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Two new players, with broad distribution and affordable propositions, are looking to disrupt the traditional health insurance market in South Africa.
This will have traditional medical aids looking over their shoulders, particularly the six largest – Discovery (DHMS), Bonitas, Momentum, Medihelp, Bestmed and Fedhealth – which together hold 89% of the open medical scheme market.
These medical insurance offerings, not strictly comparable to traditional medical aid, are mainly targeting the millions of South Africans who do not have access to medical schemes – only 8.9 million do.
But those lower-income earners who perhaps are on medical aid may now seriously consider their options.
This may also hinder growth for medical schemes, as those without substantial needs would surely consider this basic cover instead of even a simple hospital plan.
Medical aids (schemes) are governed and licensed by the Medical Schemes Act (1998). Schemes are not-for-profit entities, accessible to anyone (subject to their rules).
They belong to their members and aim to run a surplus to cover future requirements (to the benefit of their members). Health or medical insurance is an insurance policy, plain and simple.
In practical terms, the cost of treatment will typically be paid directly to the service provider by a medical scheme (from the contributions of members).
With health insurance, policyholders will be paid out an amount which they will then use to settle any health-related bills. This may or may not cover all of their incurred costs.
Medical aid membership in SA has been stagnant for some time, with members actually decreasing by 2% in 2020.
ALSO READ: Medical aid cheaper during Covid-19 pandemic – report
Dis-Chem says 11.8% of South Africans pay for out-of-pocket private healthcare, 2% are covered by medical insurance and 72% access the public health network.
Tauriq Keraan, TymeBank CEO says: “The dire reality is only one in seven South Africans [has] access to medical aid, and most people cannot afford private healthcare.”
The first entry, announced on Wednesday, is Dis-Chem Health, which seeks to fill a gap in what the group terms “affordable and quality private healthcare in an environment where more people are prepared to pay for healthcare”.
The entry into this adjacent market for the pharmacy group follows last year’s R195 million purchase of 25% of Kaelo Holdings, which houses “a complementary portfolio of health assets, including occupational health clinics, the AskNelson psychological wellbeing platform, and the administration of benefit-rich gap and primary health insurance products”.
This was followed a day later by TymeBank, which unveiled TymeHealth. In partnership with National HealthCare Group, it also aims to bring “quality, affordable medical insurance to consumers”.
TymeHealth is an app-based offering that provides medical insurance starting from R139 per month.
Dr Reinder Nauta, executive chair of National HealthCare Group, which provides products to the low-income and emerging segments of the market, says TymeHealth has “unlocked considerable potential in what has previously been unchartered territory”.
To apply for TymeHealth, one needs to be a TymeBank customer (accounts have no monthly fee). The choice of health plan is made in the TymeBank app and, once successful, membership is activated.
Members will be able to access over 12 000 registered healthcare providers, including GPs, pharmacies, dentists, optometrists, specialists and hospitals who are part of the National HealthCare Group provider network.
Currently, there are three TymeHealth plans to choose from:
Details of the plans are available here.
At the basic level, medical advice is provided by qualified nurses and GPs via WhatsApp. At the top end, these are in-person across the network. There are waiting periods for coverage, some of which are fairly lengthy.
Dis-Chem Health’s current plans are:
There are additional cover options available for accident, medical emergency illness and gap cover.
In its policy cover documents, Dis-Chem clearly spells out: “This is not a medical scheme and the cover is not the same as that of a medical scheme. This policy is not a substitute for medical scheme membership.”
At the end of September, Kaelo had 381 000 “lives under management” across gap, primary health insurance and employee wellness cover. At its interim results, Dis-Chem said the offering to the retail market would target the “12.4 million employed [but] uninsured” people in the country.
It says this offering “beneficially positions Dis-Chem in the provision of care in a rapidly evolving primary healthcare landscape and enables vertical integration in the healthcare value chain”.
It sees its 430 in-store clinics across more than 250 stores as “well-positioned as a bridge between the public and private healthcare sectors from both a cost and accessibility perspective”. It adds that these clinics have experienced increased demand for primary healthcare services, indicative of the role of the pharmacy in this space.
Dis-Chem Group CFO Rui Morais says: “The stagnation in medical aid membership has been driven by an increasingly constrained consumer under rising private medical costs, well above inflation rates consistently over the past two decades. This has resulted in more people downgrading to cheaper medical aid plans or cancelling their medical cover all together.
“There is growing demand for medical insurance policies that offer a rich set of day-to-day healthcare benefits.”
There are murmurs in the market that Standard Bank and Liberty may look to enter this space using its Liberty Health platform – it currently offers health insurance cover in 26 markets across the continent (excluding SA).
It is also likely that FNB, which has aggressively entered the life and short-term insurance markets, will soon compete in this segment.
NOW READ: 10 factors to look for in a medical aid scheme
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