By: Andrew Wood | The Unlimited
Only 17% of South Africans are covered by a medical aid scheme, which means that more than 44 million people don’t have access to private medical care. The reason is simple: medical aid scheme contributions are too expensive for the majority of the population, which begs the question – what alternatives are available?
Finance Minister Pravin Gordhan in his budget speech reflected the reality of continuing tough economic times. It also left little doubt that government’s National Health Insurance (NHI) is still a long way from full implementation, with only the basic necessities being addressed for now. The unfortunate reality is that one of the first expenses people tend to cut in a tough economy is insurance – leaving themselves vulnerable to the costs associated with everyday risks such as accidents or illness. Therefore, the need to have cover for unplanned medical and contingent expenses is still very much a reality. Only 17% of South Africans are covered by a medical aid scheme, which means that more than 44 million people don’t have access to private medical care. The reason is simple: medical aid scheme contributions are too expensive for the majority of the population, which begs the question – what alternatives are available? A large percentage of low income earners’ budget is spent on food (29%-34%) and less than 1% is spent on providing for their healthcare requirements. There is little money remaining after expenses. As a result, the only healthcare product a low income earner can afford for their family is a basic hospital cash plan. The maximum amount they can pay for a basic hospital cash plan is typically less than R200 per month, and even this can be a tough ask. Insurance companies should be prioritising this market, because they have limited access to financial services. In the absence of a viable alternative apart from government options, there is a desperate need for low cost insurance products that provide some sort of cover in the event of hospitalisation. The Healthcare Consumer Survey in 2016 highlighted that affordability was the main factor for members leaving medical aid schemes, with 41% of respondents leaving their medical aid due to the high costs. This creates a challenge for individuals who want to make some provision for the direct and indirect expenses associated with a health issue, but also struggle to afford the contributions of the most basic of medical aid plans, which costs about R400 a month for an individual (and much more for a family). South Africans need a safety net that enables them to provide for their health-related expenses but at a fraction of the cost of medical aid schemes. Consumers focus on their short term needs but, it is critical that consumers also take their longer-term requirements into consideration. The lack of awareness regarding the range of available insurance products requires a responsible solution. On the back of an embattled South African economy, affordable health insurance products will continue to play a key role in enabling consumers to make at least some provision for expenses incurred when faced with an accident or illness. It’s therefore critical for South African consumers to understand that insurance is there to protect them from financial loss at any given time, especially for unexpected occurrences – regardless of income bracket. The best approach for consumers, especially those in low to middle income groups, is to educate themselves on available insurance products and services, compare prices and be open to receiving more information.