For many people living in the United States and Europe ‘medical aid’ is a term used to describe humanitarian health assistance provided to poor third world countries. However in some countries like South Africa, medical aid refers to a type of private health insurance. The cover it provides pays doctors’ fees, hospital costs and medication. The type of policy structure available is typically individual, couple or family cover. Policies require a main member and dependents can be added onto the main member's policy. The cover it provides is intended to provide members and dependents with access to private healthcare without the crippling financial expense.
How does it work?
All the members of a medical aid scheme pool their money together. This money is collected monthly in the form of a premium. If a member requires medical services the money is taken from the fund to pay for this. The basic concept behind a medical aid scheme is that the majority of members will be young and healthy and will pay for the medical expenses of the older, sicklier members who are in the minority. Medical aid schemes also generate additional funds by investing the pooled funds.
The public health system in South Africa is extremely overburdened and is often mismanaged. This means that treatment is often of poor quality even though it is free. The alternative, private healthcare, is very expensive but very high quality. Medical aid schemes allow access to the private healthcare for a nominal monthly fee. Access to these top-class hospitals and doctors would otherwise be out of reach for most South Africans. The monthly premium is calculated based on factors like the amount of cover required, number of dependents, income of the policy holder and age.
Medical Aid vs. Health Insurance
Health insurance and medical aid differ significantly, but are essentially both insurance products, provided by service providers, used to cover medical expenses. Health insurance is a typical insurance type product where cover is paid for and if an incident occurs the claim is paid out. Medical aid is not incident based; it pays for medical services and products on an ongoing basis. Medical aid policies do not mature and do not include the numerous exclusions that health insurance policies have hidden in the small print.
One significant difference is that anyone may join a medical aid scheme regardless of their current health conditions. There is no discrimination as far as access to open medical aids other than a one year restricted cover period. Even if you suffer from HIV or cancer you may join any open medical scheme and enjoy full cover after one year. Health insurance policies typically exclude people from access based on current or past ailments. There are closed medical schemes that restrict access based certain factors like employer and level of education, but none may restrict access based on current or past health.
National Health Insurance
National health insurance is similar to medical aid, but instead of it being an optional purchase, all citizens of a country are required to pay for it via their tax contributions. NHI (national health insurance) currently exists in places like the UK, Canada and Australia. It allows members to use both public and private hospitals and doctors. There has been much debate in countries like South Africa regarding whether optional medical aid schemes or NHI is better. This debate is similar to the universal healthcare debate in the United States and does not seem likely to be decided anytime soon.
For the moment, medical aid schemes are the best option for South Africans who want private healthcare cover.
Stuart Broad is a marketer who works for a number of South African Medical Aid Schemes sites. If you are looking for a budget for medical schemes, he recommends trying to get Medical Aids In South Africa at Cheapmedicalaid.