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Discovery Headquarters in Sandton (Boogertman and Partners)
- After an average member contribution increase of 9.5% last year, Discovery will freeze increases for the first six months of 2021.
- Prices will increase by 5.9% expected on all plans in the second half of the year.
- Discovery says it is in a “strong surplus position” after Covid-19 had a positive impact.
- There were fewer claims for medical plans as South Africans stayed away from hospitals and doctors’ wards.
- For more articles, go to www.BusinessInsider.co.za.
Discovery Health Medical Scheme will not increase membership fees for the first six months of 2021.
Contributions will only be increased on July 1, 2021. The increase will be announced in the second quarter of 2021, but a maximum increase in inflation plus 2%, currently 5.9%, is expected across all schemes.
This will be the equivalent of a maximum average increase of 2.95% for all members during the year, Discovery says.
Last year, Discovery increased its contributions by an average of 9.5%.
The net impact of Covid-19 has been to improve its financial position, Discovery says. This is due to a reduction in non-Covid claims “without a commensurate increase” in Covid-related claims.
There was a sharp decline in elective operations, as well as requests for medical exams, as South Africans stayed away from hospitals and doctors’ wards for fear of contracting the virus.
Discovery reported last week that 51% fewer mammograms were performed during April through July, compared to 2019. In the same period, there was a 51% drop in the number of members who signed up for depression.
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Additionally, due to the prohibition of alcohol and curfews during the first months of closure, the schemes benefited from fewer claims related to emergencies and trauma.
“This strong surplus position provides the scheme with greater flexibility to offer unique contribution growth strategies by 2021.”
“Through the Contribution Freeze, the scheme allows members to retain existing levels of health care coverage, without being forced to downgrade their plans due to affordability restrictions.”
Previously, the Council for Medical Schemes (CMS) urged medical schemes to freeze prices for next year, or at least limit increases to 3.9%, around the current inflation rate. So far for 2021, Bestmed has announced an average premium increase of 4%, while Medshield has announced a low average increase of 5.9% for members.
The CMS warned that the long-term economic consequences of the global Covid-19 pandemic are likely to be dire and that medical schemes may see “a significant drop in membership as households grapple with reduced family budgets or loss. Total revenues”.
To “isolate members facing financial difficulties,” the CMS recommends that medical schemes in a strong financial position should consider freezing contribution increases by 2021.
While they had to pay for Covid-19 treatments, the schemes are expected to have enjoyed fewer claims during the shutdown, as South Africans steered clear of hospitals and doctors for fear of infection.
“Since the outbreak of the pandemic locally, the schemes have accumulated surpluses due to lower claims, as elective procedures were postponed to make way for Covid-19 related hospitalization,” says Clayton Samsodien, CEO of Phoenix Financial Services Group (PFSG). As a result, lower-than-expected claims could help alleviate annual increases by providing much-needed relief to consumers. “
CMS expressed concern that increases in contributions to medical plans have been consistently above inflation in recent years. Last year’s average increase of 8.2% was twice the average CPI of 4.1%.
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