In March 2020, the World Health Organisation (WHO) declared the coronavirus disease 2019 (COVID-19) a global pandemic. That has thrown the spotlight on the need for medical scheme benefits and private healthcare during a crisis. However, while consumers recognise the need for private healthcare given the parlous state of public health facilities, they are still at a crossroads as to whether the price paid for medical scheme membership justifies the value and quality received – and much of this hinges on the utilisation experience of each member.
These are just some of the findings in the latest South African Customer Satisfaction Index (SA-csi) for Medical Schemes (2020) conducted by Consulta, which provides highly scientific insights into the overall satisfaction of members of South Africa's largest open medical scheme providers – Bestmed, Bonitas, Discovery, Medihelp, and Momentum. GEMS is the only closed medical scheme included in the survey. Consulta polled 1 826 medical scheme members across the leading schemes by membership numbers.
"The principle of community rating is one of the three core principles that the MSA (Medical Schemes Act) is built on: Based on this principle, schemes charge the same contributions for all beneficiaries irrespective of health status or age. These 'social solidarity' principles of medical schemes mean that all members within a scheme contribute equally to a pool of funds, whether young and healthy or elderly and sickly. It follows that everyone that contributes equally will derive equal utility value from the scheme. On the contrary, the trends observed in the SA-csi over the last five years points to a distinct skew in the satisfaction of members who make use of their medical scheme benefits for one-off, sizeable medical event expenses such as hospitalisation or chronic healthcare needs, versus those that primarily use the scheme benefits to fund day-to-day claims such as GP visits, optometry, and dentistry. The co-payments on day to day benefits represent out-of-pocket expenses that, within a pressured consumer budget, detract significantly from the utility value of medical schemes," explains Ineke Prinsloo, Head of Customer Insights at Consulta.
"Results from our ongoing COVID tracking studies indicated that consumers are looking towards cutting back on expenses and discretionary spending as a result of the pressure on household budgets. With concerns about health care right up there with the economy's state and the ability to earn an income, consumers are reluctant to cut their medical scheme contributions. Combined with an expectation that there will be a substantial increase in healthcare expenses and spend on medicines, consumers' expectations of the value of every rand spent on medical scheme contributions are increasing.
2020 has been the proverbial game-changer for schemes: In the aftermath of COVID and the economic fallout of lock down schemes quickly had to respond to retain contributions, while navigating a strict regulatory framework and scheme rules, to accommodate members who could no longer afford contributions due to interruption in earnings.
October traditionally is the month where schemes announce their updated rates for the next year. For the first time, we have not seen the perfunctory across-the-board above inflation rate increases that have been the norm that scheme members had to absorb. The CMS called upon schemes to cap annual increases at 3.9%, with consumers facing an unprecedented affordability challenge. The major open schemes had different approaches to heed the call, with Momentum the only one to keep to the 3.9% recommendation. This year, there seem to be tangible financial relief for consumers and not, as has been the trend, more options for different affordability categories that have proven counterproductive on perceptions of value for money in the category from results of the index.
Focused yet simple communication is crucial to demonstrate the cover's value, especially for members with a relatively low utilisation experience. The latest SA-csi shows that many members feel trapped and stay with their current provider not out of loyalty, but because they don't see any viable alternative. Given that medical scheme cover can cost 20% or more of monthly disposable household income, and average hyper-inflationary annual increases of 8-10% amidst a jobs bloodbath, it is critical for medical schemes to focus on the customer experience and satisfaction of all members, but especially healthier members who claim less. It is vital to get benefit communications and customer experience on point," adds Ineke.
Consulta conducted this year's SA-csi for Medical Schemes after the arrival of COVID-19 and national lockdown, and this has changed the trajectory somewhat from last year's survey. Given the public healthcare system's disastrous state, private healthcare is viewed as crucial and something that customers do not want to live without, albeit very expensive. The complexity of medical scheme benefits also adds tremendously to the challenge of how medical schemes demonstrate value to a consumer who does not fully grasp the regulatory environment that schemes operate within. This is amplified in consumers with lower or minimal utilisation who feel aggrieved at paying the same as everyone else regardless of usage.
"Across all consumer product/service categories, we are seeing that customers want individual, modularised product, and service solutions that meet their specific needs now. While this is practical to deliver on a simple consumer product like a pay-TV subscription or short term insurance product like motor insurance, which is individually risk-rated, it's not manageable across a medical scheme benefit, which must cover a wide basket of regulated prescribed minimum benefits, all of which come at a fixed cost, regardless of whether members use them or not. Health is also a malleable and an unpredictable fact of life – you may be perfectly healthy today, but an accident or unexpected illness can change all of that tomorrow. Yet medical scheme members still demand curated choices on their medical scheme benefits, which is challenging on a model that is both unpredictable and relies on cross-subsidisation," says Ineke.
"While medical schemes have created lower benefit options to provide greater affordability and flexibility, it has created more complexity and has made the advice process incredibly challenging. As a simple example, while a member may or may not have a clear need for maternity benefits, it gets much trickier with the 'big perils' like cancer and heart disease, which are unpredictable at best. A younger, healthy member may believe that they are not at risk for any of these and thus won't see the value in having the benefits to provide for such an eventuality. However, actuarial statistics clearly show that cancer and heart disease incidence occur in much younger demographics than ever before. Twenty years ago, it was an absolute rarity for a 30-year old to be diagnosed with cancer or suffer a heart attack. Today these lifestyle diseases are increasingly common at younger ages.
"Few consumers understand, without significant counsel and advice, what they are covered for and the value of preparing for the unknown – until they experience a health crisis. The survey shows that the areas where customers (members) are least satisfied revolve around out-of-hospital costs and co-payments on primary healthcare and chronic medicine – essentially the smaller, day-to-day claims. It is this financial education and expectations gap that medical schemes must address if they are to halt the growing discontent among a significant portion of their member base who are crucial for the financial sustainability and viability of the schemes," adds Ineke.