Rubik’s Cube complexity of choosing a medical scheme
Consumers like to have options, but perhaps not so many
There is a wide range of benefits and contribution rates across open medical scheme options that makes it difficult for members to assess the value for money they will get from any option, a survey of medical schemes released this week shows.
The GTC Medical Aid Survey classifies open schemes and Profmed, the scheme for professionals, into 11 broad categories and compares them on a score derived from contribution rates and scheme sustainability, but there is no accounting in the survey for the differences in benefits that can be crucial to your medical cover.
The survey is proof of the comments in the Competition Commission's recent health market inquiry that a large number of differentiated benefit options makes it difficult for consumers to compare the price and richness of cover of different benefit options.
The inquiry noted that medical scheme members are not able to compare the quality of the providers the medical schemes contract with as there is little or no information on quality available.
Releasing the survey this week, GTC's head of healthcare consulting, Jill Larkan, noted that members and prospective members can use the survey to identify scheme options that may be suitable for them, but to choose the right cover they would need to interrogate the benefit design and value for money it offers given their unique needs.
The survey shows that many medical scheme members who choose to belong to the top options on open medical schemes are spending more than R100000 a year for comprehensive cover for a family of four (two adults and two children).
The contributions on these options as well as what is known as the self-payment gap on the top medical scheme options amount to anything from R61630 a year to R274940 (or about R5135 to R22900 a month).
On all but six of the 21 comprehensive options, the annual contributions exceed R100000.
Comprehensive options typically offer the richest benefits, with the highest reimbursement rates for doctors who treat you in hospital, the highest oncology and other expensive treatment benefits, and the best day-to-day benefits for visits to a GP, optometry, dentistry and medicines.
But members should ask their advisers to do a cost-benefit analysis, as they may be paying a lot but not accessing the full benefits.
If, for example, you have joined a comprehensive medical scheme option because it offers cover for a chronic condition not covered on cheaper options, you should consider the cost of funding that medicine yourself against the difference between contributions on a comprehensive option and those of a cheaper one.
Lower-cost schemes may reimburse doctors who treat you in hospital at a lower rate, but it is possible to insure yourself against this cost with gap cover and to top up your oncology benefits with top-up cover.
However, to determine if you can adequately cover your needs this way, you will need to consider the option benefits and any insurance policy terms carefully.
An independent medical scheme broker can provide a valuable analysis to determine whether you would benefit from complementary insurance cover.
Medical scheme brokers are paid by your medical scheme at a rate of up to 3% of your contributions or R90 plus VAT, so there is no additional cost for you to use a broker.
When releasing the Medical Schemes Amendment Bill recently, Health Minister Aaron Motsoaledi proposed that the role of medical scheme brokers be abolished.
However, the bill does not actually propose that schemes be prevented from paying brokers - it contains proposals to improve disclosure so that you know your scheme is paying a broker on your behalf.
The health market inquiry suggested that members should declare annually if they want to make use of the services of a broker, in which case the scheme will facilitate the payment.
Members who choose not to use a broker should pay a proportionally lower membership fee, the inquiry recommended.
It also recommended that a standardised benefit package be developed for all schemes to address the lack of comparability across options.
The GTC Medical Survey shows that contribution rates for open medical scheme options that offer day-to-day cover through medical savings accounts also vary widely, from R51840 to R202235 (including savings contributions) annually for a family of four.
The monthly contributions for risk benefits only - excluding contributions - vary from R2490 to R14140. Annual amounts available for spending through medical savings accounts range from R3768 to R94000, the survey shows.
It also shows that some options have a second benefit amount for day-to-day medical expenses and the way these operate also varies between schemes, Larkan says.
Hospital plans, which offer only cover for hospital admissions, some major out-of-hospital expenses such as oncology and cover for the prescribed minimum benefits that all schemes must provide, are typically cheaper.
Spoilt for choice
But even in this category, the contribution range is very broad - from R2200 a month for a family of four to more than R12400.
Many entry-level options charge contributions in line with your income, making the differences in contributions on these options even more varied. Members who opt for them need to be aware of benefit exclusions
For example, as a member you may not be aware that the popular Discovery Health KeyCare options, for example, exclude cover for hip, knee, back and neck surgery unless it is required for a fracture, Larkan says.
The health market inquiry noted that the lack of a uniform way of classifying medical scheme options creates confusion. It says the Council for Medical Schemes, brokers, actuaries and administrators all have different ways of classifying options.
Lack of transparency about benefits results in consumers often purchasing an option on the basis of what they can afford without understanding what it covers and with no way to measure the value of what they are receiving.
"Members only really become aware of the details of the products that they purchased - such as the particular medical scheme and benefit option - when they try to claim and usually when the cover is partially paid or not paid at all."