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Members still abandoning pricier Discovery plans

Nearly 91 000 members, or 28%, have been lost since 2013 ….
The Classic Comprehensive plan, with a main member contribution of R5 954pm, has lost nearly 55 000 members since 2013. Image: Moneyweb

Members of Discovery Health Medical Scheme (DHMS) are still leaving the top-tier plans offered by the medical aid, with a further 8% decline between 2018 and 2019.

Moneyweb reported in 2019 that 22% of that base had disappeared over the five years to 2018.

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Read: Members are ditching top-end Discovery Health plans (Oct 2019)

With the Council for Medical Schemes annual report for 2019 being published last month, it is now clear that the decline in members at the top end is accelerating (Discovery does not disclose the breakdown of members and beneficiaries across its plans). The decline between 2018 and 2019 jumped to 8%, from around the 5% level in preceding years.

Every plan across these top tiers has shown declines in members and beneficiaries over the past year (and over the six-year period), with the exception of the Classic Comprehensive Zero MSA (Medical Savings Account) plan, which has a tiny base of under 1 000 members. Across the six years between 2013 and 2019, 28% of members – or nearly 91 000 – have ditched these plans.

Read: Medical schemes have to do with small premium increases (Oct 2020)

The largest of the top-tier plans by members – Classic Comprehensive, with a main member total contribution of R5 954 per month currently – has lost nearly 55 000 members and over 150 000 beneficiaries since 2013.

That’s a 31% decline in members over the six-year period.

Some of these members will have emigrated and left the scheme completely, while others would have downgraded their plans. Movement within the scheme includes new members joining, existing members upgrading or downgrading, and members leaving. In a stagnant economy with formal employment growth all but stalled in recent years, the movement across the different plans is not at all surprising.

The other five-digit decline in members was in the higher tier of its entry-level KeyCare plans, KeyCare Plus. These plans (there are different options depending on income) lost over 11 000 members between 2018 and 2019. The two coastal plans, which offer cover only at hospitals in the four coastal provinces – Northern Cape, Western Cape, Eastern Cape and KwaZulu-Natal – have seen a (net) decline of over 6 000 members.

DHMS members 2018 2019 y/y change y/y %
Executive 9 813 9 208 -605 -6%
Classic Comprehensive 134 349 124 221 -10 128 -8%
Classic Comprehensive Zero MSA 915 935 20 2%
Essential Comprehensive 15 653 14 133 -1 520 -10%
Classic Priority 89 861 84 204 -5 657 -6%
Essential Priority 6 384 5 741 -643 -10%
Classic Saver 302 177 309 501 7 324 2%
Essential Saver 128 611 137 403 8 792 7%
Coastal Saver 184 540 180 347 -4 193 -2%
Classic Core 50 279 49 266 -1 013 -2%
Essential Core 42 305 44 796 2 491 6%
Coastal Core 81 100 78 975 -2 125 -3%
Classic Smart 30 607 39 160 8 553 28%
Essential Smart 22 309 30 784 8 475 38%
KeyCare Access 4 599 6 620 2 021 44%
KeyCare Core 14 561 14 819 258 2%
KeyCare Plus 232 791 221 607 -11 184 -5%
Consolidated 1 350 854 1 351 720 866 0.06%

Plans that have Delta variants are included in the ‘main’ plan.

Source: Council for Medical Schemes annual reports

Four plans have shown practically all the growth in the year: Classic Saver, Essential Saver, Classic Smart and Essential Smart.

Three of the four added over 8 000 members. Classic Saver, which is DHMS’s largest plan by members (310 000) and beneficiaries (680 000), has a total monthly contribution of R3 290 per main member currently. It added 7 324 members in the year to end-2019 and has grown by 83 517 since 2013. Essential Saver (total contribution of R2 615) added the most, with an increase of 8 792 members in 2019.

The two Smart plans – Classic and Essential – each added around 8 500 members in the year. These have seen substantial increases since they were launched in 2016 and 2017 respectively. When launched, Discovery articulated the proposition thus: “The Smart Plan embraces the dynamic world of digital technology, empowering you to manage your health plan.” There are no medical savings accounts on the Smart plans, and private hospital cover is across a network of hospitals only (excluding emergencies).

