Youth opting out of medical aid signals affordability crisis

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JIMMY MOYAHA: It is personal finance time on a Monday, and we’re looking at the shocking statistics that suggest that fewer and fewer younger people are opting for medical aids, as the cost of medical aid has become increasingly more expensive.

For more on this, I’m joined on the line by the chief executive officer of the Board of Healthcare Funders, Dr Katlego Mothudi, to look at this and see what we make of it.

Dr Mothudi, lovely having you on the show. Thanks so much for taking the time. Certainly a worrying statistic, but I can imagine with the cost of living increasing on all fronts the younger population and those that are starting out in the workplace might have a different view on why medical aid may or may not be important to them.

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DR KATLEGO MOTHUDI: Good evening, Jimmy, and thanks for having [me]. Certainly. But there are other issues that even preceded these observations. When we in the past contemplated structuring of schemes, the concept of social solidarity was bandied about, and in terms of its implementation in our sector there were three anchors.

The first one was to implement a community regime that looked at how we priced the services.

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Secondly, we needed to have mandatory membership.

And then thirdly, we needed to also have risk equalisation, which was to look at utilisation from a ‘disease burden’ perspective.

The latter two were never implemented. Now, what it meant was that as soon as you came of age, or came out of high school, or you started working, you had to rely on your own resources as a young person while your parents maybe would not be able to continue funding your healthcare services. That created this huge problem in that one of the principles of solidarity of the young subsidising the old was immediately removed from the system, and that increased the costing for medical schemes.

Now the issue of unemployment, especially for the youth, is not helping the situation in that those who come off schemes would not be able to afford to buy premiums on their own and the burden increases on those who are registered on schemes.

JIMMY MOYAHA: Doctor Mothudi, speaking of the burdens increasing, I want to look at the controversial yet relevant discussion around National Health Insurance (NHI) has been the hot topic for quite some time, and I want to take a look at how that would fit into the landscape. Because, inasmuch as we are talking about affordability and … increasing affordability, even if we are to look at things like the National Health Insurance Scheme as an alternative to medical schemes, that still needs to be funded. Is there room for that in the current landscape, or do we have a bigger problem we need to address before we can start having that conversation?

DR KATLEGO MOTHUDI: Yes. With the current discussion on how it’s likely to be funded – not by much – because, as per proposed structures, the funding of schemes will be from taxes. And the very people who are on schemes now are the ones who will be given the responsibility of funding the NHI, which means the complication will be almost similar, if not worse, because instead of just looking at nine million people, you’re going to have to look at funding for 63 million people.

So, from a funding perspective, it does not give much relief. What would help is we might just increase the tax base, because we are trying to stretch the rands of people who are already overstretched. What you need is more people who are earning.

So we need to find ways of reducing unemployment – specifically for the youth – so that the number of people who are actually funding healthcare increases. That would significantly reduce the burden for those who are paying.

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JIMMY MOYAHA: Dr Mothudi, before we run out of time, I want to get your thoughts on the importance of what we’re discussing from a healthcare and a coverage perspective. We know that, alongside the cost of the premiums, the cost of medical care when we’re looking at hospitals – both public and private – isn’t coming down.

And so for youth to be sitting there saying, ‘We want access to this, but we don’t have the luxury of access to it’ – where do we start to have the conversation about this not being a luxury and it being a necessity?

DR KATLEGO MOTHUDI: Yes, that’s the basis for discussing universal health coverage. You need to be able to make sure that you fund the relevant care. And we are directed by the WHO (World Health Organization) in that the focus should be on prevention and health promotion, while we will not ignore all the other elements of the healthcare continuum – to restore health where it’s lost, rehabilitation and giving palliative care. But we need to fundamentally structure how healthcare is delivered.

In the private sector now we are hampered by the notion of ‘prescribed minimum benefits’ (PMBs), which are hospital-heavy. You find that the majority of the funding – other than providing for a small list of chronic diseases – the bulk goes towards in-hospital care. And by that time, when you need hospital care, it is actually too late.

So the restructuring needs to look at how we look at implementing preventive care and promoting elements of healthcare to make sure that we do not deal with the more serious aspects of healthcare funding.

JIMMY MOYAHA: Dr Mothudi, healthcare funding is something that is not going to go away anytime soon. It is something that certainly, as we alluded, affects us – whether you’re looking at the young or old. And, regardless of which side of that you sit on, it is probably one of the expenses that comes along and stays along for quite a significant period of time.

How do we start to bridge the gap beyond looking at the economic growth and the job opportunities? How do we start to make healthcare a priority for the youth?

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DR KATLEGO MOTHUDI: There are already things that are on the table. You may remember, Jimmy, a little while ago the Health Market Inquiry – while it looked at the pricing concerns in the private sector – the recommendations were actually valid and things that you could actually start implementing now.

Now the barrier to entry to schemes is actually costs, and one of the discussions that emanated post that – and in fact from as far back as maybe 2015 – is the introduction of what you call the ‘low-cost benefit options’.

That would go a long way into first increasing the number of people who access private healthcare through the schemes, and that would start decreasing the threshold to entry for schemes.

We of course need to review the PMBs, make them lean more towards primary healthcare or preventive – and promoting aspects of healthcare. That would definitely make a dent in the huge challenge of cost increases in healthcare.

JIMMY MOYAHA: Making healthcare more affordable for the youth of South Africa continues to remain a priority, yet continues to remain out of reach for many South Africans.

We’ll leave the conversation on that note. Doctor Katlego Mothudi, chief executive officer of the Board of Healthcare Funders, joined us to take a look at healthcare affordability.

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