Uptake of hospital plans increase despite budgets getting tighter

MBOMBELA – As pressure on household incomes grow, interest rates increase and levels of discretionary income decline, more South Africans are looking at ways of trimming their monthly budgets.

One of the first outlays examined is medical aid and the increasing chunk that the service is taking out of household income. Alternatives are now actively being examined and adopted, says Ms Tetiwe Jawuna of Standard Bank Insurance Brokers.

In a recently published survey, the World Health Organisation (WHO) found that South Africans pay more for private healthcare than people living across 20 European countries.

The most startling finding was that although the GDP in each of these European countries exceeded that of South Africa by an average 26 per cent, private healthcare costs are 92 per cent higher in South Africa.

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Households trying to cope with increased financial pressures are therefore looking to alternative ways of addressing the funding gap experienced in their medical aid costs, says Jawuna.

“It is little wonder that, despite local controversy over schemes, hospital plans are becoming increasingly popular.

“Locally, many younger consumers are taking the decision to self-fund their initial medical expenses and then use a hospital plan to provide support if they are hospitalised.

“The monetary benefit is then used to offset costs incurred. Others, primarily heads of households and older consumers,  are opting to downgrade to entry level medical aid options and then supplement this with a hospital plan to cover the gaps that can occur in medical aid benefits.”

She says Standard Insurance Limited received more than 2 500 claims on hospital plans in 2015, a figure which indicates that there is market demand for the product and that it is being utilised to manage costs.”

Other factors identified in the WHO survey are:

• The average stay in hospital after surgery for South Africans is 3.3 days. In Europe it is 4.4 days.
• Private spending on medical aids for 17 per cent of the European population equals 41,85 per cent of all health expenditure in South Africa. This is six times higher than medical aid spending in other countries.
• Private medical care is cheap for 10 per cent of South Africans and is unaffordable for 90 per cent

“The hard truth is that supplementary hospital plans are often the only viable alternative for people seeking the best care they can for their families.

“They therefore represent a form of ‘rainy day’ savings that bring peace of mind to many consumers,” Jawuna concluded.

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