FRANK MAGWEGWE: Medical costs a major money stressor for South Africans

Roughly 20 months ago, the Covid-19 pandemic struck and life as we knew it was turned upside down. For many, the pandemic was a huge wake-up call, spotlighting our financial and physical vulnerability. The security of knowing that if you did catch the virus you would get access to private healthcare was just not there for most South Africans. Medical scheme premiums are simply out of reach for most of the nation — in fact only 15.2% of our population have it.

How big an effect does the high cost of medical care have on South Africans? Surveys consistently place medical costs as one of the top two money stressors. First is debt and second is medical expenses. And the two are often co-dependent, because up to 70% of South Africans don’t have an adequate emergency fund, which means when something unplanned happens they must borrow money to pay for medical expenses, which puts them in debt — debt that they struggle to get out of.

The impact of the prohibitively high cost of healthcare is not just felt in our pockets. We feel it directly in our health too. In my practice as a financial coach and certified financial planner, I frequently hear anecdotally about people skimping on the full medical treatments they need because of the high costs. For instance, seeing a doctor but not filling out the prescription afterwards because the medication is just too costly.

Another trend is for people to downgrade their medical scheme plan because they simply can’t afford the premiums — but at what cost? One single mom shared her story. She “downgraded” her plan to save money. Then a few months later her son’s eyes started acting up. She needed to get him glasses. Her other child needed braces. Unfortunately, he then took a soccer ball to the face and had to have the braces redone.

We don’t have to look far to find evidence of just how tough South Africans have it right now. The 2021found 80% of polled stand-alone retirement funds and participating employers of umbrella funds said their members had experienced a reduction in expected annual increases, a reduction in current pay, or had been forced to take sabbaticals with no pay in addition to retrenchments and liquidations.

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