How Medical Aid Costs are Calculated
The medical aid industry in South Africa provides many people with the financial assistance they need when medical emergencies arise. However, the South African medical aid system is far from perfect.
In practice, many South Africans can’t afford the monthly contributions for even basic medical aid plans – and costs continue to rise, putting pressure on those who already have medical aid.
So how are medical aid costs actually determined?
What medical aids have to pay for
Of course, medical aid schemes have to meet their obligations when it comes to settling claims from members. As the prices of medications, treatments and consultations continue to rise, the pressure on medical aid schemes rises too – and this is passed on to members in the form of increased monthly contributions.
In addition, medical aid schemes have to absorb costs associated with:
- fraudulent claims
- new members who join specifically because they know they’ll need money from the pooled fund, before having contributed much to it themselves
- advances in medical technology and its availability, with greater demand for expensive medication and treatments.
Finally, medical aid schemes have to pay their managed care organisations – the groups of people who assist in deciding how best to allocate pooled scheme funds – for their services.
What can be done to stabilise rising medical aid costs?
Everyone involved in the medical aid system has to play a role in managing costs.
Primary healthcare providers need to be better informed about the costs of the treatments they recommend and provide, and how these costs compare to those for alternatives. They should develop treatment protocols that take patients’ medical schemes and financial situations into account.
Medical aid schemes and managed care organisations need to foster positive relationships with healthcare providers, working with them to improve the system. They must also ensure that their members fully understand what cover their medical aid plans entitle them to receive.
Last, members can do themselves a favour by ensuring that they’re sufficiently knowledgeable about their benefits, consider the cost implications of their healthcare choices and manage their own health through proper nutrition, exercise and rest.
About The Author:
The team at IFC are behind the MedicalAid-Quotes.co.za website which provides profiles of South African medical aid schemes, details on their plans, chronic cover and lifestyle benefits programmes as well an online tool to compare different medical aid plans side-by-side. The site is also home to the ‘Medical Aid Blog’ which covers a wide range of health insurance topics.
More info: Medical Aid Comparisons