Healthcare : money talks , but how to pay ?
By Craig Comrie , CEO of Profmed – a medical aid scheme administered by PPS Healthcare Administrators
Private healthcare costs in South Africa are very competitive with rates found across the world . That said , an important question to ask is whether it is worth it to have medical insurance or not .
While the bulk of South Africans relies solely on the public healthcare system , more than eight million citizens are privately insured and look to the private healthcare system for quality care . A further eight million citizens pay for private healthcare from their own pockets and remain outside the traditional medical scheme market .
Yet , most of the privately insured South Africans still struggle with the rapid rise in healthcare costs . The issue is that most people tend to use standard inflation measurements such as consumer price inflation ( CPI ) when calculating at what rate the cost of private healthcare will increase . This is a false equivalency as healthcare costs tend to sit 3 % to 4 % above CPI every year . Therefore , when calculating the increase in this cost , healthcare inflation is a more relevant metric to consider .
There are numerous drivers of healthcare inflation , but every year those drivers shift and change . COVID-19 provides a perfect example of how new diseases and new technology drive healthcare inflation .
At the start of the pandemic we did not have the vaccines but luckily , they came through relatively quickly . However , these came at a cost . Where in 2019 there was no COVID-19 , in 2020 we had to pay for general treatment , hospital and pharmaceutical costs that we never saw in the previous year .
The cost to research , procure and distribute these treatments form part of what the healthcare industry calls “ new technology tax ”, a typical driver of healthcare inflation . Sometimes you cannot predict what is going to drive inflation in healthcare but new technology , like COVID-19 vaccines or new expensive oncology treatments , remain one of the constant drivers . COVID-19 is a reminder that new or old diseases like cancer , need lifesaving investments in new technology .
Another driver of healthcare inflation comes in the form of population demographics . When you have a young population as we do in South Africa , the benefits of fighting a disease like COVID-19 are different to other older countries . We have had fewer deaths despite very large infection rates . This is a
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