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Even in the pandemic, Discovery Health members ditch pricier plans

Nearly 30% of the top-end base has downgraded or left the scheme in five years.
Half of the scheme’s beneficiaries are now on Saver plans. Image: Moneyweb

The number of Discovery Health Medical Scheme members leaving the scheme’s top-end medical aid plans accelerated in 2020, from levels seen in 2019.

This is completely counter-intuitive given the Covid-19 pandemic.

However, various lockdowns have decimated certain sectors, with many small businesses failing and many hundreds of thousands of jobs lost. Emigration would’ve added additional pressure. This has seen the overall number of members (and beneficiaries) on the scheme decline by 2% across 2020.

The higher-end plans are leading the decline.

In 2020, the Executive, Comprehensive and Priority plans lost 22 616 members and nearly 55 000 beneficiaries, which equates to a decline of 9.4%. This compares to the 7% drop in 2019. Prior to this, these plans were losing around 5-6% of members a year. In the last five years, these plans have lost 29% of their members.

The biggest of the plans in this segment – Classic Comprehensive – has lost 32% of its members since 2015.

DHMS says “at a net principal membership decline of 14 452 [2019: 11 628], the Comprehensive series of plans experienced the largest reduction”.

Members 2020 Members 2019 Change
 Executive 8 237 9 208 -11%
 Classic Comprehensive (incl Zero MSA) 111 632 124 221 -11%
 Essential Comprehensive 12 738 14 133 -10%
 Classic Smart Comprehensive 467 935 -50%
 Classic Priority 78 484 84 204 -7%
 Essential Priority 5 203 5 741 -9%
 Classic Saver 308 970 309 501 0%
 Essential Saver 141 708 137 403 3%
 Coastal Saver 172 053 180 347 -5%
 Classic Core 48 210 49 266 -2%
 Essential Core 49 036 44 796 9%
 Coastal Core 76 359 78 975 -3%
 Classic Smart 47 602 39 160 22%
 Essential Smart 38 854 30 784 26%
 KeyCare Access/Start 6 151 6 620 -7%
 KeyCare Core 15 950 14 819 8%
 KeyCare Plus 208 859 221 607 -6%
 Total 1 330 513 1 351 720 -2%

Source: DHMS annual report, Council for Medical Schemes annual report

Half the base by beneficiaries (49.6%) is now on Saver plans (Classic Saver, Essential Saver, Coastal Saver, Classic Delta Saver or Essential Delta Saver).

By members, 47% or 623 000 are on Saver plans. There was a 1% decline in the number of members on these plans last year, following a 2% increase in 2019.

Membership on the Core plans was almost exactly flat between 2019 and 2020.

Only five plans showed growth

Only five plans across the scheme showed any growth in members last year: Essential Saver, Essential Core, Essential Smart, Classic Smart and KeyCare Core.

The two Smart plans added members at a similar growth rate to 2019. DHMS says “the most significant net membership growth was recorded in mid- to low-tier options, where the Smart series recorded net membership growth of 16 512 [2019: 17 028]”. Growth last year was 24% for the two Smart plans.

Classic Smart is now about the size of the Classic Core plan in terms of members, which is astonishing given it was only launched in 2016.

Discovery says Smart is the “most cost-effective in-hospital cover, essential chronic medicine cover plus limited day-to-day cover if you’re willing to use providers in a specified network”. These plans have no medical savings accounts, and private hospital cover is across a network of hospitals only (excluding emergencies).

KeyCare Core, the middle option of the three income-linked lower-end plans, saw an 8% increase in members, versus declines of 7% and 6% for the entry-level (Start) and higher-end (Plus) KeyCare plans, respectively. This movement is likely due to the pay cuts that many employees were forced to take.

Movement within the scheme

It must be noted that while on a net basis, DHMS lost 21 207 members in the year, there would’ve been a fair amount of movement within the scheme.

Movement within the scheme includes existing members upgrading or downgrading, as well as new members joining.

Some members would’ve been forced to cancel medical aid completely due to financial circumstances, some may have emigrated, while others would’ve died.

