Is Private Health Care Becoming Unaffordable in South Africa?

In the wake of Medical Aid premium increases announced by some of the biggest medical schemes in South Africa last month, the issue of expensive health care comes to the fore once again. The biggest medical scheme in the country, Discovery Health, announced an average premium increase of 10.2%, while Momentum Health announced an 11% increase, and other schemes are set to follow. With consumers already struggling to afford to pay for private health care, this could only set South Africans back financially more than they already are. Below are the average increases across the industry.

South African’s who are subscribed to medical aid schemes have been subject to remarkably steep premium increases. Between 2005 and 2014, premiums climbed by 50%, higher than the rate of inflation. 2015 and 2016 saw South Africa’s seven biggest schemes implement average rate hikes of between 7.26% and 10.92%. This far exceeded the inflation rate of 6% during these two years. Only 16% of South Africans are currently subscribed to a medical scheme, proving that private health care is largely unaffordable for the majority of the population.

There are numerous reasons for these high increases such as the weak Rand, which impacts the cost of imported medical equipment and imported medication. The lack of regulation allows for private health practitioners and hospitals to charge customers higher rates than what medical aids currently cover. The higher the rates are set, the higher medical schemes have to set their own rates to cover the costs. Some members join a scheme to claim and then leave. Medical aids schemes work on the basis of risk pooling where claims are paid by the contributions received. If members are only contributing for a few months, then claim and resign – this puts a strain on the risk pool. Other reasons include, enhanced consumer awareness of benefits available, pressure on schemes to maintain the required minimum reserve requirements and an increase in disease burden.

Increased premiums result in the need to look at alternative providers and ease the uncertainty of whether a consumer is on the best plan available. Don’t move plans simply because the price is lower on another. It’s important to understand the benefit versus cost differences before switching.

The Competition Commission, a statutory body created to investigate, evaluate and control restrictive business practises in order to promote equality in the South African economy, launched a lengthy inquiry into the increasing costs of private health care in January 2014 and is set to conclude in December with the commission’s preliminary findings.

With numerous speculations circulating as to why private health care has become so expensive for South Africans, it is hoped the commission’s findings will reveal ways in which rates can become more affordable. According to the above eNCA report, the World Health Organisation (WHO) found that South Africa has one of the most expensive private health care systems in the world.