Nicolette Dirk, finance writer, justmoney.co.za
There is often a perception that the size of a medical aid is an important deciding-factor when choosing a scheme. But what other factors should you consider?
What do the ‘little’ guys say?
Bigger is not always better, reckons Brian Watson, an executive at Genesis Medical Scheme. “This simple deduction is untrue. It is the solvency ratio and the ability of a medical scheme to pay its members’ medical bills that matter. A ‘smaller’ medical scheme with higher reserves may in fact be ‘bigger’ than a larger scheme with lower reserves,” says Watson.
Heidi Kruger, head of corporate communications for the board of healthcare funders of Southern Africa, says the risk based capital model for reserve requirements should be considered by the Council for Medical Schemes (CMS).
“On the issue of whether premiums are lower in a big scheme, this is not the case in the industry. In fact, often a small, employer-based scheme may have significantly lower premiums than a big, open scheme,” says Kruger.
Under the Medical Schemes Act, schemes must have reserves of at least 25% of the total contributions paid by members in a year.
“The higher the solvency ratio, the greater the ability of the scheme to pay its member’s claims,” explains Watson.
What do bigger schemes say?
Dr Jonathan Broomberg, CEO of Discovery Health, recently claimed that in 2012, Discovery’s top 100 claims would have wiped out Genesis Medical Scheme.
Kruger bigger schemes can often offer members better rates because they have a good network with a big pool of medical professionals.
But Watson says Broomberg’s claims have no statistical basis. “On the basis that 100 claims would wipe out Genesis, each claim would have an average amount of R2.56 million.
Genesis Medical Scheme insures some 20 000 lives and accordingly, 100 of these lives equal 0.5% of the total lives insured.
Discovery Health Medical Scheme insures around 2.4 million lives and if 0.5% of the total submitted claims equalled R2.56 million each, Discovery would have to pay R31 billion. This is nearly four times the sum of money the scheme had in reserves at the end of 2012,” says Watson.
How should you choose your medical aid for next year?
Aleksandra Serwa, spokesperson for the CMS says size should not be a factor.
“You should look if the governance of the scheme is healthy, if they have proper trustees and if they are compliant with the CMS. Also the solvency of the scheme is another important factor to consider,” says Serwa.
Kruger adds that it is important to decide on your budget and assess your family’s needs and what you want your medical scheme to cover.
“Some schemes have high premiums, and more benefits. Others have lower premiums with low day-to-day cover, but good hospital cover. Often, the most affordable benefit options are those which oblige members to access network providers or to follow a referral process when accessing specialists,” says Kruger.
Kruger adds: “Things to consider regarding a network option would be whether there are the relevant specialists in your area, whether the other benefits on the scheme suit your needs and the extent to which there may be co-payments.”
Most medical schemes offer a number of benefit options ranging from fully comprehensive to just hospital benefits. The options offering hospital benefits are good for catastrophic cover, doctor and dentist visits would be paid for by you.
“All options are required to cover the Prescribed Minimum Benefits, which include 271 specific hospital and specialist-based conditions; 25 chronic conditions, such as asthma and hypertension; and all emergency medical conditions, such as accidents which require immediate medical treatment,” says Kruger.
Experts recommend hospital plans if you don’t visit the doctor very often.
“Don’t confuse a hospital plan with a hospital cash back plan. A hospital cash plan is an insurance product and generally does not pay benefits according to the illness for which you have been hospitalised,” says Kruger.
It is also more cost effective to be on the same medical scheme as your spouse and children and to stay within an employer’s scheme than to opt for an open-market medical scheme.
“Many restricted (employer-based) schemes (and some open schemes) charge according to your income but everyone gets the same benefits, whereas open schemes often charge a set fee for a certain option irrespective of your income. Certain entry level schemes have a salary ceiling and require proof of income,” says Kruger.
Medical schemes’ average contribution increases for 2014:
• Bonitas: 10,6%(more than 602 000 members)
• Medi Help: 10.1 %(222 000 members)
• Liberty Medical Scheme: 9.5%(more than 52 000 members )
• Discovery health Medical Scheme: 8.9%(2.3 million members)
• FedHealth: 8.9%(more than 152 000 members)
• KeyHealth: 8.9%(more than 81 000 members)
• LA Health: 8.9(more than 97 000 members)
• Bestmed: 8.7%(more than 152 000 members)
• Momentum Health: 7.2%(195 000 members)
• Genesis: 6.4%(more than 20 000 members)