Medical aids have released their rates for 2020, and there are increases ahead of inflation.

While it may not seem that way to the end customer, medical aids are locked in a delicate balancing act to maintain a tolerable level of increase and keep private healthcare affordable.

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Medical inflation is currently sitting at between 10.5 percent and 12.5 percent, and yet the average increase in medical aid premiums from the ‘big three’ for 2020 is sitting well below this. Bonitas comes in highest with a median increase of 9.9 percent, while Discovery’s median increase is 9.5 percent and Momentum’s is 8.2 percent.

Unfortunately this ‘tightening of the belt’ comes with reduced cover and more obstacles to overcome. Cover without co-payments has become a thing of the past and more procedures and diagnosis will be subject to sub-limits.

Now more than ever, gap cover is essential to help you extend your cover and avoid incurring significant out of pocket medical expense shortfalls.

Why is medical inflation so high?

Medical inflation is defined as the observed increase in member claims from a medical aid over the previous year. There are a few reasons for this increase, not least of which is the fact that healthcare services are becoming more expensive. More hospitals means more availability of hospital care, but it also means that more people are likely to seek treatment in hospital instead of alternative options, increasing costs. In addition, advances in medical treatments and technologies, while they help save lives, also come with an increased price tag.

Biological cancer treatments and robotic surgeries are some examples that have revolutionised healthcare but also come at significant additional fees.

Adding to this pressure, medical scheme members are using more healthcare services. Claims continue to increase creating pressure on contribution increases. Populations are also ageing, thanks to modern medicine helping us to live longer, and this in turn means that medical scheme members are older and are more likely to require treatment and medication.

The long and short of it is that medical inflation is appreciably higher than the increases that medical schemes have implemented for 2020. It is extremely difficult, in light of this, for medical aids to provide the same level of services as they have in the past. They continue to employ risk management measures to try and keep medical inflation down while also offering affordable premiums and high levels of care.

What are medical aids doing to keep private healthcare affordable?

To combat the price increases, medical schemes have introduced lower cost options that have strict networks of providers that may be used. Co-payments have been increased or have been added where there previously were none. Additional services are now also subject to sub-limits, which means that the medical scheme will pay for them but only up to a defined Rand limit. Medical schemes are also trying to encourage members to make use of lower cost healthcare options such as consultations with nurses prior to GP visits or video calls instead of face to face consultations and use of day clinics for minor procedures

There is also significant effort being expended in reducing medical fraud from all sides. This is a contribution factor to contribution increases and is therefore a focus for medical aids.

While medical aids are maintaining and in certain instances increasing their annual limits, medical inflation continues to rise, necessitating strict risk management. This means that medical scheme members are increasingly likely to incur out of pocket medical expense shortfalls – gap cover is absolutely critical in minimising the financial burden.

Why is gap cover more important than ever?

Medical technology innovations and other factors cause medical costs to increase. This means that medical aids are having to adapt by making their networks stricter, imposing additional co-payments and increasing the sub-limits on certain types of cover. In the event of a medical emergency it is increasingly likely that consumers will be left with out of pocket medical expense shortfalls that they will be liable to cover. Gap cover is an economical solution to assist in covering these medical expense shortfalls. It is important to discuss your needs with your financial advisor in order to find a solution that matches both your medical needs and financial limitations.

By Tony Singleton, CEO of Turnberry Management Risk Solutions

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