Business Day Insights Medical Aid Schemes (June 2021)

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BusinessDay www.businessday.co.za Wednesday 23 June 2021

INSIGHTS

MEDICAL AID SCHEMES

Sector players launch more affordable options Various •products aim to

make medical cover accessible to all, writes Lynette Dicey

T

he hard lockdown imposed in 2020 in a bid to curb the spread of the Covid-19 pandemic resulted in one of the worst economic downturns in SA’s recent history with a 7% contraction in gross domestic product.

For average households, affordability and lasting value have in the past year shot to the top of the priority pile — if they were not there already, says Josua Joubert, CEO and principal officer of CompCare Medical Scheme.

“This is particularly true with regard to health care, which — with the ongoing impact of Covid-19 — is now more important than ever before.”

However, despite the fact many households saw a decline in their overall income, most medical scheme members were loath to give up their private health insurance in the midst of a global health pandemic. Instead, says Damian

Damian McHugh … alternatives.

McHugh, executive head of Marketing at Momentum Health Solutions, if they had no other option, members downgraded to more affordable plans.

Although there remains a great deal of work to be done in ensuring the health care needs of all South Africans are met, Joubert agrees there is a trend towards consumers doing their utmost to keep their health care cover intact.

The cost of private medical scheme cover has long been in the spotlight with medical scheme contributions accounting for the single largest item in the consumer price index. Annual increases for medical scheme contributions are typically above inflation.

Deloitte estimated medical scheme membership would decline by more than 5% in

2020 as a result of constrained household income. Initial indications show a decline that is far less with most schemes reporting significantly lower membership losses.

Health care actuary Ashleigh Theophanides, life sciences and health care leader at Deloitte Africa, reports that membership for the larger medical schemes declined about 2% in 2020 but cautions this figure could be higher in 2021 as the economic downturn typically takes time to reflect.

“The pandemic has resulted in members delaying elective procedures. This has reduced hospitalisation rates which has improved the solvency ratios of schemes, leaving them in a stronger solvency position than pre-pandemic.”

Medical schemes focus on health quality ratios, explains Theophanides. “Ultimately, their aim is to provide the best possible level of care at the lowest possible cost. In the past year some changes have become apparent in the way hospital admissions have occurred, particularly for more acute cases. As a result, some schemes are in discussion with specialist associations to try to understand these drivers and potentially optimise admissions.”

One of the reasons for the high cost of medical scheme

membership is that schemes are legally obliged to provide certain prescribed minimum benefits (PMBs). McHugh explains that the base price of a medical scheme plan is largely fixed to cover these PMBs. This has made it difficult for the medical funding industry to provide products under the Medical Schemes Act for the low-income market.

Momentum Health Solutions is one of many scheme administrators that has elected to launch insurance products which provide more affordable and accessible cover but which fall outside the scope of the Medical Schemes Act. McHugh says demand for these alternative products now exceeds demand for traditional medical cover.

Momentum Health Solutions is not the only company to introduce alternative products that fall beyond the ambit of the act. Last year National HealthCare Group introduced MediClub Connect, a service that uses mobile communications and chat commerce technology to bring the benefits of private medical services to the low-cost segment of the health care market. The product uses WhatsApp prompts to pinpoint potential health care issues and provides members with online access to doctors and nurses, as

well as physical consultations with doctors on referral and prescribed medication for an affordable rate.

Hospital group Netcare, on the other hand, has introduced a number of cost-effective products including an affordable GP consultation voucher and an accident and trauma cover product which guarantees stabilisation at the scene of an accident or trauma event and Netcare 911 transportation to a contracted private hospital. The product includes access to unlimited in-hospital treatment for a defined period. A PrePaid Procedures product, meanwhile, provides for certain medical procedures at an allinclusive cost.

Netcare’s new affordable products aim to address the affordability gap and make it possible for more South Africans to benefit from quality private health care, says Teshlin Akaloo, MD of Netcare’s Innovative Products division.

