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 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%, private healthcare costs are 92% higher in our country.
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 Ms Jawuna of Standard Bank Insurance Brokers.
“There is little wonder that, despite local controversy over schemes, hospital plans are becoming increasingly popular,” Ms Jawuna adds.
“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.”
“During 2015, Standard Insurance Limited received more than 2,500 claims on hospital plans, 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% of the European population equals 41.85% of all health expenditure in SA. This is six times higher than medical aid spending in other countries.
- Private medical care is cheap for 10% of South Africans and is unaffordable for 90%.
“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.”