DHMS says “as a consequence of the Covid-19 pandemic, the scheme experienced a sharp reduction in utilisation, with deferral of healthcare resulting in 76.5%3 of contributions being used to fund claims for members’ direct benefit”.

“The remainder of the funds are used to build reserves and support and benefit members in areas such as innovation, managed care, administration, financial advisers and the daily operations of the scheme.”

Like many schemes, it ended with a surplus. At the end of 2020, it had a net surplus of R9 billion (2019: R1.56 billion).

It is the largest open medical scheme in the country, with 57% market share (excluding restricted schemes) as at September 30, 2020.

COMMENTS   34

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Discovery charge a 30% premium on basic hospital plan. It’s excessive.

I don’t want to pay for their shiny new building.

Strom in a tea cup comes to mind.

Have you ever considered that perhaps the new building works out cheaper for Discovery?

The Discovery building does not belong to Discovery, the new building is rented from one or two big property companies.

If you look at the performance of the Reit companies/shares it was a very good decision.

Have you seen what has happened to property prices?

I bet that a varsity graduate or maybe even a student could have worked out a much cheaper way of housing the staff at the time. Also do not have to be a genius to know that all the flash and high specification costs and that you will be paying for it in the monthly debit order. Medical Costs are an emotional subject and that some look down on institutions that seem to overly profit off this, so it is better to be “low key”. I do not think that anyone suggests that they operate out of a railway container but this is the complete opposite.

What a tone-deaf article! “This is completely counter-intuitive given the Covid-19 pandemic.”

No one is going “Wow, it’s a pandemic, let me reduce my cover!”
It’s a direct correlation to cost. Given the choice between buying food and paying for medical aid that is not being used, I know what I would be doing.

(That said, that medical aids have not done enough to keep medical inflation down. They have been charging above CPI increases for years, but have been largely ineffective in curbing the increasing costs except in reducing the benefits to their members.)

I agree that the article is tone-deaf. The downgrading of options has been a trend for all medical schemes for some time now. This is really not news at all. The actual problem is the erosion of the member base on these higher options and what it means for the liquidity of those options, because most people on these higher options are on them to make use of the benefits associated with them. When the claims exceed the membership collections the options will need to be closed, changed or face steep increases.

Actually, I am busy changing medical aid and downgrading plans as we speak. Pandemic or not, the SA medical aid industry is one big ripoff.

“This is completely counter- intuitive given the Covid- 19 pandemic”.
Hardly a primary reason to reduce expensive medical scheme plans.
People do not have money to waste and or just do not have the money to spend.
Most People are not scared of Covid, but rather by the devastating socio economic impact it already has had on their lives, which is evident in the savings they are effecting by downgrading their health packages.

We have, saving R4000 pm which will pay the tax bill. Also closed Telkom and moved to VoIP, saving R400 pm.

How do you find Voip?

I’m with Mweb as an ISP and can get 200 minutes for R99 though them but of course must be within Wifi of my fibre router.

Your question is 2 fold.

1. How’s VoIP experience
For me it was really good with headsets. Granted I was using Skype and paid for minutes. Skype are big and if anyone knows how to do VoIP it’s them. My only complaint is that their prices change by country and SA to SA is prices.
2. How do you find a VoIP service
Well Skype for one. But like the other respondent pointed out, your ISP probably has a VoIP solution for you.

Never used a Cell provider in SA for over 4 years. Use RAIN data card and use a VOIP SERVICE #AXXESS – SAVED THOUSANDS!

Someone on Moneyweb said that Discovery plays the role of risk adjustor.

Above threshold benefit provides risk cover on the higher end plans. After my company allowed us to have fixed subsidy but choose our own plan I soon realised that cost of ATB was way too high for a family of 4 people.

Been said before. Discovery’s management is blind to reality (and so is this article as blogged above). We are talking about high flyers that actually think that people can afford R15K to R25K pm off their netted down salary after tax that they also get no benefit on. They are arrogant in a cutesy kind of way and is evident in things such as their head office and the rah rah optimistic PR letters they send out. This is all while declining claims and going after practitioners. Let’s NOT get fooled by PR as this will not change while they think they are right.

