Lowdown on medical aid increases
AFTER a leading medical aid disputed The Herald’s portrayal last week of its increases for next year, Fair and Square asked both the medical aid and the broker who provided the figures, to spell out what the increases mean for the consumer. Port Elizabeth-based Hold Consulting principal Michael Stow supplied increases asked for by 10 leading “open” medical schemes.
Last week, he said he not only stood by his interpretation of the data supplied by them but said the scheme which complained was not alone in using “spread ranges” to put a marketing spin on annual contribution increase.
The Herald reported Medihelp as having the highest median increase for next year, but its media affairs manager said Medihelp’s figure given of 11.7% was “incorrect” and that the correct figure was 10.1%. See the report alongside for the crux of Medihelp’s complaint.
Stow, however, says “the devil lies in the details” because more than three-quarters (77%) of this scheme’s membership will experience increases of 11.7% or higher, which was the figure used on our consumer page.
Stow adds that percentages alone are just a starting point and that on absolute price Medihelp’s Dimension range was more competitive than at first appeared, particularly as they charge for the first two dependent children only.
“However, percentages correctly understood seldom lie about underlying trends – the obligation is on medical schemes to become more transparent in their marketing, if they wish to retain the trust of consumers and the public at large.
“Medical schemes hotly contest each other on contribution increases, given their significance relative to salary increase inflation – for some, an across-the-board increase is equal for all plans, where the ‘average member’ pays the same ‘average increase’ as every other on that scheme.”
Stow said CompCare, Discovery and Fedhealth medical aid schemes do this. For others, different increases are applied to plans with different volumes of membership, leading to different press release interpretations of what their “overall average” contribution increases are. He said Medihelp was among these.
“The ‘median’ increase which we refer to is the percentage increase which members on most plans will experience coming off their salaries or bank accounts next year, while medical aid schemes may choose to average the low and high increases across all plans to produce various kinds of ‘weighted averages’,” Stow said.
This explains the discrepancy between Medihelp’s 10.1% and his conclusion of 11.7%.
To reduce pricing, Stow said, many open schemes introduced “economy discount” versions of their main plans, which limit members to a network of cheaper service providers, typically attracting younger healthier members without the burden of chronic illness.
“Although these options experience lower cost increases, they make up a tiny fraction of the overall membership of a scheme and their rates of increase are not reflective of what ‘most members’ experience.”
This is why Stow stands by his figure of 11.7% for “most members” .
By contrast, only the relatively few young and healthy members who chose Medihelp’s network ‘economy discount’ version of its Dimension option range will receive a premium decrease of -1.3%.
“Lies, damned lies and statistics as Mark Twain put it is perhaps over-simplifying but some open schemes have become too used to using spread ranges to put their best marketing spin on annual contribution increases – using maths and public ignorance of option membership, which they know full well the public will misunderstand.
“Medihelp is far from alone, this approach has in the past been relied upon by others such as Momentum Health.”