The Council for Medical Schemes is reviewing these low-cost benefit options, which primarily target low income market segments. It would like to see all products ultimately falling under the ambit of the Medical Schemes Act. Theophanides says her concern is that medical scheme members who are used to a certain level of care and then decide to opt for these low-cost health insurance products could ultimately be disappointed when they discover what they are covered for when compared to the indemnity nature of medical scheme PMB coverage.

“When a consumer decides on an alternative health care product such as hospital health insurance coverage on a perday basis, the criteria to assess these benefits can be quite onerous. It’s vital consumers read the fine print regarding what is covered and when the benefits kicks in, for example, and understand exactly what they are covered for.”

Choose a medical aid to suit your requirements Choosing the right medical aid — one that meets your needs but is still within budget — can be a tricky decision.

Lee Callakoppen, principal officer at Bonitas Medical Fund, says the first step is to analyse your health care needs and establish your priorities.

“Do a quick personal health care needs analysis to determine what cover you need. If you have dependants, factor in their health care needs too. Consider how often you and your family visit a doctor or specialist; what over-thecounter medication or chronic medication you require; chronic conditions such as high blood pressure or diabetes; any specific conditions you may have and how much you tend to spend on dentistry or optometry,” he advises.

Consider which of these expenses were once-off and won’t come up again soon and which are likely to be recurring.

This, he says, will help you decide whether you need a comprehensive medical aid or a hospital plan.

Read the scheme information carefully, he suggests, because benefits vary from plan to plan and it’s important to establish what is and isn’t covered and what additional risk benefits might be available that can potentially provide savings on day-to-day

Lee Callakoppen … analysis. expenses. “Once you understand what is on offer, including any managed care options to manage severe chronic conditions such as cancer, diabetes and HIV/AIDS, you can make an informed comparison and decision.”

Other considerations include the savings and day-to-day benefits being offered, including out-of-hospital expenses such as GP consultations, overthe-counter medicine, dentistry and optometry.

“Most schemes will suggest ways to maximise your benefits. This could require you to use a specific GP, hospital network or designated service providers (DSPs) with whom the scheme has negotiated special rates.” He advises checking the designated network in your area before making a final decision.

Something else to consider

is whether you must be referred to a specialist by your GP, and whether your medical aid offers additional GP consultations after you have exhausted your dayto-day benefits.

Most schemes have started to embrace technology and virtual care. Check that the scheme and plan you are considering allows you to access your benefits and medical information 24/7.

If you have children, look out for what child illness benefits are included, as well as maternity benefits if you are planning to start a family. If you are older, look for plans that cover chronic conditions and will cover you in the event of hospitalisation.

From an affordability perspective, says Callakoppen, the rule of thumb is that your medical plan contributions should not exceed 10% of your monthly income. Don’t forget to factor in the cost of medical aid co-payments. He also advises enquiring about the scheme’s rules around waiting periods and exclusions.

“Navigating the complex medical aid landscape can be challenging so consider using a broker. A broker won’t cost you anything but will help you work your way through the different options and help you to choose the medical aid plan best suited to you and your family’s needs.”

Pandemic highlights value of cover Medical aid cover has long been considered a grudge purchase — even more so than car insurance. The Covid-19 pandemic, however, has illustrated yet again just how important medical scheme cover is.

As principal officer of Medshield Medical Scheme, Thoneshan Naidoo points out if you are in a car accident it’s a relatively simply exercise to repair or replace the car. A human life, on the other hand, is not replaceable.

He reveals that in 2020 Medshield’s top 10 claiming

patients collectively cost the scheme R29m in claims. The biggest claim — R7.4m — was from a 56-year-old member who developed complications as a result of Covid-19. All costs associated with a Covid-19 diagnosis are covered by the scheme’s prescribed minimum benefits (PMB) so the member was fully covered. This is despite the fact the member was covered by Medshield’s Medi-Value plan which costs just over R2,000 a month.

“The reality is most people won’t have this kind of money to pay for a catastrophic health

care event which is when the real value of a medical scheme becomes apparent,” says Naidoo. “By pooling all member contributions schemes are able to afford claims of this size.”