This is true Mr Jones.

I know someone at Discovery who was working there while Discovery Bank was going to market….

The person said and mentioned Adrian Gores name blatantly… These guys dont see price…. they believe people will pay for their product…

I hope they see their share price this morning…

TO note: I gave up my discovery medical air… ages ago…I do trade their stock that pays for my medical aid at other companies!

People who don”t need the “de luxe” options shouldn’t be on them! Surely it doesn’t need a pandemic for them to realise that.

Correct, politically correct reporting. Think they meant that people would really want “top deluxe cover” in a pandemic to cover them if they end up sick and therefore are more willing to pay more even if they are healthy and don’t normally require the deluxe version.

The article should read “Discovery’s Greed and Disconnect with their members results in an ever increasing numbers of members not being able to afford their premium cover”.

Medical professionals do not work with CPI increases of 5.2%

Medical aid inflation is not the same as the normal CPI inflation.

What do you expect to buy with a cheap Rand when importing Medical equipment and medicines?

People have no choice, we earn less money today rand for rand than the boomers in the 90s. Discovery as a “non-profit” needs to make more money every year to give to Adrian Gore and his cabal yet salaries have stagnated for decades. Sooner or later the corporates will have to start paying people properly again so we can have actaul consumers in our economy and not just people in debt

Im sure 30 to 50% of their pricing is brand related.

I really dont see the point of having medical aid … except when in hospital…

the rest of the time im paying through my teeth

No dental benefit… no fertility benefit…. local doctors charge 400% mark up which medical aid does not cover

It’s almost enough to start thinking about supporting a new state operated medical scheme … 😉

Be careful what you wish for beachcomber

Theoretically its a brilliant idea…. It just needs to be administered properly.

Maybe Blockchain can help…. as every transaction can be technically recorded…. this should be relatively easy to setup.

Ja one of those where you go for an arm operation and come out with leg missing?

@BeesWax, hopefully not the middle leg missing 🙂

Slowly but surely they are disappearing into oblivion

Well yes they are ripping me off. I accept that I have a penalty for a period of non membership. Had no money for medical, when I did join I got a penalty, that was harsh to start with but I the penalty with my premium goes up every year.

I have taken my punishement, instead of welcoming me to the fold I get kicked in the teeth. Increase the premium each year along with inflation, but leave the penalty as it was when I first joined.

Was on Discovery for 15yrs. Left for the USA (contract) came back after 10 yrs and Discovery wouldn’t want to cover me unless I waited 1 yr- Told them the F%$K off and went to Genesis – oh and I get cover for Dental work included for less.

The challenge is that across nearly all these plans the overall limits are quite low for nasty events – so as long as you get 200% rate cover and are not too restricted in terms of provider choice – you don’t get much benefit from higher plans until you get to Executive. The saver plans might be useful if your employer pays for them – but otherwise you are just giving the scheme money which you have to go through admin to claim back under certain rules.
Even if you look at their ‘gap cover’ it is limited to items like in hospital specialists and has very low maximum cover values.

It would be nice to have a subscription model. You subscribe to your local GP, say R200 per month, and you subscribe to your local hospital, R1000 per month. If you get sick they take care of you as part of the subscription, no middle man. This also incentivizes your GP to actually keep you healthy so he/she can work less.

Fantastic idea, perhaps some clever guy can advise medical professionals on how to set this up.

I really wish someone would do a little exercise where they took the detailed formulary and service rates that Discovery changes behind the scenes every year and compares that year on year. It would be interesting to see how premiums have increased vs. benefits that have shrunk/increased? When Discovery says they cover 200% of in-hospital rates it would be interesting to see what that rate actually is year on year for all the different specialists. When I requested this formulary from one of their reps there was suddenly a deafening silence.

Yes no increase in our pension this year but Discovery sees fit to increase our fees. Life is getting too expensive for us pensioners.

End of comments.

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