In a cost-of-living crisis, healthcare costs in South Africa have been increasing sharply, posing significant challenges for medical schemes and their members.
Profmed CEO Craig Comrie sheds light on the complexities and factors driving these escalating expenses, emphasising the commitment of medical schemes to prioritise their members’ wellbeing while striving to keep cost increases as low as possible.
Listen as Profmed CE Craig Comrie speaks about Healthcare Inflation on SAFm
The realities of healthcare inflation
Healthcare inflation, a term often used to describe the rising costs associated with medical treatments and services, has become a pressing issue in South Africa. According to Craig Comrie, CEO of Profmed Medical Scheme, a prominent medical scheme serving over 35,000 professionals, these increasing costs have profound implications for both the present and the future of healthcare in South Africa.
“The ever-increasing cost in medical schemes, which is essentially healthcare inflation, is a concerning trend. If we look at current cost trends, it’s projected that in 10 years, the cost could be as high as R2 600 per member per month, compared to the R1 000 today,” notes Comrie. This exponential growth in healthcare expenses far outpaces salary inflation, making it an urgent issue for medical schemes and their members to navigate.
Several factors contribute to the rising healthcare claims costs, according to Comrie. “It’s essential to understand that the cost doesn’t always translate into the price,” he explains. “New medical technologies, treatments, surgical and medical procedures, come at significant costs, driving up healthcare expenses well beyond expected inflationary averages. We have seen amazing advancements in the detection and treatment of cancer. These are often lifesaving or extending, but they come at a cost of millions of Rands.”
However, the primary driver of cost increases, Comrie emphasises, is the growing utilisation of healthcare services. He says South Africa’s young population is paradoxically burdened with a high prevalence of diseases like cancer, cardiovascular and even staples like diabetes and tuberculosis. This consumes a substantial portion of the healthcare budget.
“Another contributing factor is the shift in the average age of South Africans in general. We now have a higher average age, with a rising incidence of obesity, hypertension, cardiovascular disease, and diabetes,” adds Comrie. “These lifestyle-related health conditions are further straining the healthcare system and driving up costs.”
Medical Schemes’ Response to Cost Challenges
As the cost of claims continues to climb, medical schemes are facing unique challenges. Comrie points out that the loss of younger members has a substantial impact on cost increases. “Traditionally, younger members cross-subsidised older members, however due to affordability younger members are joining medical schemes far later in life. The rising unemployment levels means that even graduates are not finding work. This is disrupting the balance where health insurance and medical scheme populations are getting older. For each year a medical scheme ages, this increases the costs on average by 3-5% above inflation,” says Comrie.
In the South African context, this issue differs from many other developing countries where aging populations have been a long-standing concern. South Africa, with a blend of first and third-world economies, necessitates reformation of healthcare in general for medical schemes and those that access public health facilities. The National Health Insurance Bill is an effort to address the problem, however Comrie warns that in its current draft offers little hope of improving the situation.
High-cost medical conditions, such as cancer, present a particular challenge for medical schemes. Comrie highlights efforts to fund smart new drugs that come with substantial costs. Deciding how to allocate limited funding to these high-cost treatments while ensuring others receive necessary care remains a complex issue which drives up medical scheme premiums.
Global Challenge of Rising Healthcare Costs
Comrie emphasises that skyrocketing healthcare costs and unaffordable treatments are not unique to South Africa. “This is a global issue,” he asserts. “Every economy around the world is grappling with the growing healthcare needs with a restricted number of health practitioners that translates to less access to health for citizens who live longer and therefore require more care.”
He points out that healthcare advancements have extended life expectancy significantly. People now live longer, necessitating more extensive healthcare services and treatments. The rising rate of individuals living beyond the age of 100 is adding to this challenge.
Engaging Healthcare Providers to Control Costs
According to Comrie, medical schemes like Profmed, are collaborating with healthcare providers to manage utilisation rather than simply negotiating annual fee increases.
“We engage providers not just on price but on quality of their outcomes, how efficiently and effectively they provide services,” explains Comrie. “Health risk management programmes are also implemented to encourage healthy living and prevent costly healthcare interventions.”
Balancing the need to control costs while providing comprehensive access to medical treatments and services is a central challenge for medical schemes. Comrie emphasises that while cost control is crucial, ensuring members have access to the correct quality services remains a top priority.
“As healthcare expenses surge beyond the reach of salary increases, we stand resolute in our mission to keep cost increases as low as possible. Our dedication to this cause extends beyond cost control; it encompasses innovation, engagement with healthcare providers, and the relentless pursuit of healthier living for all,” Comrie concludes.