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Discovery delays medical aid contribution increases again

Increases for 2022 will only be implemented from May …
Medical scheme claims are currently depressed because of Covid-19, but Discovery says the trend is temporary and not reflective of underlying medical inflation. Image: Moneyweb

Discovery Health Medical Scheme (DHMS) will again delay the implementation of its annual contribution increases because of “the decline in non-Covid-19 healthcare claims seen over the course of the pandemic,” says Discovery Health CEO Dr Ryan Noach.

Annual contribution increases of 7.9% will only be implemented from May 1 next year. This follows a six-month delay in implementing the increases for this year. Discovery says this makes DHMS the only medical scheme to have deferred contribution increases twice since the onset of the pandemic. It says the contribution relief to members totals over R4 billion.

Noach says: “The deferral of the increases for 2021 and 2022 means that members will have an actual effective increase in total contributions of 2.9% in 2021 and 5.3% during 2022. At the same time, the scheme’s contributions are keeping pace with the medical inflation anticipated once Covid-19 becomes endemic in the healthcare system and avoids the need for increase ‘shocks’ at that time.”

Medical inflation breakdown

The 7.9% estimate for medical inflation in 2022 is comprised of a 4.4% increase in the cost of healthcare services (tariff inflation), a 1.5% increase in claims (utilisation changes) and 3% because of changes in the demographic profile of the medical scheme (demographic risk). Discovery says this is unaffected by Covid-19.

This totals 8.9% and will be offset by a 1% reduction in expected future claims in “benefits derived from risk management and Vitality”.

Noach says the trend of lower healthcare utilisation “has strengthened the scheme’s reserve position relative to regulated solvency requirements”.

Reserves

The scheme has maintained its strong reserve position over 2021 and is projecting solvency to be well above the regulated requirements by the end of the year.

Read: Discovery: Profitable in a pandemic

“While reserve levels remain high, medical schemes must account for the return of non-Covid-19 healthcare demand once Covid-19 becomes a stable, endemic infection. Strong reserve levels are essential to manage short-term Covid-19 spikes, and the return of latent, non-Covid-19 healthcare demand.

“This is why contribution increases must be priced absolutely correctly to allow for expected future healthcare utilisation,” it says.

“Setting contributions lower than medical inflation will result in contributions falling behind claims and lead to ongoing medical scheme losses, ultimately resulting in future contribution ‘shocks’ to maintain sustainability.”

While medical scheme claims are currently depressed because of Covid-19, the trend is temporary and not reflective of underlying medical inflation.

Claims higher between waves

Discovery says the DHMS claims experience for 2021 shows that healthcare claims between Covid-19 waves are higher than pre-pandemic levels.

It says that as an example, between waves of Covid-19 infection, elective surgical admissions such as major joint replacements and cataract surgery have increased to 113% and 120% of pre-Covid-19 levels respectively.

Noach adds: “The claims experience of DHMS provides guidance on the expected future cost of healthcare claims between Covid-19 waves and once Covid-19 becomes endemic.

“The trends imply that medical inflation has persisted at a rate of 3% to 4% above consumer price inflation since 1 January 2020, and that DHMS will be well positioned with contributions at the level of anticipated claims before considering contribution increases for 2023.”

Contribution changes

Discovery has not confirmed the contributions from May onwards, but applying the 7.9% increase to current contributions provides the following estimates. Some of these may end up being R1 or R2 higher or lower.

Main member contribution 2020 2021 July 2021 Estimated contribution from May 2022
Executive Plan R7 257 R7 257 R7 688 R8 295
Classic Comprehensive R5 954 R5 954 R6 309 R6 807
Classic Delta Comprehensive R5 362 R5 362 R5 681 R6 130
Essential Comprehensive R5 003 R5 003 R5 301 R5 720
Essential Delta Comprehensive R4 507 R4 507 R4 775 R5 152
Classic Smart Comprehensive R4 327 R4 327 R4 585 R4 947
Classic Priority R3 814 R3 814 R4 041 R4 360
Essential Priority R3 278 R3 278 R3 472 R3 746
Classic Saver R3 290 R3 290 R3 485 R3 760
Classic Delta Saver R2 628 R2 628 R2 784 R3 004
Essential Saver R2 615 R2 615 R2 770 R2 989
Essential Delta Saver R2 085 R2 085 R2 209 R2 384
Coastal Saver R2 608 R2 608 R2 763 R2 981
Classic Smart R1 954 R1 954 R2 070 R2 234
Essential Smart R1 400 R1 400 R1 483 R1 600
Classic Core R2 449 R2 449 R2 594 R2 799
Classic Delta Core R1 960 R1 960 R2 076 R2 240
Essential Core R2 104 R2 104 R2 229 R2 405
Essential Delta Core R1 681 R1 681 R1 781 R1 922
Coastal Core R1 946 R1 946 R2 062 R2 225
KeyCare Plus R0-8 550 R1 207 R1 207 R1 279 R1 380
KeyCare Plus R8 551-13 800 R1 659 R1 659 R1 758 R1 897
KeyCare Plus R13 801+ R2 450 R2 450 R2 595 R2 800
KeyCare Core R0-8 550 R949 R949 R1 005 R1 084
KeyCare Core R8 551-13 800 R1 183 R1 183 R1 253 R1 352
KeyCare Core R13 801+ R1 809 R1 809 R1 916 R2 067
KeyCare Start R0-9 150 R914 R914 R968 R1 044
KeyCare Start R9 151-13 800 R1 538 R1 538 R1 629 R1 758
KeyCare Start R13 801+ R2 394 R2 394 R2 536 R2 736

