Discovery Health Medical Scheme contributions to jump by 7.9% in May next year | Fin24

Discovery Health Medical Scheme will increase contributions by 7.9% from 1 May 2022.

• Discovery Health Medical Scheme will increase contributions by 7.9% from 1 May 2022.
• The scheme says its delays in implementing increases in 2021 and 2022 will provide over R4 billion relief to members.
• However, with an effective increase of 5.3% for 2022, the scheme’s contribution increase is above the 4.2% suggested by the Council for Medical Schemes.

Discovery Health Medical Scheme (DHMS) will delay medical aid contribution increases again in 2022, but this time, when its new premiums kick in from 1 May, its members will pay 7.9% more. 

The delay in implementing the increase means that members will have an actual effective increase of 5.3% in 2022 compared to 2.9% that the delay in increases up to July caused in 2021.

The scheme said that through these price delays, it will provide contribution relief of more than R4 billion to its members.

“With lingering Covid-19 economic effects, the deferred contribution increase provides much-needed contribution relief for members of Discovery Health Medical Scheme,” said Discovery Health CEO Dr Ryan Noach.

He said the above-inflation increase from May was necessary to keep contributions in line with medical inflation, which was usually above the general consumer inflation.

“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,” he said.

However, most medical schemes are sitting on record reserves because of the plummeting of non-coronavirus-related claims in 2020, especially hospital admissions.

Although schemes say that demand for surgical hospital admissions and medicines has come back, they have not used up the reserves they built last year.

DHMS said it maintained a strong reserve position in 2021 and is projecting to end the year with a solvency ratio well above the regulated requirements.

However, Noach said schemes need strong reserve levels to manage short-term Covid-19 spikes and the return of non-Covid-19 healthcare demand that they are starting to see.

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

Other healthcare claims are starting to increase 

DHMS expects a 4.4% increase in the cost of healthcare services for 2022 and a 1.5% increase in claims. Combined with the projected increase in the average age of its beneficiaries, the scheme said its medical inflation for 2022 is estimated to stand at 7.9%.

The scheme said the low level of non-Covid-19 claims was temporary and not reflective of underlying medical inflation. It said its data showed that healthcare claims between Covid-19 waves in 2021 were higher than pre-pandemic levels. 

Between the waves, elective surgical admissions for procedures like major joint replacements and cataract surgery increased to 113% and 120% of pre-pandemic levels, respectively. The scheme said new healthcare services required to diagnose and treat Covid-19 infections also remain high.

All the other major open medical schemes that have announced 2022 contribution increases also pitched them above inflation, save for Momentum Medical Scheme and Bestmed.

Bestmed’s contributions will go up by 3.9%, and Momentum will increase contributions by 6% but only from September 2022, making its effective contribution increase for the year 2%.

The only medical scheme that has reduced contributions is Medihelp. The scheme’s contributions will decrease by 0.45% on average.

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