Are primary care insurance products good alternatives to medical aid?

SEVERAL high-profile launches of products that provide a level of cover for healthcare at considerably lower costs than traditional medical aid have been in the spotlight recently.

Several leading brands are all taking aim at the same target market – economically active individuals who find medical aid contributions unaffordable.

While it is encouraging to see the insurance and healthcare industries innovating to cater for this significant market segment, these products don’t replace nor have the intention to replace existing medical aids. However, it certainly provides valuable protection at a much lower price point than entrylevel medical aids.

Why is medical aid so pricey?

Legislation requires each medical aid option to provide cover for a list of prescribed minimum benefits (PMBs) that covers a wide range of basic and advanced healthcare benefits. This pool of benefits is expensive, but has to be included. Therefore, no matter which option within a medical aid you choose, this cost, along with administration and other non-healthcare costs, represents a “floor” below which no contribution rate can fall.

Medical aids are non-profit entities (unlike their administrators), and therefore do not benefit from avoiding legitimate claims. However, some people cannot afford medical aid. In fact, medical aid membership declined as a percentage of the total population during the Covid-19 pandemic.

As a result, many businesses are seizing the opportunity to offer some form of medical cover to this large pool of economically active people, who cannot afford medical aid. The products offer a wide range of varying benefits.

Most of these low-cost solutions are insurance products. While all these products claim to have a place in the market, they have limitations – and it’s important to be aware of these.