Countries like the US and the UK have been grappling with the costs of public and private healthcare.

Meanwhile, South Africa has notoriously poor access to healthcare. But how do our costs measure up to the rest of the world?

Simply comparing the cost of a procedure in different countries doesn’t take into account different levels of purchasing power. But there are a few other measures we can use for comparison.

Healthcare Portion Of GDP

By looking at how much of the GDP consists of medical costs and services, we can see just how much South Africa’s citizens are paying for medical care.

According to the World Health Organization (WHO), the most recent figures (2014) showed that that the total amount spent on healthcare in SA wasn’t very different to other countries:

• SA: 8.8% of the country’s GDP;
• UK: 9.12%of the country’s GDP.

Government Vs. Private Spending

The differences become apparent when looking at the ratio of private spending on health versus government spending.

• Private spending is 51.76% of the total amount spent;
• Government spending is 48.24% (including funding of public hospitals and government medical workers);
• Medical aids account for 82.8% of private healthcare spending.

This is a stark contrast to countries like the UK.

• 83.14% of medical spending comes from government;
• Only 16.86% is spent by private citizens;
• Medical aids only make up 20.41% of private spending on healthcare.

South Africa Vs. OECD

When looking at Organisation for Economic Co-operation and Development (OECD) countries, our government funding of healthcare falls well below the average.

“The public sector is the main source of health funding in nearly all OECD countries. In South Africa, 48% of health spending was funded by public sources in 2012, much lower than the average of 72% in OECD countries,” a report by the organisation says.

OECD countries include 35 states like Australia, France, Germany, Greece, Latvia and Turkey. Many of these are developed countries.

In terms of government spending on healthcare, South Africa’s is among the lowest of OECD countries, along with Mexico, Chile and the United States.

South Africa Vs The United States

But how does South Africa compare to the United States in terms of how much is spent on healthcare?

Well, spending on healthcare accounts for a large chunk of the US GDP – at a staggering 17.14%.

The stats are very similar to SA:

• Private expenditure accounts for 51.7% of spending on health in the US.
• Government spending accounts for 48.3%. (Where this differs though is that most of the US government spending on health is through social security, which accounts for 88.29% of government spending on healthcare.)
• For private spending, medical aids accounted for 64.2%, which is significantly lower than SA.

But on the other hand, out-of-pocket expenses for private healthcare accounted for 21.37% of total spending. In South Africa, this percentage is only 12.54%. This partly explains why there is a difference between the proportion of spending on medical aids – with more Americans paying out of their own pockets.

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Higher Costs Of Medical Aid In South Africa?

The cost of medical aid plans in South Africa come into focus when you realise how many people they actually cover.

WHO points out that despite a lion’s share of private spending going towards medical aids, these plans only cover 16-17% of the population.

“South Africa spends more on voluntary private health insurance (42%) as a share of total health expenditure than any other country in the world. It serves, however, only 16% of the population,” a report by WHO says.

However in 2014 in the US, only 11.7% of the country’s population didn’t have medical insurance.

So 16% of the SA population’s spending on medical aid accounts for around 43% of total spending on healthcare.

88.3% of the US population’s spending on medical aid only accounts for 33.2% of the country’s total spend.

This implies that the cost of medical plans in South Africa might actually be considerably higher than those in the US, in terms of proportional expenditure.

Considering the sheer number of people who are uninsured in South Africa, it is alarming that medical aids account for so much of spending on healthcare.

Healthcare Spending Per Capita

Here we compare healthcare spending per capita with the salary per capita of residents in each country. This is so we will get a better picture of how much healthcare costs people in relation to their earnings.

Data from the World Bank shows that health expenditure per capita has risen for both the US and SA over the past decade.

• In 2014, SA’s health spending per capita stood at $1 148.
• The US, health spending per capita in 2014 was $9 402.

In terms of gross national income per capita:

• South Africa stood at $12 730
• US was at $55 140.

This shows that for South Africans, health expenditure accounts for around 9% of the average resident’s income. For the US, this figure rises to 17% of the average American’s income.

Global Rankings

Globally, we are ranked at number 63.

This makes our healthcare significantly cheaper than countries like New Zealand, Japan, Russia and Chile.

The global figure for healthcare spending per capita was at $1 272 in 2014, a little above the figure for South Africa.

For OECD members, this figure rises to $4 697.

But we also have to take into account how much of this spending is by government versus private individuals. For example, while Canada is at number 11 in the healthcare spending rankings, over 70% of their healthcare costs are paid by government.

So What Does This Mean?

Healthcare is more expensive in the United States. In fact, the United States is actually the country with the most expensive healthcare in the world.

While South African healthcare isn’t necessarily expensive, quality also comes into consideration. South Africa has long been criticised for its standard of healthcare in public facilities. In order to achieve higher quality, South Africa’s government would have to spend significantly more on healthcare.

The state of our public healthcare is why so many residents who can afford it flock to medical aid. This, of course, allows medical aids to charge higher rates due to the demand.

These medical aid costs have spiked in the past few years. Just in 2017, Discovery Health announced an increase of up to 14.9% for premiums.

While the Competition Commission has been looking into the price of medical aid schemes, this doesn’t address the issue of public healthcare.

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While some terms may seem pretty self-explanatory, there are a few which are bound to leave you completely stumped. You are forgiven, of course, for not understanding what most of the terminology means.

