The stark reality is that the South African private healthcare sector, in its current format, is unsustainable, writes Gary Feldman in Business Day, but restricting medical schemes contribution increases is not the answer to a complex issue.
While the recommendation by the Council for Medical Schemes (CMS) earlier this month that medical aid schemes cap contribution increases at 5.7% has been welcomed in many quarters, this may not be the best idea.
On the face of it, limiting medical aid increases looks like a prudent cost-cutting measure. In reality, it could affect the sustainability of the entire healthcare ecosystem, which includes patients, healthcare providers and funders.
Ideally, both the private and public healthcare systems should be reviewed to devise a system giving all South Africans decent healthcare.
As the industry tries to balance affordability and sustainability, it is crucial it finds ways to manage rising healthcare costs – but restricting contributions to medical aid schemes is a blunt response to a complex, nuanced situation.
Few, if any, schemes will adhere to the proposed 5.7% contribution cap. During the Covid-19 years some of them put through low, and even negative, increases. They changed how they implemented fee increases, including deferring the hikes, dipping into reserves, and announcing delayed increases.
None of those measures is sustainable in the long term. That is because claims have gone back to pre-Covid levels, so schemes will come under severe financial pressure unless they make more realistic increases now.
What type of increases can we expect? As medical inflation is about 3% higher than the consumer price index (CPI), increases of at least CPI plus 3% can be expected. In fact, several medical aids could institute double-digit increases in the coming months to stay abreast of rising costs and claim levels.
Some will justify contribution increases above inflation due to industry-specific cost factors. Hospitals are already increasing prices by 10% or more, for example. It doesn’t help that providers hike their rates by 10% but funders can only increase their contributions 5.7%. That is unsustainable. To ensure the sustainability of schemes, increases of 7%-10% are anticipated.
No trust
The bigger question is what steps should be taken to create a more sustainable, equitable healthcare system. There are about 4.5m registered medical scheme members, and about 9m beneficiaries. That leaves 51 South Africans relying on the public health system.
The elephant in the room is National Health Insurance (NHI). NHI is necessary because every citizen has the right to decent healthcare.
But implementing the NHI faces several challenges. Perhaps the biggest is the low to zero trust in government’s ability to manage one single medical scheme that is 20 times bigger than Discovery.
Then there is the funding, which remains a well-kept secret. We still have no indication of what it will cost, and exactly how it will be funded.
Throw into the mix the chronic shortage of doctors, nurses and facilities, and the mountain facing NHI starts to become evident. Medical schools are still generating the same number of doctors they did 30 years ago, but the population has doubled since then.
Simultaneously, the brain drain is robbing us of the trained medical professionals for which the healthcare system is crying out.
The bottom line is that NHI may not be fully implemented in our lifetimes.
That is not particularly comforting to the average medical aid member, whose main concern is that any increases in contributions are kept as low as possible. Many are already downgrading their plans and options: further increases will only put more pressure on consumer wallets that are already under strain.
Most of the larger schemes have introduced network options to maintain affordability. Other than that, their options are limited. The best thing medical aid members can do is to speak to an informed broker to ensure they get the best coverage for their family’s needs at a price they can afford.
Ultimately, balancing affordability with the provision of quality healthcare requires a holistic approach that recognises the complex relationships between the various stakeholders in the system.
Until then, we will not reduce healthcare costs, let alone ensure a robust and sustainable healthcare ecosystem for all.
• Feldman is executive head of healthcare consulting at NMG Benefits.
See more from MedicalBrief archives:
How medical aid premiums are calculated and spent
Government dodges issue of NHI funding model – DA
BHF back in court over ‘irrational’ blocking of low-cost medical options
CMS caps medical aids price hikes at 5.7% for 2023