Profmed CEO Craig Comrie confronts the rise in medical scheme costs, stating that the best solution lies in an age-old healthcare adage – prevention is better than cure – or in this case – Prevention is better than high costs.
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It’s that time of year again. Medical Scheme cost increases set to stretch the budget of every consumer, leaving consumers in a state of panic. While some indicators such as inflation rates and interest rates appear to be on the decline affordability of healthcare whether you are a member of a medical scheme or paying for healthcare out of pocket, healthcare will continue to drive a significant hole in your pocket. Several major medical schemes are implementing double-digit increases for 2025. It’s not surprising at all that people cry foul, especially as we have endured a cost-of-living crisis the likes of which hasn’t been seen or felt in decades.
As someone deeply embedded in the medical scheme industry, I feel compelled to address these issues and share insights from my experience. Even though Profmed has planned a moderate average increase of 8.4%, there is a good reason for this. Medical Schemes are effectively mutual societies which are owned by their members and therefore do not make profits.
The goal of affordability remains difficult with the growing prevalence of lifestyle related conditions complicated further by the cost of new technology and the diminishing number of doctors and specialists in the marketplace. Even though schemes set the price, the real reason for double-digit increases is far more nuanced and lies in all our courts.
Getting to grips with healthcare inflation
The rising cost of medical schemes is largely driven by healthcare inflation, a trend that cannot be ignored. If current trends in terms of cost-drivers continue, we could see healthcare costs escalate and double every 7 years. A monthly premium today of R1,000 will soar to R2,600 per member in the next decade. This steep increase in healthcare expenses is outpacing incomes and salary inflation, creating an urgent challenge that both medical schemes and their members must address.
The drivers of healthcare inflation are complex and multifaceted. We’re witnessing an increase in the costs of healthcare services, a growing prevalence of chronic illnesses, and the impact of an ageing economically active population. These factors are not just abstract economic data points; they represent real challenges that affect every person in need of healthcare.
So many macroeconomic movements lie outside our control, but the structures of the scheme industry also play a role.
‘Open or closed’ is a good question to ask
Profmed stands out with a strategic advantage as a closed scheme. By targeting “intelligent” people or specifically individuals who have a professionals qualifications means that Profmed’s members are uniquely empowered to actively manage their health, leading to fewer claims and more stable costs over time. Our ability to maintain a lower contribution increase is a testament to the effectiveness of these targeted initiatives.
In contrast, open schemes face a tougher landscape. They must accommodate a much broader demographic, resulting in a wide range of health needs and engagement levels. This diversity often leads to greater variability in claims, making cost control more challenging and leaving open schemes more vulnerable to attracting only those seeking to make claims against the reserves of the medical scheme.
At Profmed, we’ve managed to keep our increases lower by being able to transform the role of medical schemes from mere financial backers to active partners in our members’ healthcare journeys. This means investing in prevention, education, and empowerment. And that’s where the consumer comes in.
Prevention saves lives… and costs
Health literacy is a pivotal element in this equation. Educated and engaged healthcare consumers are better equipped to manage their health effectively, which has proven to significantly reduce the frequency and severity of claims. This is an area where closed schemes like Profmed have an advantage. Our member base generally demonstrates a higher level of health engagement – which makes sense considering the majority of our members are healthcare professionals. However, this cannot remain exclusive to any one group; enhancing health literacy across all strata of society is our ultimate goal.
In 2025, Profmed launches a new digitally driven initiative called Amplify, designed to encourage preventative health behaviours. By incentivising regular health checks and screenings, we’re not only helping our members take charge of their health, but they also mitigate the long-term costs associated with potential chronic diseases and serious health conditions. It’s a simple matter of good health.
For us, and for the schemes industry in general, this proactive approach for our people to live longer and be happy. It is also one mechanism to reduce claims and, consequently, controlling the inflation of healthcare costs.
Healthcare needs to be robust
As we look ahead, the development of the National Health Insurance (NHI) is also a significant factor to consider. While the NHI aims to provide universal healthcare access, it will encounter the same inflationary pressures the vigorous debate about how much it will cost at the start will pale in insignificance to the long-term costs which will escalate beyond what is anticipated due to healthcare inflation. Other national health systems are already buckling under this pressure where healthcare costs escalate well above the rate of revenue from taxes. The result is a curtailment of access and introduction of alternative private healthcare solutions for those able to pay for services hereby removing the burden off the fiscus to fund healthcare for all.
That’s why it’s essential to maintain a robust private healthcare sector to complement public services. Efficient, high-quality private schemes will be vital in ensuring that healthcare remains accessible and effective for all South Africans. In the meantime, we can all, public and private, focus on improving this country’s health literacy.
Ultimately, the value of medical schemes should not be measured solely by the cost of premiums. The true value lies in the support structures, education, and quality of care that schemes can provide. Those who have faced significant health challenges can attest to the peace of mind and security that a reliable healthcare partner offers.
As we navigate these turbulent times, let’s embrace a model of partnership and prevention – it’s the only way we are going to get the costs down while growing a healthier society. By working together, we can confront the challenges of healthcare inflation and ensure that high-quality, sustainable healthcare remains within reach for all South Africans.