Remember, before you put pen to paper, it is important that your insurance provider has explained to you, word-for-word what the benefits of your health insurance includes and excludes.

It would be disastrous to be struck by an emergency visit to the E.R. only to find you are not covered for any medical procedures that follow.

CLICK BELOW to view our insurance handbook filled with definitions for confusing insurance terms.

16 Medical Aid Terms You Think You Know, But Probably Don’t

Let’s start with the easy ones…

1. Principal Member

This is, of course, the main member of the medical aid fund. It can be a single person, or someone who has one or more dependents on their medical scheme.

The principal member will often pay a larger contribution than their dependents do.

What happens if the principal member dies?

If the main member dies, dependants can usually stay in the fund but would have to select a new principal member between them.

2. Open And Closed Funds

An open fund is a medical aid scheme that is open to anyone who wants to join. In simpler terms, it is the medical aid schemes offered by health insurance providers.

A closed fund gets its name from the fact that it is only available to a certain group of people, i.e.: the employees of a specific company are allowed access to the benefits of the scheme. Not all employees will take a grouped medical aid and may opt for their own medical aid in order to enjoy specific benefits appealing to them.

3. Medical Scheme Tariff

The medical scheme tariff is the amount, in Rands, that your insurance provider will pay for certain procedures or consultations. For example, you go to see your specialist and the consultation fee is R750, but your medical aid option only pays R500 for that particular procedure, you will have to pay what is called the ‘co-payment’ or the difference remaining (R250).

4. Waiting Period

While we like to think we are covered in a medical aid scheme as soon as we join, the reality is that you cannot claim for any daily expenses for the first three months.

If, however, you are joining from another medical aid, you may have access to daily expenses claims immediately. The upside is that as soon as your contract comes into effect, you will have access to emergency medical care, should you be involved in an accident or another type of emergency.

5. Prescribed Minimum Benefit (PMB)

According to the Medical Schemes Act, there is a total of 270 conditions for which all members have to be treated. All medical schemes and hospital plans are bound by this law. Hospital cash-back plans and health insurance products are not governed by the act, which means they do not need to include all 270 conditions in their scheme.

6. Day-To-Day Benefits

As mentioned in ‘Waiting Period’, these are out-of-hospital benefits, such as prescribed medication or monthly supplements. Day-to-day benefits differ greatly from scheme to scheme and from option to option. An easy rule of thumb is that the bigger your contribution, generally, the bigger your cover.

Examples of day-to-day benefits:

• GP visits
• Prescription medication
• Dental treatment
• Optometrist visits

To check your benefits, refer to your benefits schedule for your particular healthcare option.

7. Hospital Plan

A hospital plan does not pay for any out-of-hospital consultation or treatment, and only provides cover in the event of your hospitalisation.

This plan is cheaper than a comprehensive plan as it provides less benefits. A hospital plan will, however, pay for chronic medication prescribed for one of the 27 chronic conditions named in the Medical Schemes Act.

8. Medical Savings Account (MSA)

A percentage of your medical contribution (15% to 25%) will be paid into your medical savings account and is for your day-to-day claims.

If you do not use this money in a 12 month period, it will be transferred into your MSA for the following year. If, by chance, you leave your current medical aid, this money will be paid out to you.

9. Chronic Illness Benefit

If you have one of the 27 listed chronic conditions indicated in the Act, your medical aid must pay for this medication on an ongoing basis.

Some medical aids may require you to use a generic form of a specific medication. Once you have registered your chronic condition with your insurance provider, the cost of the medication will not be taken from your MSA, but from your overall limit allowed (as indicated in your policy).

10. Acute Medicine Benefit

An acute medicine benefit provides cover for all once-off prescriptions, such as an antibiotic for the flu or other types of infection. This is because when an infection clears up, you no longer require medication and, as a result, receive medical compensation.

11. Network Doctors / Hospitals / Designated Service Providers

Medical Aid is no different to any other type of insurance and, as a result, a scheme may have agreements with certain doctors, hospitals, or service providers.

A scheme may require its members to use these services if they do not wish to make co-payments at other out-of-network health providers.

12. Pre-Authorisations

If you have been admitted to a hospital for a specific procedure before, you know that, unless it is a medical emergency, you will have to get pre-authorisation from your fund. Failure to do so may result in your health provider refusing to cover the mentioned procedure.

You should obtain your pre-authorisation at least three days before admission by contacting your scheme administrator.

13. Self-Payment Gap

If you have depleted your medical savings account, you will go into what is called the ‘self-payment gap’. This means you will have to finance all day-to-day medical costs yourself.

14. Clinical Protocols

These are considered to be medically appropriate claims for certain conditions and procedures put together by teams of medical professionals. Your cover is subject to the scheme’s rules and funding guidelines.

15. Overall Annual Limit

This is pretty self-explanatory, but refers to a set amount that is covered by your chosen medical aid scheme. The overall annual limit will include a combination of in and out-of-hospital expenses and their limitations. Some schemes may not have a limit.

16. Ex-Gratia Payment

Ex-gratia is Latin for ‘out of goodwill’. This means, if your benefits for certain things have run out, you can put in a request for payment of further treatment. Your request will be carefully considered according to certain guidelines. Your medical aid scheme is not obliged to grant all ex-gratia payment requests.

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