Despite DHMS increasing its overall member base by 866 in the year (or 0.06%), the number of beneficiaries on its plans declined by 11 000 to 2.8 million in the year.

It remains the largest open medical scheme in the country, with 56.4% market share (excluding restricted schemes) as at end-2019.

Read: SA medical schemes to fund Covid-19 vaccines

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It’s when you speak to ex Discovery staff who know how the company priced gouged, especially for those on the basic hospital plan, and treated the members with disdain that you realize why this is happening.

It’s not just Covid-19.

Also dated a girl that worked at Discovery. She said they tea the ring out of everything. Don’t use vitality she said and she closed all her stuff with them when she left.

I dated her too Pete (same time as you actually) – we didn’t have time to talk about boring medical aids

Someone is making money, and it is not the members.

The money making racket is imploding rapidly.

The medical aids blame the hospitals. The hospitals blame rising costs in equipment etc. Its nobody’s fault, right ?

Either way, makes no difference which fat cats are to blame, the honeymoon is over for the medical vultures.

Bro – Nail on the head. Its time for their massive bonuses to go to giving people medical care. Imagine…. a medical aid paying for medicine, doctors and hospitals, its a whole new world people.

Point taken, but I think the money making racket is much more intensive with Vitality on a per member/percentage basis. Formerly you required a degree to understand the loyalty program, but now with forced removal from FNB, and bullied joining of Discovery Bank, I think a PHD is not enough. Bottom-line, rewards are so watered down it doesn’t even cover a fraction of the exorbitant fees.

THEY DON’T CARE THEY HAVE A CREDIT CARD AND BANK NOW

This company and many others has put profit before care and treated its client base with disdain. The gravy train has run dry and now they’ll do everything to squeeze benefits from clients. Big business beware, your time of ripping clients is ending. Maximisation of profit at the expense of human dignity is criminal.

True, ultimate financialization completed on a service company that once upon a time might have added some value to society..

One wonders how all that was funded.

Just because they in the health business; do you expect a sympathetic ear?

The discovery business is started to make money and provide a service. Does Discovery achieve these two? Yes

If they don’t meet your expectations; then I suggest you bring to their notice.

I’ve yet to see a medical aid head office building that’s not kitted out like a hotel, they dont have this kind of money by looking after you.

Not surprised considering the cost – and then the hassles you have claiming. Dealing with Discovery is a complete nightmare – constant “wrong codes”, this code isn’t covered, “we have an agreement with the doctor” so we won’t pay more, lost claims, lies, and excuses.

If I am not mistaken included in your premium is a component that Medical Aid companies are required to hold aside for liquidity / funding purposes (in the event that there is pandemic like COVID). My understanding is that this is regulatory requirement, I have heard that this number is somewhere between 15% & 25% of premium amount).
I may be mistaken about the exact number retained but would be interested to hear somebody else confirm or clarify this……………..

Yes, there are capital/solvency requirements. These are like buffers that the institution needs to hold to make them more financially resilient. Its not different with insurance companies and banks.

Would you want your bank/medical aid/insurer to run with no cash reserves/buffers – definitely not.

Its global practice and written into regulations (though they vary) everywhere in the world.

Johan_V I understand the need to capital adequacy and as such my point was not meant to criticize the cost of medical aids from the need for this but purely that perhaps Medical aids need to highlight this so that members have a better understanding of the premiums that they are paying and how the premiums actually get costed.

I think it’s slightly misleading to say that the reserve requirement is a ‘component of your premium’ as though it’s a permanent recurring charge. It’s more a once-off thing that would be covered by premiums during your waiting period(s), there’s no need to ‘cost it in’.

