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Discovery Health’s 2020 medical aid increases

Members can expect to pay up to 11% more ….

Total monthly contributions for plans in the Discovery Health Medical Scheme (DHMS) will increase by between 8.88% and 10.96% for main members from January.

The increases are mostly skewed to the higher-end plans, with those in the Comprehensive range and the Executive plan increasing by very close to 11%. Discovery contends that “Only 19% of members will have the 10.9% increase, while 60% of members will have an 8.9% increase.”
 
One outlier is the lowest income band of the most comprehensive of the entry-level KeyCare plans, KeyCare Plus (R0-R8550), which increases by a similar amount.
With the exception of the Coastal Core plan (9.94%) and Coastal Saver Plan (9.9%), contributions for all other plans will increase by just under 9%. The Classic Comprehensive Zero MSA (no medical savings account) plan falls away. In its place is the Classic Smart Comprehensive plan, also with no medical savings account. Exact differences between the two are not immediately apparent from the pricing table.

Discovery cites a market survey of financial advisors representing over 250 000 lives, which shows that “market expectations are for increases between 10% and 12% across the industry”.
 
“Following the success of its digitally enabled, network-based Smart Series, the Scheme has extended the design to its Comprehensive Series, to offer families attractive options for efficient, affordable comprehensive cover in 2020.”
 

According to a pricing document made available to brokers, the weighted average increase is 9.5%. This takes into account contributions for main members, adults and children. DHMS generally shares price changes publicly in October/November.

Main member monthly contribution 

(per salary range where applicable)

Plan

2019

2020

Increase

Executive Plan

R6 541

R7 257

10.95%

Classic Comprehensive

R5 368

R5 954

10.92%

Classic Delta Comprehensive

R4 834

R5 362

10.92%

Essential Comprehensive

R4 509

R5 003

10.96%

Essential Delta Comprehensive

R4 062

R4 507

10.96%

Classic Smart Comprehensive

R4 327

Classic Priority

R3 501

R3 814

8.94%

Essential Priority

R3 010

R3 278

8.9%

Classic Saver

R3 021

R3 290

8.9%

Classic Delta Saver

R2 412

R2 628

8.96%

Essential Saver

R2 400

R2 615

8.96%

Essential Delta Saver

R1 915

R2 085

8.88%

Coastal Saver

R2 373

R2 608

9.9%

Classic Smart

R1 794

R1 954

8.92%

Essential Smart

R1 285

R1 400

8.95%

Classic Core

R2 248

R2 449

8.94%

Classic Delta Core

R1 799

R1 960

8.95%

Essential Core

R1 931

R2 104

8.96%

Essential Delta Core

R1 543

R1 681

8.94%

Coastal Core

R1 770

R1 946

9.94%

KeyCare Plus R0 – R8 550

R1 088

R1 207

10.94%

KeyCare Plus R8 551 – R13 800

R1 523

R1 659

8.93%

KeyCare Plus R13 801+

R2 249

R2 450

8.94%

KeyCare Core R0 – R8 550

R871

R949

8.96%

KeyCare Core R8 551 – R13 800

R1 086

R1 183

8.93%

KeyCare Core R13 801+

R1 661

R1 809

8.91%

KeyCare Start R0 – R9 150

R839

R914

8.94%

KeyCare Start R9 151 – R13 800

R1 412

R1 538

8.92%

KeyCare Start R13 801+

R2 198

R2 394

8.92%

The detailed contributions document for 2020 is available here.

Last year, DHMS attempted to consolidate the income bands for its entry-level KeyCare plans. On KeyCare Core and KeyCare Plus, it removed the middle income bracket, and on KeyCare Start, it consolidated the lower two brackets. This meant increases of between 20% and 47% for some members. It reversed the plan to consolidate these after a strong backlash. The same brackets as 2019 remain in force next year.

The circular to brokers also reveals that co-payments and deductibles will increase by 9.5%.

 

Given DHMS’s position in the market – it held 56.6% market share of members in September 2018, according to the Council for Medical Schemes – these price changes are far-reaching. It nonetheless continues to grow. In 2018, it added a net 41 193 members, versus a combined 9 048 decline for the next seven largest schemes (Bonitas, Momentum Health, Medihelp, BestMed, Medshield, Fedhealth, and Sizwe).

Read: How taxpayers will cough up for the new NHI

According to its annual results presentation, medical inflation from July 2018 to end-June 2019 was 10.6%. Over the past decade, this has been 10.9%, with both supply and demand-side factors contributing to the rate which is more than double the Consumer Price Index (CPI).

Source: Discovery Health Medical Scheme annual results presentation

Discovery Health estimates total medical inflation for 201at between 10.5% and 12.5%, with the variance due to utilisation trends on the different health plan options. However, risk management by Discovery Health and the ongoing positive impact of Vitality on engaged members’ health, reduce medical inflation by 1.6%, resulting in plan specific contribution increases  between8.9% and 10.9%.”

