMBs) that may be included in all of a company’s products. For example, schemes must cover the full cost of diagnosis, treatment and care of 26 chronic illnesses, including asthma, epilepsy and diabetes. While short-term insurers offer a product known as a hospital cash plan, their regulatory body does not require them to provide these valuable PMBs.
How KeyHealth Handles These Constraints to Provide Quality Medical Aid
Despite the current financial situation, South Africans must have access to affordable cover to protect their health and keep their families safe. KeyHealth has developed several low-cost products to help them provide that vital protection during good times and bad. Let’s take a closer look at three of these:
- Essence: This product is an enhanced hospital plan providing crucial cover for emergencies, unexpected medical costs, early detection tests, conservative dentistry, selected maternity services and listed chronic conditions, including unlimited virtual consultations at cost.
- Origin: This offering is a more comprehensive option which adds to the benefits of Essence with added out-of-hospital cover that includes GP visits, specialist consultations, optical services and some additional dental services.
- Equilibrium: Members have access to a medical savings account for a marginally higher premium, allowing them to choose how they manage their day-to-day expenses.
The above details refer only to the main benefits. All products include access to our Health Booster, Easy-ER and Smart Baby Programme at no charge. You can view more details of our 2023 medical aid lineup here.
