Medical aid clients sick of annual hikes
IF Joburg communications consultant Lianne Osterberger hadn’t downgraded her medical aid, her family of four would have been paying more than R10 000 a month in premiums.
A steep, above-inflation increase in her premium forced her and her husband to change to a cheaper medical aid plan. It restricts which hospitals they can use, but it’s a compromise she can live with.
“I couldn’t come to terms with spending over 10K a month for medical aid. It’s a huge amount,” said Osterberger.
Annual medical aid premium increases had been 2% above consumer inflation for the past 16 years, said Casper de Vries, senior actuarial specialist at Alexander Forbes.
Most medical aid premiums increased by between 9% and 10%, with Discovery’s Coastal Core plan up by 14.9%.
Experts say the trend is unsustainable in the long term and even the regulator of medical aids admits the industry needs more young and healthy members.
But people in their 20s cannot afford medical aid.
Osterberger’s decision to leave Discovery’s Classic Comprehensive plan — which for a family of four costs R10 566 a month — and move to the Classic Delta plan for R9 515 a month saves the family more than R1 000 a month.
“The R1 051 is a welcome injection to help pay our other bills, or as an additional contribution to groceries each month,” Osterberger said.
Jill Larkin, head of healthcare consulting at GTC Financial Services, who advises on medical aids, said she had noticed many clients downgradLarkin ing to cheaper plans this year, as she did herself when she realised her premium equalled her car repayments.
“The premiums will eventually outstrip a person’s salary at this rate,” said. But she warned that when consumers cut costs by getting a cheaper plan, they weren’t necessarily saving money. “You carry the risk, you absolutely will pay for more in the end. You will have less money in your day-to-day spending accounts [for GPs and dentists].”
The Government Employees Medical Scheme (Gems) said 50 000 of its 694 262 principal members changed options this year — mostly downwards. The scheme had expected this and designed a plan, Emerald Value Option, with cheaper benefits, restricting members to certain hospitals and forcing them to see GPs before a specialist, to keep the plan cheaper.
Discovery Health Medical Scheme said it had a higher percentage of people buying more expensive plans (3.1%) than downgrading, but the percentage of members downgrading had increased from 2.6% last year to 2.9% this year.
Last year, 1.2% of Bonitas Medical Fund members changed to cheaper plans. This rose to 1.8% this year, said Bonitas CEO Kenneth Marion.
Most consumers stay put on their medical aid, research by the Competition Commission market inquiry last year showed. Only 16% of those surveyed suggested any real commitment to changing the medical aid they were on.
But Damian McHugh, head of health marketing at Momentum Health, warned: “If people aren’t forced to downgrade this year, they will do so in future if these increases carry on.
“If we have another year with 12%14% increases it is going to hit the consumer.”
The strain on medical aid schemes, which have increasing numbers of older and sicker members, is beginning to show.
In 2015, the medical aid industry ran at a R1.2-billion loss, from R500million the year before.
Most medical aid options in 2015 paid out more than they earned in premiums.
But De Vries said that due to the relatively large reserves held by medical aid schemes, the industry remained financially stable.
The increases in premiums are HEALTH KICK: Lianne Osterberger and her family downgraded their medical aid because it became too expensive
You carry the risk, you absolutely will pay for more in the end . . .
partly driven by increased visits to doctors and hospitals.
GEMS principal officer Guni Goolab said that five years ago, one in six people on the medical aid scheme were on chronic medication — it is now one in four.
Elsabé Conradie, spokeswoman for the Council for Medical Schemes, said that rising prices were “definitely a concern. We need membership growth in the younger age [group] to protect the risk pools of medical schemes.”