Because of its size and overall population dynamics, the average age of its member is trending up over time.

Source: Discovery Health Medical Scheme annual results presentation

As members get older, there is an increase in claims. Higher-risk members also drive up demand-side inflation.

* Hilton Tarrant works at YFM. He can still be contacted at hilton@moneyweb.co.za.

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COMMENTS   42

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29 different plans. No wonder no one can explain their plans properly. Are Discovery out to cause confusion when declining claims?

Gore and his pals are NOT causing confusion within the ANC cabinet pal! The ANC will welcome this insane increase as manna from above in their quest for NHI Nirvana.
Discovery scored one hell of an own goal with this cock up.
Are there no adults in the room at Discovery? Seems no. Jeepers, you can’t make this stuff up any more!This should cause a big leg down for Discovery over at the JSE today.

I agree.

Just as you say above, they do not see the problem here that they are creating.

The reason is that the “adults in the room” (especially in the board room) at Discovery are so used to being fat cats for so long (all earning fat salaries, bonuses, share incentives, above inflation salary increases etc. etc…) that this type of increase is pretty OK.

They clearly do not see that other sectors are battling and in some instances not giving increases (SARS taking more and more). This is rife for a backlash against their do-gooder PR stoory.

They may even not see this for a while yet but when it starts gaining momentum it will be quick.

Spending more on healthcare than on food???

That is normal in most western countries. Remember reading an article a few years ago that in Germany people spend about 10% of their income on food (excluding restaurants which was classified as entertainment) while the health insurance is about 15%. People pay health insurance on their salary which is around 7-8% and the employer pays the same amount too.

This is not a Western country. This is pure greed.

@Henriques The private health system is on the same level or in most cases even higher than in most western countries. You have to pay for this. For example in Canada, which does not allow private clinics to provide services which are available through their NHI system, the average waiting time for a medical specialist is about 20 weeks! Just google it. In Sweden the law limits the waiting time for a GP to 7 days, for a specialist 90, but still a lot of people have to wait longer. Can you imagine if the same happened in SA in the private health system?

Yearly increases above inflation. It reminds me of the property bubble back in 2008. I predict the painful popping of another bubble, but this time around, it will not be property….

Real bad news for me. Medical aid now costs me about 30% of my pension and yet, it is only September and the day to day benefits are finished. Perhaps this is the Discovery strategy to soften us for NHI. I have financially battled the last few years to pay the premium and this is a blow. Not even on the top plans.

These % increases are ridiculous, especially considering there is a cap on medicine price % increases through the Single Exit pricing controls. The medical aid industry, ignoring NHI, is heading for collapse.

Maybe after all the NHI will be a good thing. Even if it just put these guy’s out of business.

No need to cry about it. In a few years time you wont be able to pay it anyway. You will starve.

The quicker they meet there demise the better.

Viva NHI Viva.

Discovery may be far from prefect but the NHI will be an absolute disaster. Look at all the SOE’s – Show me one where the government has delivered or improved service delivery… I have multiple friends that have emigrated to the UK but they keep their SA medical aids and use them once a year for dental, check ups etc in SA – So much for quality health care in the UK under the NHI and that is a 1st world country with a large tax base.

The UK has an NHS, not an NHI. There is a significant difference between the two things.

The opposite. I suspect Discovery and quite a few other medical supply type businesses are keen to rake off nice “profits” from administering and supplying services to what passes for government in SA under NHI. All that is needed is a few ANC cadres on the board.

The only reason I am with Discovery is due to my Workplace’s agreement with them. Had I had a choice I would have picked one of the other big Health Insurers that didn’t cost an arm and a leg.

Methinks Discovery is in the process of building up a war chest for when the NHI hits. Reminds me of the 2000s when they had to build up their reserves to 25%, and were able to do it in record time by convincing everyone that their premiums had to go up…

This comment illustrates profound ignorance of how the medical schemes framework operates. “Their” reserves are “your” reserves – they belong to the Scheme and its members, not the administrator. There is a legislative requirement to build and hold reserves to protect members from a situation where they’ve loyally contributed but the Scheme has bad luck in its claims experience and then cannot honour their claims. The only way to build members’ reserves is to collect more in premium income, or to pay out less in claims and operating costs. This wasn’t some greedy move by profit-making companies, but an inevitable consequence of a risk-averse regulatory framework.

That is not the only way to manage the cost of Medical Aids? Maybe start by having less opulent Head Office buildings at a rental of Millions per month? Maybe make less profit in the Administration Business where the Directors make huge salary/bonus and incentive packages? Maybe reduce the number of schemes to a few for example….low wage earners, middle salary earners and the top earners packages? How about a scheme for old age pensioners who supported this Scheme whilst salary earners and now have to live and survive off a pension that does not keep track of administered increases and unfortunately even with inflation? It will at least make their packages more understandable and possibly eliminate the parasitic so called advisors from the scheme? (Maybe you are one of them?).