Cheatah58 my intention was not to mislead but rather to illustrate that this actually exists. Many people don’t actually know this and financial peace of mind lies in the fact the each member understand the need for this but also that companies need to realize that perhaps more transparency is what is needed

Medical aid value is being undermined by 25% ROI shareholder expectations. Price increase and benefit lop offs have got them as far as they can go and they have pushed it too far. Outside of hospital benefits, I pay for everything else via PMA, including dental. So on a mid level Discovery package I basically have a hospital plan and some funded credit for medical expenses that I pay off monthly. Then Discovery tell me how I can spend my money for medical expenses with many treatments needing to be paid in on as they “don’t approve certain rates.”

Revolution coming to Med Aid to the first company that breaks it down to line items and is nopt ruled by the 25% ROI growth principle. Will be a private company happy to take the profit and give more transparent and affordable products to the market.

Medical aids do not have shareholders. They are owned by the members.

Hirre tog. Go to sharenet and type in discovery.

This is the typical smoke and mirrors offered by Discovery: “We’re not the scheme, we’re the administrators.”

Yes. You’re the ones who gouge the schemes, who then gouge their members.

@Bibap – learn the difference between the medical aid (not for profit, by law) and the Discovery GROUP of companies.

What confuses the real issue i.m.o. is the continued reference to Medical Aids. It’s the Medical Aid Administrators (MAA) that should be in the spotlight methinks. For the MAA’s to get their slice, they have to influence the MA (not for profit) Trustees to accept what they propose to charge. So they probably argue, like most fund administrators (UT, Pension, ETF, etc) that their fees will remain unchanged, or only increase by inflation percentage like ‘good guys’. But the fact that the pot – medical aid contributions – is increasing by medical inflation of say 12 – 15% is maybe not clearly focussed upon (my assumption) and thus becomes a freebie for the administrators. Or do administrators charge a competitive negotiable flat fee? Are MAA’s fees / costs ever interrogated by the MA Trustees and communicated to Members? What portion of each MA member’s contribution goes to fund this administration cost? Wish my pension could increase by medical inflation – after all I’m getting old and medical expenses are more of a burden? No such luck for me.

Your employer? You come across as very knowledgeable on MA jargon. Regarding your suggestion – no, I have better things to do.

Yes, I also thought I had a hospital plan in the event that me or my family needed it, like for an operation, ,, or for instance if there was a pandemic or something like that. ,,,

News flash!!! there are no hospital beds for you, or me , now that you may need one.
And now?

My parents are 89 and 87 years old pensioners and have to pay a medical aid of R15,000 per month – so not affordable!! They have contributed to medical aid cover all their lives. Discovery and other medical aids should be ashamed of themselves at the fees that they charge and then whenever there is a claim or expensive procedure (e.g. dental work) they always find a loop hole not to pay you!

If they are paying that they are on a
‘de luxe” option. Are you sure that is necessary?

or if, God forbid they need to be hospitalised for any reason currently.

Frankly, the whole Medical Savings Account idea is a con. Discovery ‘lends’ you approx. a quarter of your annual medical aid payments which you can use for anything. And by the end of March you have totally repaid the ‘loan’ with your monthly med aid payments. But now there’s a catch – you now have a Self Payment gap, because Discovery don’t cover the full amounts that doctors and specialists charge. My wife and I paid R11 587 a month every single month last year, but Discovery paid for NOTHING apart from a couple of chronic meds for the last 4 months because we were in a ‘Self Payment Gap’. Grrrr. We have this year changed to Classic Delta Core and look forward to saving over R8000 p.m. Beware any med aid designed by an actuary.

I may be totally wrong, but to me the “Medical Savings Account” which is actually your own money, plus excess of medical aid money, surely led to the “bank” division of Discovery – why deposit money at another bank if this money can be deposited in Discovery’s own bank and lend out to debtors + earning interest thereon??

Unless you are on an Comprehensive option because you need meds which are not PMBs you should be controlling your own savings outside of the medical aid environment. Even if your meds are not PMBs you need to look at their cost versus the cost of the expensive options against what you pay for the lesser options.

Let’s be honest, expensive options have been on a downward trend since the tax incentive changed from a percentage of contributions to a fixed Rand amount which was compounded by cost pressure on consumers. Expensive options do not present the same value since the introduction of Gap Cover insurance and doctors opting not to be part of medical aid networks.

