Looking after the long-term

Blue Chip spoke to Christo Becker, the Principal Officer of the Selfmed Medical Scheme that has served South African families for more than 50 years

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What are the trends you are seeing in the industry today?

Over the last 25 years there has been a consolidation of schemes in the industry and today there are far fewer schemes than was the case even five years ago. There is also a consolidation across the medical aid and the insurance industry, and I believe that this may not be a positive development in the long-term. The not-for-profit focus of a medical aid gives it a different focus than a profit-driven organisation, and the blurring of the two distinctions may prove not to be in the best interests of the member.

How important is medical aid coverage in South Africa today?

The fact that there are very limited resources to provide healthcare remains one of the core issues in South Africa as well as internationally. The State’s facilities are under-resourced and overburdened with the current disease burden and, therefore, access to private healthcare is a non-negotiable. The unfortunate fact of the matter is that South Africans view medical aid as a grudge purchase and only once it is required for a significant health event is the benefit of medical aid realised. In many cases there are members whose claims well exceed their total contributions and, while these events cannot be predicted, it is through the social solidarity principle that Schemes survive and are able to absorb these high cost incidents.

What are people looking for in their medical aid today?

All members want the maximum coverage for the lowest possible premium. There is a focus on the non-healthcare wellness components that come associated with a medical aid and, unfortunately, these do not add value to the long-term positive outcomes of healthcare. A medical scheme is well positioned to create an e-health record that can ensure coordinated care across the different service providers. This will ensure that a member receives medical care that is monitored over a period of time and also curbs the duplication of expensive tests and investigations. A comprehensive medical history that captures all the healthcare data of a member can greatly assist in the early detection of medical conditions.

What concerns you about the current social and economic situation in South Africa?

The only way to improve the current social and economic situation is to expand the economy through growth. The structural hurdles that are manifested in the acrimonious industrial relations and the red tape that makes it near impossible to start a business or to grow a business is central to the slow growth we are currently experiencing. It is concerning that an adverse market reaction to the change in financial minister and an imminent sovereign credit downgrade was required to create the political will to take tangible action. A concerted and sustained effort is required to ensure that South Africa sees the growth required to make a difference to the social and economic situation in South Africa.

How is the economy influencing individual medical memberships and medical strategies?

In the current economic climate our experience is that members either buy down on their medical cover or opt out completely. The reality is that younger, healthier members buy down or opt out, which places an ever-increasing burden on the medical scheme to sustain older or less healthy members. This places an upward pressure on the affordability of the premiums that, in turn, drives out more members and thereby creates a cost spiral that is difficult to break. The rand’s performance against international currencies also increases the costs of both capital and consumable purchases, and these costs are simply transferred down the value chain to the member.

What has been the impact of the medical aid tax changes made by SARS in recent years?

The changes have not substantially impacted on the employees or employers from our point of view, although the tax has slightly increased for higher-income members while it has reduced for lower-income members. The big question that still remains is how National Health Insurance (NHI) is going to influence the private sector and how the Treasury will provide the income that is required. However, this remains unclear and the white paper does not give firm direction in this regard.

How has Selfmed adapted its offerings towards self-funding and affordability to cater for the economic shift towards SMMEs?

The Selfmed options are very well placed in the market and deliver a balance between affordability and benefits, with each option focussed at a different segment of life stage of members. The annual benefit design is a major focus for both the management team and the Board of Trustees, ensuring that benefits are member-focussed while remaining as affordable as possible. In the 2015/16 review, evidence-based preventative benefits were added to ensure that members are protected against seasonal illness as well as the early detection of certain diseases in which early treatment has a significant impact. Some of the benefits added were human papilloma virus inoculation for young female members, which is focussed on the prevention of cervical cancer, flu and pneumonia prevention for members with a higher risk. Examples of this are members with multiple chronic conditions and older members, an active disease management programme for members with multiple chronic conditions, including free clinic and GP visits, free cancer screening for breast cancer and prostate cancer as well.

When you look at captains of industry, top ranking executives and high net worth individuals, what strategies are they implementing for their medical cover and for their families?

In our experience these members remain on the higher-level options as they enter retirement while ensuring that there is adequate cover for dread disease and disability and gap cover. It is estimated that 80% of the entire healthcare spend in a person’s life will be incurred after the age of 60. The current practice of reducing your medical cover after retirement may not be the correct option, although the reasons for this are understood. While keeping the 80% of spend after the age of 60 in mind, it is more prudent to have a lower level of medical cover throughout life while preparing for a more significant spend after retirement. The earlier one can enter a dread disease and disability insurance programme, the lower the premiums will be and you will have less exclusions and penalties levied than if you join later in life.

What’s important to consider in terms of medical cover for people who travel a lot overseas, whether for business or pleasure?

A good medical insurance is imperative for overseas travel. The cost of healthcare is perceived as expensive in South Africa, but if compared to a catastrophic incident such as a heart attack or motor vehicle accident while travelling abroad, the costs could have a significant impact on an individual. It is important to ascertain what medical facilities and level of care is available in the areas that you are travelling to as well as how to access these services. With private healthcare in South Africa, we are used to relative easy access to both emergency and elective care resources, but this may not be an option while travelling. There are several organisations that have extensive experience in ‘travel’ medicine and they will be able to assist you. Do not assume that the medical cover that you have through any insurance – coupled with credit cards or even with travel agencies – are accepted everywhere. Take the time to do the homework before leaving and understand what challenges you might face once you reach your destination.

With over 50 years of history and experience, Selfmed must have built up a strong competitive advantage in the industry?

The decades of experience that Selfmed has, clearly shows that the Scheme exists for its members and is actively focussed on servicing their healthcare needs. Some of our members have been with the Scheme in excess of 20 years and this shows the long-term commitment of the Scheme to the healthcare needs of our members.

We are working hard and looking forward to building a partnership between healthcare providers and members for the next 50 years, and we are doing this by being one of the industry leaders when it comes to member services.

Aside from being 119% reserved, in what ways does Selfmed offer members additional confidence in the Scheme and added value?

The fact that the Scheme is well-reserved gives members the assurance that the Scheme can meet its obligations at all times. There is a fine balance between ensuring long-term sustainability through good reserves and ensuring that contributions do not become unaffordable. As mentioned above, the Scheme has focused on the expansion of benefits during the 2015/16 benefit review, while at the same time keeping the annual increase to a very low 7% across all options. The strong position also allows the Scheme to investigate the application of technology across different industries and to ascertain how these technologies can be adapted to improve the management of individual member health, long-term forecasting based on international research trends, early identification and management of broader health risks and the integration of care across several disparate provider platforms. This will not only afford us a broader picture of individual healthcare needs, but also allow for more effective long-term risk management.

"In the current economic climate, our experience is that members either buy down on their medical cover or opt out completely"

The Scheme is also focused on playing an active role in employee wellbeing. The Scheme can work closely with employers to monitor health trends that could have a long-term impact on the business through the cost of sick leave and disabilities, due to poor health. The Scheme is also in a position to monitor the health trends to identify occupation health and safety risks, and an example of this would be in the instance of an employer whose warehouse staff are clocking up sick days due to lung infections. In such an instance the employer might need to increase the ventilation in the area to firstly prevent sick leave, but also to guard against long-term financial risks due to chronic illness of staff members. These practices can deliver measurable results that will reduce the costs while at the same time improving staff wellbeing.

"The not-for-profit focus of a medical aid gives it a different focus than a profit-driven organisation, and the blurring of the two distinctions may prove not to be in the best interests of the member"

 

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