NOMPU SIZIBA: Healthcare cover is very important as we never know when our health situation and that of our loved ones can suddenly change. This is definitely something that needs to be anticipated. If not, one runs the risk of becoming sick and unable to afford to be treated at a good medical facility. But of course the reality is that there is a cost implication in taking whatever cover, and one needs to consider the pros and cons of the options available.
Well, to share his wisdom on the topic, I’m joined on the line by Craig Comrie, the chief executive officer at Profmed. Thanks very much, Craig, for joining us. In your view, the health cover item is the most important in a household’s expenses. Why?
CRAIG COMRIE: One thing it does do for you is provide you peace of mind and surety that you won’t land up without any medical care when you need it most. We have seen medical expenses escalate. I think we have fewer and fewer specialists and medical doctors around, and to get access to them becomes very important. So health cover is the one way you can prepay to get access to what is a very specialised and scarce skill in South Africa.
NOMPU SIZIBA: When people are looking for a good medical aid, how can they be sure that they can trust it?
CRAIG COMRIE: The problem with insurance products is that the only way you can really figure out if you can trust them is once you have to use them. So typically we have probably only 40-50% of medical scheme members utilising their medical cover every year, while you have another portion who may not use it during the year. So the value only comes when you need it most.
We had a youngster in August last year who landed up in a motorcycle accident and, R3.5 million later, after rehabilitation and the necessary care, he made a full recovery. It took him three months of accessing the right doctors, landing in the right hospitals, and then going through the care programme that was designed for him.
NOMPU SIZIBA: Three months and R3.5 million!
CRAIG COMRIE: Yes. A few days in ICU – you’ll be amazed at how much it does cost. I don’t think people are aware of that until they land there. So I always say our best ambassadors for medical schemes are those who have landed in hospital and had to incur some of these high costs.
NOMPU SIZIBA: Just take us through the distinction between “medical aid” schemes and “health insurance” schemes. Which of the two is the best for one to get for one’s family?
CRAIG COMRIE: For family specifically you want something that has comprehensive cover, and medical schemes certainly offer more comprehensive cover. Health insurance pays you an amount per incident, so that cannot directly connect a specific medical condition to what they pay you. For example, they would pay you a few thousand rand if you land up in hospital, depending on the number of days you are in hospital.
So one of the real distinctive factors is in fact the benefit that you will receive. To distinguish between the two, the best way is probably to look at the cost. There are very few medical schemes that can offer healthcare cover below R600 per month for a single member. So what you are looking at is then very possibly health insurance.
Maybe another distinction that you would find between the medical-scheme products and health-insurance products is when you look at the content of your provider. A health insurance provider would make what we call “underwriting profits” – so any profits they make go to their bottom line as the insurer, while in the medical scheme each member of a medical scheme actually owns the scheme. So any surplus left in the medical scheme is there for future expenses as well.
NOMPU SIZIBA: One of the things that medical schemes must be able to do is offer what’s called “prescribed minimum benefits”, or PMBs. Just take us through what those are, and some of the more common conditions they should cover.
CRAIG COMRIE: Your medical scheme options range from what people often refer to as things like a hospital plan up to very comprehensive options which will cover almost anything, any health need that you have. So “prescribed minimum benefits” is defined by the regulator or in the Medical Schemes Act as any emergency medical condition. There are 270 different identifiable conditions usually in hospital, and then 25 chronic conditions as well. So every medical scheme has to at least cover, even on its lowest plan, these prescribed minimum benefits. But they are minimum benefits. Certainly the more comprehensive plans would cover you for a lot more than that.
But it is the assurance an individual has, knowing that this is the cover they have. So if you have been sold something like a hospital plan, please be aware that you are covered – if it’s a medical scheme – in terms of those prescribed minimum benefits. Even your diabetes will be covered on that so-called hospital plan.
NOMPU SIZIBA: Are you penalised when you take on health cover when you are bit older?
CRAIG COMRIE: Yes, you are. The cutoff age is 35. So a lot of people aren’t aware of that, if they join the medical scheme after the age of 35, their contribution or premium will get loaded with what we call “late-joiner penalties”. That could be, depending on your age and how long you haven’t been covered by a medical scheme, anywhere up to 50% added to a normal premium. That you would pay for the rest of your life, even if you swapped medical schemes. What it tries to do in the marketplace is encourage young people to join early rather than later.
It’s also a fairness space, where you have somebody who joined at the age of 25, and contributed to the medical scheme for 10 or 15 years, and then claimed as they got older, [compared to] a person who comes in at 35 and wants to claim immediately. So this is just a safety net for medical schemes and one that should encourage people to get cover and get the right cover while they are still young.
NOMPU SIZIBA: Let’s just go back to the example of that young man that you were talking about – three months in hospital in care, and R3.5 million. If he had had a hospital plan, how far would he have been able to be treated?
CRAIG COMRIE: A lot of the hospital plans – and really it depends on which medical scheme hospital plan you would have been on – in an emergency, and if it is an emergency – would have been covered in full.
So he was in hospital for about 40 days in ICU, and then six weeks after that in rehabilitation and what we call a “step down” facility. Depending on your plan, your hospital stay is usually covered. Your specialist costs, which may include the anaesthetists, may not be covered in full on the plan that you were on. Some of the plans would pay 100% of scheme rate. You get the comprehensive plans which would pay 300% or even the full amount. So there is always a portion of your costs that lands up being payable by you, depending on the option. But in a hospital plan typically you would find about 70% of his costs have been covered.
NOMPU SIZIBA: And at the end of the day, the more comprehensive cover you have, the more you are paying in terms of your premium.
CRAIG COMRIE: Yes. People buy medical scheme cover based on affordability, and often they aren’t checking carefully what the benefits are, so you really need to look at the benefits before you land up in a car accident.
I think what we also have seen is that young people in general don’t buy medical scheme cover. We are encouraging people to get in early, because we’ve seen some of the dread diseases being detected at a lot earlier age in people, and when you don’t have cover that usually is underwritten – which means that you’ll wait 12 months in a medical scheme before the scheme will pay for that type of cover.
NOMPU SIZIBA: You’ve also raised a caution around people taking up medical insurance that gives one loyalty benefits and the like, which are a nice-to-have. But your message is that whatever happens you need to ensure that in the event of anything serious happening to you health-wise, you have adequate cover.
CRAIG COMRIE: What many people do is mistake the free flight and free movie tickets, in terms of whether we cover you in terms of an ICU event. Or, if I think of the premature babies, are they covered in terms of your health insurance product, or is there is a co-payment involved as well?
So people must be careful. The loyalty programmes are very attractive and provide really valuable incentives to behave in a healthier manner, but first check the core benefits that you are purchasing. The loyalty programmes and the frills are paid for from your premiums, undoubtedly.
NOMPU SIZIBA: That’s right. Many thanks, Craig, for your time this evening.