Discovery says there has been a reduction in members withdrawing from the DHMS, and an increase in the number of new members joining the scheme.

As at the end of August, the scheme had grown its membership by more than 27 000 lives during 2021.

Listen to Fifi Peters’s interview with Profmed CEO Craig Comrie (or read the transcript here):

COMMENTS   32

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For most South Africans, these medical aid contributions are unaffordable. Only 20% of South Africans have medical aid, which means 80% don’t have access to quality medical care.

There is a huge gap between private and public healthcare in South Africa and it’s only getting worse!

The successful implementation of the NHI is the only solution and it needs to be implemented, as soon as possible. It will lead to equality in health care and provide millions with quality medical care.

Well you not wrong, and as someone that lived under the NHI in the UK for a while, its truly a brilliant system and if we could get it to work here would only benefit everyone.

Sadly we have massive players now like Aspen and co that make more money off more of us being sicker for longer. As well as the billionaire and corporates dont pay enough taxes here is SA to support the system long term. We dont need the ruperts to donate another billion, we need to tax all the overpaid and lucky in SA

Regrettably Hitches this will never work in SA due to the lack of accountability.
Evidence the former Health Minister and getting Digital Vibes on board to embark on NHI communication – the focus from the outset is a new full cookie jar and not ”quality healthcare” He has not been arrested nor charged.
DO NOT EQUATE any form of NHI in SA with that of the UK.

NHI could work here if administered by honest people.

UK NHS 2020 paid out £920 million in compensation for botch medical jobs
Since 2015 £8.2 billion paid out for botched medical jobs

The NHS is far from the panacea for private medical

Like everything for free…its abused and standards fall from indifferent staffing to nepotism and corruption

More doctors at any time are leaving the NHS for stress reasons, primarily for malpractice

>> we need to tax all the overpaid and lucky in SA

This sums up the failure of post revolutionary politics, and the EFF, in South Africa.

There is nothing wrong with the masses other than bad culture and lack of education – why don’t you EFF geniuses focus on education, collaboration and productive habits, instead of having a manifesto that is little other than hate and jealousy.

Economic Freedom Fighter Commissar

More than a third of the S.A population is unemployed. Of those employed, many are remunerated as such, to ill-afford private medical care. That is where the State comes in.
The government is well endowed with financial resources through taxes, to afford each and every single citizen with quality elective public health care.

You claim to be an Economic fighter, i petition an alternative, to rather be an Economic practitioner for once, which requires years of study and professional practice. If Economics principles are respected, there would be no need of NHI. Through tenders, a considerable amount of money is shifted from benefiting the end user(patient) to benefiting anc aristocrats (eff is no different).
You use politics for your perennial nonsensical demands which are enmity against Economic principles. Economics dictates to politics, not the other way around. Economics long told S.A to curb population growth, 30% matric pass is a joke, political stability is a dire need.

You use the poor as a leveraging tool to usurp power from Economics and demand something like NHI.

Pathetic!

If the EFF and ANC handed out Condoms instead of T shirts and Berets we would as a country (coowntree) be able to afford National health !!

The state of public health care is a fore-runner of the NHI.

Managed and administered by incompetents and thieves. Run down state hospitals, disinterested nursing staff overseen by a Minister of Health caught stealing. The provision of ppe is another great example of how the theft (under NHI) will continue unabated.

Cadres cant get the basics right. Basics!

and then they want NHI…

Nothing ensures that the hospitals will be run any better than it is currently.

NHI, Etolls, Increases in Rates and Taxes – all the tools to suck more money out of the system.

This is not about service delivery.

Start by having one child instead of five per family.