I don’t hold a flame for Discovery, but medical aid funds are ringfenced from the company that administers them. Discovery makes its money from a percentage of the premium, but does not make money from refusing claims. Clearly increases in premiums do increase the admin portion, but they also risk clients moving policies down or leaving outright. The rising costs of good medical care is a world wide phenomenon. Britain’s NHS provides a possible model, but I would not hold my breath on our being able to replicate that.

Haven’t had medical insurance for over ten years. Keep myself fit and healthy and put small amount away every month in an investment account. Over ten years it’s a very nice sum that’s growing. Anything with insur*nce in it, I stay away from. They all scams the worst is car insurance. If you can’t afford a decent car for cash don’t buy it.

Stupid statement Thumper!!I agree absolutely that you should pay cash for a car ,but to not insure it is frankly idiotic !!

off the topic…can Moneyweb maybe do an investigation into the so called budget medical aids eg. how do they “work”, cost structure and their administrators. Most of these medical aid members doesn’t even understand how these medical aids work. Examples = Affinity health,NBC,Essentialmed. KeyCare Plus apparently also falls in this category but is well administrated?

…I tried to do a comparison some years ago. In vain. Gave up. Info overload / comparing apples to oranges to pears.

And found that many of the ‘experts’ have little clue themselves.

So I picked up the dice.
Held my breath….
….and threw it.
And it landed on Bonitas 😉

Been with Discovery for many years, we were migrated to them when company medical aid folded. Never had any problems. We are pensioners and pay our own premiums we changed to a smart plan when they first opened that option saving substantially each month. Can’t see the point of them saving on our behalf, only point to it is your saving are available from 1 jan so useful for anyone with no private savings. We have saved many thousands over the years and invested that money. It also makes you more careful about excessive tests prescribed by doctors.

Dear Moneyweb. I don’t recall seeing articles analysing the fees charged by Medical Aid Administrators. When it comes to complaints about the high cost of MA Plans a regular response is that Medical Aids belong to their members. The ‘Discoveries’ of our world are simply the administrators. So why not focus research articles on the fees they charge? How many cents of each MA contribution Rand goes to administration costs? A table showing these percentages from each public medical aid would be interesting. Can they give members an assurance that there are no clauses that incentivise the administrators to keep claims as low as possible? Because many people complain how the administrators continually and conscientiously appear to want to minimise or reject claims wherever possible. Perhaps transparency in this regard may reveal questionable / unpopular practices?

(PS: Now my comment is long and will no doubt be subject to ‘moderation’ (or so it seems). I hope that will not take too long.)

The best medical aid is still a mutually owned one. That way the members own the profit of the medical aid administrator and the earnings off the reserve requirements. Profmed is good example, there are others I suspect. Much like back in the day the policy owners owned Sanlam and Old Mutual.

Most people confuse the profit / loss of the Fund with Discovery that is primarily an Administrator. They make money managing the underlying funds, not from whether your premiums were more or less than your medical expenses.

I prefer to OWN DSY shares… helps me pay for my medical aid at another company … way cheaper and more benefits.

Thanks Discovery for screwing your customers!

2 million jobs are gone I’m sure a lot of those lost their medical aid as well.

Having a Discovery Medical Aid is like not having medical aid at all. They make you believe you do but when the tyre hits the road and you need to access real benefits you realize you have just been wasting your money.

I downgraded my plan when I needed to pay for a procedure of about R21000. I got pre-authorisation from Discovery and was advised that medical aid rates for the procedure was R3500 for a total of R7000 at 200% MAR. Well don’t do me any favours. When I asked where I can find a specialist to do the procedure for R3500 as they have calculated, the response was that they have ‘very good actuaries that work this out’. This renders the term ‘200% or 300% of medical aid rates’ meaningless as the consumer has no idea if you will pay 10% of total or 90% until you are in a dire situation where you have no option. Then they had the cheek to try sell me gap cover, literally insurance for your broken insurance, why anyone accepted this is beyond me. I would rather be in control of the money if I have to pay anyway, additionally many professionals will offer huge discounts if you pay them direct.

This was completely predictable for a decade.

End of comments.

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