Medical schemes cover the cost of Covid-19 tests for their members as well as vaccinations. “It’s imperative we get everybody vaccinated as quickly as possible to curb the spread of the virus,” he says, adding that the vaccine rollout has been a good example of the public and private health care sectors successfully working together.

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BusinessDay www.businessday.co.za Wednesday 23 June 2021

INSIGHTS: MEDICAL AID SCHEMES

Better fulfilling patients’ needs There’s nothing like a global crisis to speed up much-needed change. More sustainable approaches to health care that better fulfil patients’ needs are being driven by the necessity to manage the new challenges Covid-19 presents.

“The claims patterns we observed in 2020 among our medical scheme members with certain types of medical conditions showed a reduction in hospital admissions, with members instead accessing outpatient treatment options where their condition permitted,” says Dr Jacques Snyman, medical advisor to Health Squared medical scheme.

“Health care providers report that patients are concerned about spending time in health care settings unnecessarily due to the risk of Covid-19. As a

result, in many cases doctors and specialists have adapted their services to more closely align with their patients’ needs, particularly if there is no compelling medical requirement for inpatient care,” he says.

FOCUSED ATTENTION

Snyman adds that where outpatient care is feasible, members benefit from followup attention from the provider which may be more focused than is generally possible during hospital rounds. Although this may require the scheme to pay for an additional consultation, it’s often more cost effective in the long run, improves outcomes and significantly reduces the chances of the member experiencing a repeat health event — which has the added benefit of being more

sustainable for the medical scheme.

Hospitals faced severe pressure with the second wave of Covid-19, indicating the level of care available in the acute hospital setting should be reserved for those who really require it, says Snyman.

“When a member has sufficient primary health care benefits, they are less likely to develop more serious health problems in future,” says Snyman. “The need for hospitalisation, for example, can be avoided when a person is kept well with benefits that encourage members to access the health care they need early on in a properly co-ordinated and integrated manner.”

According to Snyman, the general practitioner at primary health care level is ideally placed to co-ordinate health

care as they tend to be more familiar with the individual’s health background. Effective management of those with existing chronic conditions, on the other hand, can significantly reduce the risk of the member developing more severe Covid19 complications.

COST-EFFECTIVE

“While the costs of proactively supporting the health of at-risk members may be a little more in terms of their total cost of care, preventable costs are avoided by keeping members well. This is ultimately more cost-effective for the scheme than if the member’s condition were to progress, potentially causing a serious health event, such as a heart attack.”

The pandemic, he says, has shown we can do things differently and better.

A new approach to benefits model Medical aid is one of those things that is hard to get excited about, but in the midst of the Covid-19 pandemic it’s something that’s more important than ever.

There is widespread acknowledgement the medical aid model is not perfect, particularly when it comes to day-to-day benefits which, for most schemes, is restrictive.

Jeremy Yatt, principal officer of Fedhealth, explains that in a conventional medical scheme members pay a monthly contribution which provides them with two things: risk cover, which protects you in case of accidents, emergencies and diseases like cancer, for example, that require extensive hospitalisation or treatment. The

Jeremy Yatt … affordability. second is day-to-day benefits, which pays for things such as glasses and GP appointments.

“What most people don’t realise is those day-to-day funds are not just free benefits

your medical aid is nice enough to give you — they are literally just a portion of your monthly contribution the scheme sets to one side and then gives back to you to fund these day-to-day expenses,” says Yatt.

“We looked at this age-old model of medical aid and thought, ‘Why should people pay for their day-to-day savings if they haven’t yet used it, or if they don’t even plan to use it?’ It just doesn’t make sense anymore in times like these where affordability is so important to everyone.”

Fedhealth has instead developed MediVault, a complete revolution of how day-to-day benefits are funded, according to Yatt. “Instead of forcing you into a compulsory

loan from the beginning of the year, Fedhealth places a day-today allowance into your MediVault, where it’s always available. Still, you don’t pay for it until you use it. It is only once you start using your MediVault allowance you start repaying it as part of your monthly contribution and, even then, you only pay back the portion you use,” says Yatt.

