What can South Africans and their advisers expect from medical aid schemes this year? Get up to date with the latest industry trends.
The medical aid industry is at a crucial turning point, driven by innovative technologies, and an ever-growing need for inclusive and affordable healthcare solutions. As a result, we are witnessing the emergence of a more collaborative ecosystem, as well as partnerships between tech businesses, insurance companies and healthcare providers – those that offer an integrated experience – to align to shifting consumer demands.
In fact, the consolidated number of medical schemes decreased from 144 in 2000 to 72 in 2022 and while the industry overall experienced a 1.17% growth in the number of principal members and a 1.05% growth in the number of beneficiaries over this period, there are several pressure points that continue to challenge the industry.
Compliance, with its evolving regulations and policies, including those related to data protection and member privacy, is high on the list, along with balancing budgets within a tight economic environment. From the consumer side, rising costs, inflation and understanding plan details are challenges that must be met to ensure that suitable plans – for their current and future anticipated medical needs – are selected.
Brokers and the financial advisory market play a critical role in driving information, helping consumers undertake in-depth risk analyses and health assessments, and proposing relevant medical aid options to meet requirements and budgets.
These advisers are usually independent of the medical scheme and can provide an impartial overview of the options available – providing appropriate advice on plans to consider as well as benefit structures.
So, as a financial adviser, here is what you need to know this year to ensure you can continue to consult correctly:
Increased health costs
The cost of providing healthcare cover is increasing faster than the economic growth rate and the consumer price index (CPI). In 2023, according to The Council for Medical Schemes, the actual average contribution growth rate of 6.8% exceeded the projected average CPI of 6.1% by 0.7%. The difference between the increase in the contribution rate of medical schemes and the average increase in the CPI carries significant ramifications for the ongoing affordability of private health services.
As such, making sure that your members understand the intricacies of their plan, or change it when necessary, while still getting the required cover, is crucial to offering value for money. It is no longer just about affordability – it’s about deriving value beyond price.
Encourage personalised prevention
There is also a growing trend towards preventive healthcare. Medical schemes are, therefore, focusing more on wellness programmes, health screenings and preventive measures to reduce downstream/future costs. This also includes recognising the importance of mental health, and providing broader coverage and services, which include access to counselling, psychiatric treatments and support programmes.
Make sure you understand the preventive benefits available via each scheme and undertake regular health screenings. The more consumers understand what is available to them, the less likely they are to neglect potential risks and can take more control of their health. Committing to this does not only prove to be life-saving, but also ensures that their money is not consumed unnecessarily and that the medical scheme is able to safeguard their contributions (reserves) to cover future medical expenses and ensure financial sustainability.
Retaining control while going digital
Now more than ever, consumers are demanding transparency, simplicity and responsiveness when it comes to their medical aid, which means a focus on more digitally integrated platforms for easier access to service, information and support. This means that much of the administrative work can now be done quickly and more efficiently from both sides – encouraging consumers to be more active participants in their health planning. As a result, by utilising digital tools offered by schemes, advisers can refocus on client needs as they are freed from administrative tasks and rather spend their time on where they can add value.
They can also use sophisticated software to get additional information on clients so that they can explore “what if” scenarios, adding different scenarios to their planning suggestions, and then having those collaborative discussions about what the future will look like and mapping products and providers to those needs.
Embracing technological advancements to create an integrated healthcare ecosystem, as well as focusing on delivering innovative health solutions that are competitively priced, will be key.
There is no doubt that the industry is changing. It is going to be a tough year as economic growth remains flat. Disposable income under sustained pressure from high interest rates and inflation, and so-called value-for-money product offerings, as well as being responsive to consumers’ needs will continue to be critical going forward. It is no longer just about being transactional; it’s about making it personal. The role of the adviser has never been more apt to do so.
