What to expect from medical aid price hikes in South Africa

While private healthcare in South Africa is very competitive compared to the rest of the world, South Africans are still struggling with the rapid rise in costs, says Profmed chief executive Craig Comrie.

Profmed is a closed medical scheme designed exclusively for graduate professionals in South Africa.

“The issue is that most people tend to use standard inflation measurements such as consumer price inflation (CPI). This is a false equivalency as healthcare costs tend to sit 3% – 4% above inflation every year. This is why the industry references healthcare inflation as a more relevant metric,” Comrie said.

He said there are numerous drivers of healthcare inflation, but every year those drivers change. He cited Covid-19 as a perfect example of how new diseases and new technology drive healthcare inflation.

“At the start of the pandemic we didn’t have the vaccines and luckily they came through relatively quickly. But these came at a cost,” he said. “Where in 2019 there was no Covid-19, in 2020 we had to pay for general treatment, hospital and pharmaceutical costs that we never saw in the previous year.”

Comrie said the cost to research, procure and distribute these treatments form part of what the healthcare industry calls ‘new technology tax’, a typical driver of healthcare inflation.

“Sometimes you can’t predict what is going to drive inflation in healthcare but new technology, like Covid-19 vaccines or new expensive oncology treatments, remain one of the constant drivers. Covid-19 is a reminder that new or old diseases like cancer, need lifesaving investments in new technology.”

Shifting population

Another driver of healthcare inflation comes in the form of population demographics, Comrie said.

“When you have a young population like we do in South Africa, the benefits of fighting a disease like Covid 19 are different to other older countries. We have had fewer deaths despite very large infection rates. This is a result of a younger population however we are seeing an ageing population in the professional market and even the medical scheme market.

“This number of elderly people will continue to increase, which will put further strain on the healthcare system and lead to rising costs.”

According to the WHO’s World Report on Ageing and Health, the proportion of South Africa’s population aged 60 years or older will double from 7.7% to 15.4% of the country’s total population over the next 35 years.

Comrie said age and a growing burden of disease even amongst the younger population are driving people to use healthcare services more regularly than in the past. This will result in growing healthcare inflation, and we must focus on creating a healthier population through preventative measures such as healthy activities and behaviours.

Fewer skills 

Lastly, Comrie noted South Africa now has fewer doctors and specialists which leads to long waiting lists even in the private sector – while these specialists can demand much higher remuneration.

“This is not about the clinic or available hospital facilities but the skills who operate and provide services in these facilities. We are simply not creating enough nurses, doctors, and specialists in our system to actually create more supply of services for people to access.

This sentiment has been echoed by health minister Dr Joe Phaahla, who revealed in parliamentary Q&A that the country currently has a doctor-to-patient ratio of 1 to 3,198.

When compared to 2019, when that ratio was 1 to 1,266, Comrie said the future requires serious intervention to create a wider base of healthcare skills, and unfortunately until this happens healthcare costs will continue to escalate.

“We are always carefully considering the claims we receive and engage regularly with specialists and hospital groups to limit their prices but also to improve their outcomes.”

Issues like hospital-acquired infections, or instances where procedures need to be repeated, are quite carefully monitored and Comrie said medical schemes are in a good position to analyse those performance numbers in a bid to get the best value in terms of healthcare outcomes for members.

“That process is ongoing to analyse claims and trends every month of every year so when we reach the next year we are positioned to tailor-make our benefits so that they are more in line with what people need.”

Despite these efforts, Comrie said the issue of healthcare inflation will continue play a role in price increases.

“All we can do is try our best to identify the problems, find possible solutions and prepare ourselves for the changes that we can predict.”

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What to expect from medical aid price hikes in South Africa