South African consumers see medical aid schemes as “complicated and unfair” – but are generally woefully unaware of the benefits of their plans, let alone the complexities of reimbursement rates, waiting periods, self-payment gaps and co-payments, according to a local market research company.
Tim Matthis, director of TMS30X30, says years of providing research for some of South Africa’s leading medical aid schemes has underlined the importance of ongoing education around the role and benefits of medical aid schemes for battered consumers.
Matthis says recent trends in the medical aid space make it difficult for consumers to be positive about medical aid schemes. Firstly, medical aids raise their premiums each year at a rate which outstrips the CPI (Consumer Price Index) – and in many instances, benefit increases do not keep pace with premium increases, which means in real terms medical aids are offering less value for money.
Secondly, the legal landscape continues to drive changes to what schemes can and can’t do. To maintain compliance, schemes need to create complexities to their offerings which often don’t make sense to consumers.
Lastly, from a re-imbursement rate perspective, there has been more deconsolidation than consolidation, which means that from the consumer’s standpoint, if they move from one scheme to another, there is no consistency.
“Of course, another part of the problem is that most consumers seem to think that a medical aid should pay for everything. This is simply not achievable,” says Matthis. “What medical aids are really there to do is to try to use the collective funds of all of their members to best pay the majority of the claims. There will always be tradeoffs, which means expensive or less important benefits can simply not be funded.”
Consumers also fail to see the difference between medical aid funds and medical aid administrators, leading to a popular misconception that medical aids make excessive profits at the expense of paying the claims of customers.
Matthis explains that every contribution is split into two parts – the member’s contributions and a fee which is paid to the administrator to manage the fund. Usually the admin and the fund have different names, e.g. Bonitas medical aid fund administered by Medscheme.
“Unfortunately, South Africa’s largest administrator, Discovery, has the same name as the largest fund. This leads to confusion. When it is declared that Discovery Holdings has made headline earnings of in excess of R2b, it’s hard to blame the consumer for thinking that somehow this is their money from which they are profiting so grandly,” says Matthis.
Matthis says understanding these fundamentals will go a long way to easing people’s minds about where their premiums are going. “Do your homework and obtain a well-educated advisor before signing on the dotted line. Remember, medical aids are there to help you and believe it or not, are not out to get you,” he says.