He reveals Fedhealth’s MediVault solution means members pay a lot less upfront — usually about 25% less than comparable plans — and there is no compromise on the member’s cover quality.

Fedhealth is the only scheme that allows members to pay for their day-to-day benefits only when they use them.

Room for both NHI, private health care

• Long term, medical schemes should function alongside public offerings

T

he Covid-19 pandemic has highlighted the disparities between SA’s private and public health care sectors given that the public health care sector is in a less than optimal state characterised by poor management and planning, insufficient capacity and crumbling infrastructure.

In a bid to provide more equitable health care, government has proposed the introduction of universal health care coverage in the form of a national health insurance (NHI) fund. The challenge, however, is how NHI would be funded, particularly given the constraints of a struggling fiscus.

In a presentation to parliament recently, Simon Nemutandani, president of the Health Professions Council of SA (HPCSA), called for medical scheme reserves — estimated to be more than R90bn — to be transferred to government’s NHI fund. He said NHI should replace all funding mechanisms for health.

Medical schemes have strongly condemned this proposal, pointing out that this move would be illegal and in direct conflict with the Medical Schemes Act. Nematandani’s proposal is counter to the statutory obligations of the Council for Medical Schemes — an autonomous statutory body created to regulate medical schemes in SA — which is intended to protect the interests

Thoneshan Naidoo … world class. of schemes and their members.

Damian McHugh, executive head of marketing at Momentum Health Solutions, explains that medical scheme reserves are owned by the members of the scheme and not the scheme itself.

“Medical schemes are notfor-profit entities which are owned by their members. By law every scheme is required to maintain reserves to be able to afford the health care claims made by members.”

Adding that there is no question the provision of health care in the public sector is far from optimal and needs to be improved, McHugh says he supports initiatives to improve the overall standard of care provided. The provision of universal health care, however, should not be at the expense of the private health care sector.

“The private health care sector reduces reliance on the state for health care services which should be considered a

positive,” he says, adding that a private health care sector can co-exist with NHI. Principal officer at Medshield Medical Scheme, Thoneshan Naidoo, agrees there is space for both. “Public and private health care sectors successfully coexist in countries such as the UK and Australia and there is no reason the same should not be happening in SA,” he says.

The private medical sector, he maintains, is world class and a national treasure and should be protected and nurtured.

The challenge for SA, says Naidoo, will be to find a way to supercharge NHI given that ultimately it will benefit the country as a whole. “There is no question health care has a close correlation to productivity and a country’s gross domestic product. SA can’t prosper without a healthy population.”

SUSTAINABLE

An approach that integrates and co-ordinates public and private delivery of care is more sustainable and will be to the greater benefit of all, says Dr Ryan Noach, CEO of Discovery Health. “In the long term, private health insurance in the form of medical schemes should function alongside the NHI.” Noach agrees with McHugh and Naidoo that the proposal to nationalise medical schemes reserves is unfeasible and unacceptable. “Medical scheme reserves represent the accumulated funds of the members of the schemes which

belong to the members and are held in trust by medical schemes. These are the hardearned private funds of the members paid to schemes from after-tax earnings over and above their tax contributions to the fiscus.”

He says the HPCSA’s comments are not reflected in the NHI Bill or the related policy proposals and there is no legal mechanism for the nationalisation of scheme reserves.

Health care actuary Ashleigh Theophanides, life sciences and health care leader at Deloitte Africa, says that although the role of medical schemes once NHI has been implemented is still not clear, it is unlikely SA can afford to simply do away with them. She agrees that in the same way other countries have a parallel public and private health care sector, there will in all likelihood continue to be a private health care sector for those who can afford it.

“There is no question NHI will offer positives including from a technology perspective in terms of greater interoperability and helping to drive adherence to clinical protocols,” she says. “Given the country’s health care system is short on capacity, health reform will — if done correctly — help to alleviate some constraints and create a more robust and sustainable health care system.

Ultimately, a healthy population is a more productive nation so that has to be our priority.”