Medical schemes remain unaffordable for many working South Africans. According to Gary Allen, chief executive at Sanlam Health, an individual should not be spending more than 10% of their income on health cover. Considering that a basic hospital plan can set you back R1 800, anyone taking home R17 000 or less a month will find that medical schemes are not an option.
For example, a single parent with a child would pay Bonitas R3 360 for a basic hospital plan.
The high entry costs for medical schemes are driven by the prescribed minimum benefits (PMBs) set out by the Council for Medical Schemes. This requires all medical schemes to cover, and pay in full, the costs charged by medical service providers. This includes 270 life-threatening conditions and 26 chronic illnesses. The cost to cover this list of PMBs is around R820 per member.
While there have been talks about the design of a low-cost medical scheme benefit with a reduced set of PMBs, these have not yet been approved by the council. In its absence, medical insurance has been largely filling the gap for those individuals who earn less than R17 000 a month.
Medical insurance falls under the short- and long-term insurance acts. An agreement was reached with the council, which approved the pricing and design benefit. The idea is that, over time, once the low-cost schemes are approved, these medical insurance offerings will be absorbed into the existing medical scheme structure.
Sanlam this month launched its comprehensive health offering for the retail market under Sanlam Health Solutions, which combines the various elements of medical cover, allowing individuals to find a product that meets their pocket. Its Health Solution includes a medical insurance primary care option, providing for GP visits, medication, pathology, radiology, basic dentistry and optometry, with additional cover available for accidents. The accident benefit includes hospitalisation at a private hospital due to an accident, with cover up to R225 000 per event and an overall annual limit of R1 million.
The cover starts at R420 to R579 for the main member. The monthly premium for a married couple with two children, including the accident benefit, is R1 468, and a single parent with two children would pay R999.
“The affordable health insurance market is where all the growth is happening. It is way outstripping standard medical scheme cover,” says Momentum Health chief marketing officer Damian McHugh, which offers corporate clients an integrated medical insurance offering called Health4Me. “We find that employers use this solution for employees earning less than R30 000 a month.”
TYPE OF MEDICAL INSURANCE
Primary medical insurance focuses mostly on day-to-day benefits such as GP visits, dentistry and medication. It excludes private hospitalisation, although, in some cases, extended cover can be purchased.
Gap cover insurance is bought in conjunction with an existing medical scheme as a top-up for the cost of private hospitalisation and specialists. Many scheme members are opting for entry level hospital plans which they then top-up with gap cover.