@JKF. You hit the nail on the head with the new, shiny, expensive offices. Analysts told us that the medical aid members would get stuck with this outrageous rental bill and here it is.

The issue being discussed here is not “reducing the cost of medical aid”, but increasing members’ reserves held within medical aid schemes; this is money held by the Scheme (owned by its members) to act as a cushion in case claims soar or membership dwindles. Of course, reduced administration costs help, as I said, but they are not high enough to move the needle relative to claims paid out and premium income collected. Simplifying the bewilderingly complex array of plans would definitely help – and might obviate the need for brokers/advisers – but our law doesn’t allow for a cheap plan for pensioners based on age. That would drive a coach and horses through the risk-pooling required to make any insurance system viable.

how is this even sustainable? Every year we drop a plan lower and soon we will be going to public hospitals…

Being self employed I am fortunate enough not having to belong to a medical aid fund. My medical bills over the last 15 years were less than R 10 000 however the savings on not belonging to a medical aid fund are about R 300 000 which are invested in an interest bearing savings account resulting in a healthy growth of my private medical aid.

You can’t conclude anything about how much Discovery as a company (rather than the schemes) is receiving from these increases, unless you know by what amount their management fee is escalating. Remember that the medical schemes administered by Discovery are, like all medical schemes, not-for-profit funds owned by their members. The administration companies (like Discovery) charge fees to the funds for managing the day-to-day operations – including claims and chronic disease management. Increases in contributions don’t necessarily mean increased profits for the administrators; and medical inflation typically runs above consumer inflation globally as expensive new drugs (such as cancer biologicals) and technology become the “standard of care”. We also have prescribed minimum benefit conditions in South Africa, which must be funded by all schemes – and these are costly conditions to treat, such as diabetes, high blood pressure and all emergencies. I don’t like double-digit increases in health premia any more than you do, but we can’t rush around denouncing the medical aid schemes/administrators for rampant profiteering unless we actually have facts to support these conclusions.

R300,000 will take you basically nowhere if something serious happens to you. If you develop cancer, or are involved in a serious accident, or even need a joint replacement or two, that R300k will evaporate before you know it. Then what? Self-insuring for catastrophic health issues is very dangerous territory. The whole concept of medical insurance where age-loading is not allowed (as is the case in SA – unless you join late in life) relies on your paying premia whilst young and healthy and then claiming when you are older and your usage of healthcare resources increases sharply.

What happens when you have a major medical expense, eg heart attack, stroke, cancer or perhaps being smashed up in a car accident?

Then you could easily find that R300k is not nearly enough, and you then need to start saving from scratch. It is foolishness to not, at least, have cover for major medical expenses.

Dream on if you think that you are covered. Read the fine print. (and theres lots of it) There is a limit in intensive care, as with anything else, after 4 weeks in intensive care, my friends cover stopped.
We have the highest Caesar rates in the world (for those on plan) .Why ??? because it suits the medical rip off. From the oversupplied under-filled hospitals, to all those in the theatre, to the ladies that are too posh to push..
As guess who pays for it, us other sucker members. Try breaking a leg without needing microsurgery!!!! really ??? Job creation for specialists. And on top, all us policy holders are paying for a vain TAJ Mahal head office and bank experiment!.
And the bonus, when NHI kicks in, you will be rewarded for all those years of contributions by having the same cover as those that have never contributed….

If you have a major medical expense eg car accident, cancer or heart attack, then that R300 000 will be used before you know it. On top of that if you joined now you might have a Late Joiner Penalty i.e. higher premiums you have to pay.

Maybe you should reconsider your approach.

Wow, you are in my opinion gambling big time with your future? We never know what is around the corner? Chester Williams was supposedly very fit and healthy? At least a hospital plan and a gap cover is in my humble opinion the least you should have in place? Paying the medical aid, SARS and other insurance policies like for your home and car are always grudge purchases, but unfortunately not possible to avoid.

Incredibly short-sighted to not have some form of medical insurance in case of an emergency. In the last 20 years my father’s hospital bills total nearly R3.5 million (plane crash, double by-pass and a hip replacement). He’s always been a fit, healthy man but life has a way of surprising you when you least expect it.

While we are on this topic, who offers the best medical aid at a lower cost?

What if the sky falls we will all be blessed with blue hats. You are all missing the worthiness of the idea. I have no intention criticizing the health insurers or their costs in running it as I have seen people visiting medical facilities for the most trivial signs of a possible illness and leaving it with stacks of medicine for which these health insurers have to pay.
The R 300 000 in the kitty was worked out on a very moderate monthly installment. Had I done it on a more comprehensive healthcare package I would easily have ended up with +R 800 000 over the same period which is still less than I have in my healthcare savings account.

