Want to save on medical aid costs? Choose a smaller scheme
However, GTC has found that the larger schemes are attracting the bulk of new members mainly because of their reputations
Smaller medical schemes are offering consumers better value for money, but have not been as successful as some of the larger schemes in attracting new members, a study by wealth and financial advisory firm GTC has found.
GTC (formerly known as Grant Thornton Capital) released its seventh annual medical aid survey on Wednesday.
The study analysed the rates of 22 open medical schemes, as well as closed scheme Profmed, and a total of 144 plans that were categorised into 11 areas in accordance with the benefits offered.
The survey made use of a micro rating system based on a plan’s competitiveness in relation to others in the same category, and included the company’s solvency. It also provided a standardised comparison and ranking of the choices available to consumers. These ratings were also based on the risk premiums, while the macro ratings focused on size, growth and financial stability of a company.
Smaller schemes with fewer than 1-million members were ranked top of the crop.
Head of healthcare consulting Jillian Larkan said the smaller schemes generally had large reserves and so their solvency levels were quite high, allowing them to lower their premiums to attract new members.
"Individual members look mainly at risk premiums," Larkan said. "Fedhealth is one of the schemes that has performed consistently well in the micro ratings, indicating that it is very competitively priced and can offer consumers good value for money," Larkan said.
Other ratings top scorers were the Makoti, Topmed and CompCare wellness medical schemes.
However, Larkan said there was a risk for small schemes that continued to subsidise premiums, as this would eventually lead to negative returns for the businesses if they kept dipping into these funds.
The smaller schemes did not fare as well in the ratings that analyse a company’s net healthcare results.
"The Council of Medical Schemes data shows that net healthcare results of the small companies was not wonderful because they subsidise premiums from their solvency," she said.
The good news for the schemes was the slight increase in membership. However, the larger schemes were able to attract the bulk of new members mainly because of their public reputations.
Discovery, SA’s largest open medical scheme, topped the macro rankings categories, which consider membership, solvency and complaints made against the company.
The number of members, average age and solvency had the largest weighting in the macro rankings report while Hello Peter complaints and year-on-year growth were weighted the least.
GTC said that with this year’s inclusion of multiple additional macro demographic areas, along with the applied weightings on these, the more stable growing schemes have now scored considerably better in the macro rating.
The study also found that consumers were more often than not unaware of their own medical scheme details and entitled benefits, which has resulted in consumers potentially losing out on saving significantly.
Larkan pointed out that even though individual needs changed every year, members remained on the same plans for long periods of time.
"Too many consumers stay on the same plan for years, regardless of how their circumstances or plan’s benefits change. This means consumers tend to pay for benefits they don’t need, or they are unaware of benefits that are no longer provided," Larkan said.
GTC group CEO Gary Mockler said although the survey was a powerful tool in itself, it was not definitive as individuals had personal preferences and priorities.