Hands up if you’re convinced your medical aid will pay your hospital stay in full?
After all, doesn’t the fineprint say they’ll pay 100%?
But here’s the thing…
It’s almost impossible to compare medical aid schemes. Let’s say for example you’re going in for a burst appendix. How much of your hospital bill will your scheme pay compared to another medical aid scheme? Neither of us will ever know.
What happens then is we base our decision on cost. The conversation goes something like this:
“Scheme A charges R900 a month and covers me for 100% of the scheme rate. Scheme B charges R1, 200 a month for the same thing. Let’s go with scheme A.”
Now this has always bugged me, so when I got the chance to speak to someone at Genesis Medical Scheme about this, I jumped at the opportunity.
Basically I said the following:
“You’re saying you’re the best value for money hospital plan in South Africa, prove it.”
And they did.
I was referred to the GTC report comparing the vast majority of open scheme medical aids in the country. You can download that report in our best hospital plan money can buy article.
Then I wrote on how Genesis Private Choice beat 17 other open hospital plans to offer the best value for money hospital plan in 2015.
By the way, open scheme means that anyone can join. A closed scheme is one where you have to work for a company in order to belong to their scheme.
Then I argued:
“It’s easy to say you offer basic dentistry, but I bet it’s something silly like one filling per person per year.”
And the end result of that was I wrote an article on what makes Genesis Private Choice different from most other hospital plans.
I was about to give up but I had one final question:
The Genesis Private Choice hospital plan sounds great, but…
“Will you guys still be around in a years’ time from now?
I say this, because as I write this article a number of major league medical aid schemes are on solvency watch with the Council of Medical Schemes.
What do I mean by solvency watch?
Medical aid schemes are required to keep 25% of your contributions to the scheme in reserve as a backup. If the percentage drops below that, the Council for Medical Schemes places them on solvency watch.
Why would a scheme’s reserves drop?
If a scheme experiences higher than average claims during a year, then they’ll dip into their reserves to pay these claims. What choice do they have? They can’t turn around to everyone and say, “Okay, we’re increasing our rates because you claimed too much this year.”
So here’s how I see it.
If a medical scheme’s reserves drop to, let’s say 20%; then how on earth do they get back to 25%?
I can think of three ways:
- They can reduce their benefits the following year. In other words you pay more for less
- They can keep the benefits the same but increase their cost to make up the shortfall or
- Claims going forward could dramatically reduce, and in so doing, allow them to close the gap. I wouldn’t count on that though.
You want to be on a scheme with:
- young (meaning healthy) members,
- fewer pensioners, and
- Healthy reserves.
Here’s how Genesis Medical Scheme stacks up against 23 other open schemes:
- Average age is 31.9 Among the 23 open schemes in South Africa they have the sixth youngest membership. They are followed closely by Discovery who comes in at seventh. Interestingly enough, the highest age amongst all schemes comes in at 47.8.
- Their pensioner ratio is 6, 4% placing them in seventh lowest spot overall. Bonitas squeezes in just ahead of them at 6, 0%. The highest ratio amongst all 23 is 28, 3%
- Solvency ratio is – now get this – 145, 1%. They’ve got the highest solvency ratio in SA! The worst solvency ratio amongst the 23 is 9, 4%
- 74, 8% of all contributions received are used to fund claims. This is the lowest amongst all open schemes. The more pensioners you have on a scheme and the higher the average age of your membership, the higher your claims ratio. The highest claims ratio was 103%.
Like you, I’ve never heard of Genesis Medical Scheme before. I’ve always felt more comfortable with the bigger schemes but I have to admit I was pleasantly surprised.
I give the Genesis Private Choice hospital plan a big thumbs up.
Until next time.
The InsuranceFundi team