We once had a functional state health system but sadly it now resembles our roads — Good luck with NHI – SA just cannot afford it !!

Under your NHI treatment will be equal.

Equally @&#**%

Good! They make billions in profits each year and have made Adrian unjustifiably rich esp when when they a “non profit”, so good I’m glad they not being greedy. We should call out more companies. Always remember if a company is making billions in profits, we losing as society.

You do realise that this company, as well as most others that “make billions” are publicly listed. You are free to invest in their shares if you feel they are unreasonably profitable.

I actually had to register just to say…you have made some dumb comments in the past, but this one takes the cake.

Judging by ur username and comment, I’m gonna assume this is Charlie and Mac typed it out for you!

Ok my dude its not that simple sadly, firstly dont assume people just have cash laying around to buy shares. Then what if the company doesn’t issue dividends? or enough capital to buy enough shares? Good results dont equal the share price going up. Fees. Taxes. Etc etc. Its more complex than the boomer dream of buy shares and get rich with the company.

My claim was these people are rich enough. The poor consumer cant get bleed anymore. I’m happy they taking the bullet. If they didnt their userbase would probably have halved and they know that

The Discovery Health Medical Scheme, to which this article refers, is an independent non-profit scheme subject to the legislation of Medical Schemes Act.

The scheme essentially belongs to the members who contribute to it and is overseen by trustees elected by the members.

Discovery Health, the public listed company, run by Adrian Gore et al, is a separate entity and administers the scheme and is paid a fee per contribution. I would imagine that his wealth comes largely from other Discovery offerings Life, Vitality, Invest etc.

I do not work for Discovery, nor am I a shareholder, nor do I give a tinker’s cuss for either, but I am struck by the assumption people make that Discovery executives (in the building that they don’t own, by the way) are thought to be profiteering from the risk pool, or indeed that medical inflation is anywhere near that of CPI.

Well there’s enough that they “don’t cover” No we don’t cover that. Sorry it’s not covered. In your plan this is not covered. If you wish to purchase additional cover, THEN we can cover it? TADAAAAA THERE IT IS!!!

This is a gun to the head company. Have to have so we rip you off.

My beef is the penalty I was charged when I rejoined. Took a break for financial reasons, now 20 years later that penalty gets increased with my premium every year. There is no sunset clause to the penalty. You are punished for life.

My premium is more than double what it should be.

Whilst I sympathise with your financial reasons for taking a break from contributing to the medical aid fund, remember whilst you were not paying in others were contributing – year in and year out, very often without claiming.

It’s unfair to expect to pay the same in contributions as someone who has not had a break (for however long). That is the nature of the scheme.

One must remember, a hospital plan is not a short term insurance product. The fund belongs to those who contribute to it.

I was out for a year, been punished with increases for the last 20.

If the penalty was applied and frozen that would be a little less painful, but to have it increased every year is plain robbery.

It looks like the ANC/EFF brigade has arrived to pollute the comments

8% increase is still ridiculous! Thieves!!!

I’ve been experiencing the future of SA healthcare firsthand at state hospitals – 3 weeks of waiting in pain in the hospital in order to get surgery post a car accident. During that time, the op was delayed multiple times and mostly just waited in the hospital bed. This is not a healthcare system that anyone with means will ever want to participate in.

Private healthcare may be unaffordable – and will get worse, per the US model – but helps the few/20% that can pay.

No, the NHI won’t help us either and after seeing the above, I’ll never support it in SA. The state hospitals are dysfunctional.

Discovery has lost the plot.

Let use an example of a graduate starting out today, with a R20k p/m salary, at 25 years of age.
Assuming a R2k p/m medical aid.
Assuming he is not particularly ambitious and sticks to his job for 40 years, with inflationary increases.
Assuming he gets married at 35 years, and takes on his wife’s medical aid contributions.

Based on Discovery’s past increases, by the time he hits retirement, his medical aid contribution will be 84% of his salary!!!

Exactly – somebody must pay for their new office in Sandton!

Sadly the same is happening in the USA – Scary stuff

Covid does not save consumers money, even if it saved the fund money.

Would be nice if medical aids paid for covid tests. Family of 5 needing test on way to Botswana and on way back = R10,500.

20 million tests later = not far off R20,000,000,000

But unreasonable Johan to expect someone else to pick up part of your holiday costs : You could always stay at home !!

don’t be like that

or maybe you were sarcastic. Comments need a special font for sarcasm

Guilty consience after twice delaying my PMB refunds.
One took 12 months, 432 emails and the CMS. The next took 100 emails and 3 months.
My current refund is now a month and about 60 mails….and still no payment !

End of comments.

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