Health Insurance is proving an invaluable and affordable employee benefit solution
Offering health insurance as an employee benefit is generally one of the most effective steps you can take to attract, retain and reward talent. Employee health benefits also go a long way in increasing productivity through providing access to quality healthcare, boosting morale, and helping shape a positive company culture that’s about caring and investing in your employees.
While medical scheme benefits have been the typical go-to benefits offered to higher-income employees, the reality is that given the economic trajectory in SA’s post-COVID-19 economy, many employees and employers are facing far greater financial constraints than ever before. The high costs of medical scheme membership, with its expensive Prescribed Minimum Benefits (PMB) model, places it out of reach for a huge swathe of South Africa’s working population. A disproportionately huge percentage of South Africa’s working population has no access to quality private health cover at all – only about 15% of South Africans have access to private healthcare according to the Council for Medical Schemes¹, while 85% rely on the heavily over-utilised and under-resourced public healthcare services. This is where health insurance is able to provide a far more affordable solution for employees to access quality healthcare when they need it, and for employers to demonstrate their commitment to employee wellbeing and being an employer of choice.
Where health insurance plays an especially important role in ensuring access to quality primary healthcare, an essential and preventative measure needed to ensure that symptoms don’t deteriorate to more serious conditions that require hospitalisation or surgical and invasive interventions. Here, health insurance serves as an important intervention to unplanned healthcare costs through its support for primary healthcare, such as unlimited GP visits, dental care and so on. From an employer’s perspective, a good primary healthcare plan for employees is a solid investment against unplanned health emergencies that can have a significant impact on productivity and staff absenteeism and morale.
Consider just one example of a scenario where an employee must take an entire day off work simply to see a doctor at a public facility or clinic to refill a chronic script, only to be turned away because a healthcare practitioner is over-subscribed or medical equipment isn’t available. For a person living with a chronic condition such as diabetes, hypertension, HIV and so on, the challenges are exacerbated and repetitive in that this will be their challenge every single month that they need to refill a script or go for their medical check-ups. With an affordable primary health insurance plan, these same employees have access to a designated healthcare provider, at a facility closest to them, on an appointment basis, that’s paid for by their health insurance, and can be done and sorted within hours in terms of the consultation and filling of the prescription.
Over medium to long-term, not having access to quality primary healthcare also has significant financial and productivity implications for employee and employers. Consider the prohibitive cost of a GP consultation – averaging R400+ excluding medication – which sees many low to middle income earners not going for annual check-ups or health screenings, and also ignoring and languishing with symptoms left unchecked. The emotional impact of a serious diagnosis of illness for individuals and families that could have been avoided by attending to symptoms early, and having access to preventative healthcare, is massive, not to mention the repercussions on employment prospects and productivity and the repercussions for a family where a breadwinner is no longer able to earn an income due to their deteriorating health.
Why is health insurance more affordable than medical scheme benefits?
One of the reasons whey medical scheme membership is expensive is that medical aids must provide full cover for a list of treatments and conditions called prescribed minimum benefits (PMBs) which is a major cost driver. These PMBs include 270 in-hospital, life-threatening procedures and 26 listed chronic conditions and these must be covered at cost for all members. This means members pay for these benefits, whether they use them or not. In fact, many medical scheme members may in fact never even need to claim for a PMB event in their lifetime. It is this ‘base’ cost for the PMBs that typically puts medical scheme access out of reach for most lower to middle income earners.
Health insurance does not cover Prescribed Minimum Benefits (PMBs), nor is prescribed to by PMB legislation. Rather, health insurance can specify its benefits and pays out a defined or fixed amount towards them – from a doctor’s visit, to medication, to a hospital procedure, emergency, or accident, up to a fixed sum defined in the policy. This means you don’t have the hard upfront cost for a set of PMBs that you may never actually end up using or needing. From an employer’s perspective, health insurance means that you can build your employee health benefits strategy based on the employee’s actual needs, as well as on what the company and employee can afford.
The reality is that the cost of even an entry level, basic private medical scheme benefit is typically out of reach for millions of workers, and for SMEs who may want to provide such benefits for their staff but simply cannot afford to. Health Insurance works differently and specifies the benefits and pays a fixed sum toward them. Health insurance also works with a designated list of private healthcare providers that you would need to use which helps to keep the cost of cover more affordable.
The benefit of health insurance is that it provides a range of options on cover from basic primary care only options, hospital only options as well as more comprehensive options combining both in and out of hospital benefits. Depending on the option selected, a basic health insurance plan would cover you for primary medical care, including unlimited day-to-day consultations with a GP and acute and chronic medication for a monthly premium of R399/pm for a principal member (*based on Wesmart’s Primary Standard Option 2022 rates). On more comprehensive plans, there is also cover for defined hospital events within stated annual benefit limits including a daily illness and ICU benefit, in-hospital maternity benefits, accident and casualty benefits, specialist consultations and unlimited day-to-day consultations with a GP and acute and chronic medication for a monthly premium of R950/pm for a principal member (*based on Wesmart’s Comprehensive Advanced Option 2022 rates). A comparison of five medical scheme options on the most affordable plans that cover hospital events and some day-to-day cover can range anywhere from R1400 – R1900 (based on one adult principle member.)
On a group scheme basis for employer groups, health insurance provides a much more affordable and quality healthcare solution that employees and employers can more easily afford and access. Securing health insurance for your employees will also most likely be at a better rate than they could secure on an individual basis, and as a group, there’s more leverage and negotiating power to ensure that the money you do spend on insurance is well spent. Being able to offer healthcare benefits like health insurance for lower income workers – who would typically rely on the public health sector – provides a massive safety net where employees can access quality healthcare – and the peace of mind and productivity gains is also a win-win for all concerned.
1: The Medical Schemes Industry in 2020. Found at: https://www.medicalschemes.co.za/the-medical-schemes-industry-in-2020/ [accessed 4 Feb 2022), Download the CMS Industry Report 2020 at https://www.medicalschemes.co.za/industryreport2020/