I think we all understand the concept – self-insuring is not rocket science, after all. It’s just a daft thing to do with your health and that of your family. Self-insurance is fine for all losses you could afford to sustain, but it is reckless for anything you can’t – like the uncapped costs of a catastrophic health problem. Do you also self-insure your car and house and invest the equivalent of the premia in a money market account?!

I suspect that at the cost and complexity of schemes, a good number of people will soon be on a basic medical and pray that if they have a disaster their government hospital will triage their case.

This is why the knee-jerk hatred of the NHI doesn’t make sense. The current level of increases is just not sustainable.

I don’t think knee jerk distrust of anything proposed by the ANC kleptocracy is any more irrational than clinging to the naive belief that the NHI could ever work or be viable with our demographic and taxpayer structure. We actually don’t have a shortage of funds for acceptable (within our means as a country) public healthcare here – it’s just that the funds are looted, plundered and mismanaged long before they reach the clinics and hospitals. Just ask those dying of cancer in KZN where there is no public oncology…

I fully agree with you that the ANC’s shocking track record means that they will mess this up. But, in principle, the idea of NHI does make sense, even if it means accepting that some forms of healthcare will have to be rationed to an extent. The current system is unsustainable.

Talk about beating inflationary numbers!

Average increase:
2017-18: 7.9%
2018-19: 9.2%
2019-20: 9.5%

What was inflation again?

The problem here is medical inflation – it is a global issue:

https://www.axaglobalhealthcare.com/en/wellbeing/global-access/the-mystery-behind-medical-inflation/

Medical schemes and administrators are way too well regulated and the CMS will never allow these increases if they weren’t justified. I would be very surprised if any of the other schemes’ increases differed significantly from this.

@DieOom

Yeah sure because the American pharmaceutical industry is so ethical and doesn’t increase prices just because they can.

“Regulated” you say? Sure, if you mean that they wrote the “rules” to suite their pockets, then yes they are wonderfully regulated.

Are you aware that the price of insulin in the United States per vial is around $320, while in Canada the same medication under a different name is around $30? That’s more almost 11 times more.

The United States has around 4.27% of the world’s population and yet the US accounts for more than a third of the global pharmaceutical market.

Just one little example of how ethical the American pharmaceutical industry can be when they want to be.

“Martin Shkreli, CEO of the biotech company Turing Pharmaceuticals, and his decision to hike up the price of Daraprim, a drug used to treat a rare infection, by more than 5,000% overnight.”

That was a bit much so he got what was coming to him, but there are lots of other companies that increase their prices just because they can because they spent enough money lobbying politicians.

Two pieces to take note of:

“The largest pharmaceutical companies and their two trade groups, Pharmaceutical Research and Manufacturers of America (PhRMA) and Biotechnology Innovation Organization, lobbied on at least 1,600 pieces of legislation between 1998 and 2004. According to the non-partisan Center for Responsive Politics, pharmaceutical companies spent $900 million on lobbying between 1998 and 2005, more than any other industry. During the same period, they donated $89.9 million to federal candidates and political parties, giving approximately three times as much to Republicans as to Democrats. According to the Center for Public Integrity, from January 2005 through June 2006 alone, the pharmaceutical industry spent approximately $182 million on Federal lobbying. The industry has 1,274 registered lobbyists in Washington D.C.”

“The lobby’s influence in securing the passage of the Medicare Prescription Drug Improvement and Modernization Act of 2003 was considered a major and controversial victory for the industry, as it prevents the government from directly negotiating prices with drug companies who provide those prescription drugs covered by Medicare. Price negotiations are instead conducted between manufacturers and the pharmacy benefit managers providing Medicare Part D benefits under contract with Medicare.”

Iced Coffee, thats the facts, comment of this thread ! It’s one big money making system!
Run and sold like all insurances, fear of what happens in the worst case scenario. Its specifically potent, as its your own life,, and health, and that of your families, that they are scaring you with.The straw that is busy braking the back is affordability.
No real increase in members- lets up the premiums (inflation is ? % p/a)
Ridiculous head office – hit the members
Bank idea/concept funding- hit the members
A thought- , a priest, minister or person of faith should be doing it to spread whatever god love they believe in, not for the money?
A doctor, and the medical industry, should be doing it to heal the sick? If you want to be rich, why practice medicine, become a businessman! The whole industry is in cahoots.

@IcedCoffee; @imho

My point exactly – the problem is on the supply side not with the regulation of medical insurers or apparent lack thereof. Bonitas just released their increases @9.9% and to my knowledge they haven’t moved into a new head office or launched a bank

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