Growing Healthcare Funding Woes
Rising Mega Gap Claims Signal Growing Healthcare Funding Woes
The South African private healthcare sector is experiencing a worsening funding crisis, highlighted by a surge in mega gap claims (exceeding R50,000). Between 2020 and 2024, these claims increased by 512% in volume and 437% in value, with the average large loss gap claim reaching R63,000. This escalation is attributed to medical schemes reducing benefits, transferring risk to members, and provider costs outpacing inflation. Specialists’ charges can be over 500% higher than medical scheme reimbursements.
Key Trends and Statistics
- Increase in Claims: From 2022 to 2024, large loss claims volumes increased by an average of 35% year-on-year.
- Cost Drivers: Covid-19 and deferred surgeries significantly contributed to a 118% increase in claims value paid in 2021 compared to 2020.
- Age Distribution: While the highest claims (over R200,000) were for ischaemic heart disease in the 50+ age group, the under-49 age group accounts for 23% of large loss claims.
- Claim Distribution:
- 62% of claims fall between R40,000-R60,000
- 30% fall between R61,000-R100,000
- 6% fall between R101,000-R150,000
- 2% fall between R151,000-R210,000* Condition Types: Musculoskeletal conditions account for over 51% of claims, with spinal stenosis being the most common. Cancer and circulatory conditions each represent 10% of large loss claims.
Challenges and Implications
Gap insurance is facing exploitation, with healthcare providers potentially inflating charges upon learning of gap coverage. This threatens the sustainability of gap insurance and could lead to unaffordable premiums. Despite these issues, gap cover remains vital due to deductibles, co-payments, and reimbursement limits in medical schemes. Addressing unregulated provider pricing, benefit erosion, and gap insurance exploitation is crucial to prevent further deepening of the healthcare funding crisis.