Medical aid schemes hikes return in SA
Reduction in claims during Covid-19
One of the reasons for the back-to-normal increases has been a rise in claims.
During the Covid-19 pandemic, medical schemes saw a decline in claims as members deferred elective procedures or were reluctant to seek medical treatment for health issues not related to Covid.
This meant medical schemes were running surpluses, where the value of claims was lower than the premium income.
Many schemes used these surpluses to defer premium increases, apply below-inflation increases and boost member benefits.
“The reduction in claims experienced during the Covid-19 pandemic, alongside a desire to maintain affordability for members in a low-inflation environment, saw many schemes defer their 2022 increases, with the biggest open medical scheme – Discovery – originally deferring its increase from January to May 2022, and then again until October,” explains Jill Larkan, head of healthcare consulting at financial advisory firm GTC.
According Discovery Health, “the scheme’s excess solvency has been used to the benefit of members, with R6.8 billion achieved in contribution savings during 2020 and 2021 through the deferred increases.
“This also achieved effective annual contribution increases that were 50 basis points below the market over these two years.”
Bonitas Medical Scheme says that, by applying low contribution increases since December 2020, the scheme has effectively passed R1.4 billion in savings back to members.
Inflation
According to the Council for Medical Schemes, the increases announced last year were the first time in over a decade that the industry had implemented contributions below the official consumer price index (CPI).
In previous years, medical scheme premium increases have typically exceeded CPI by about 4%, and Larkan says that, with a “return to normal”, many schemes have announced increases above inflation.
The good news is that the schemes that had deferred their increases to April or October this year have once again announced a deferment of increases to next April, providing some relief to members’ pockets.
However, Larkan says this is likely to be the last time the schemes will defer and that the normal January increases will revert in 2024.
One of the reasons for the back-to-normal increases has been a rise in claims.
“Coupled with this, we have seen the costs of these treatments increase, mostly in line with medical inflation, which is 3% to 4% above CPI.”
According to Discovery Medical Scheme, hospital admissions have almost entirely returned to pre-Covid-19 levels. “While hospital admissions for Covid-19 have declined with the roll-out of vaccinations and the lower severities of Covid-19 waves, hospital admissions not related to Covid-19 (including elective surgeries) have been returning to the levels seen in 2019,” says Deon Kotze, head of research and development at Discovery Health.-Fin24
This meant medical schemes were running surpluses, where the value of claims was lower than the premium income.
Many schemes used these surpluses to defer premium increases, apply below-inflation increases and boost member benefits.
“The reduction in claims experienced during the Covid-19 pandemic, alongside a desire to maintain affordability for members in a low-inflation environment, saw many schemes defer their 2022 increases, with the biggest open medical scheme – Discovery – originally deferring its increase from January to May 2022, and then again until October,” explains Jill Larkan, head of healthcare consulting at financial advisory firm GTC.
According Discovery Health, “the scheme’s excess solvency has been used to the benefit of members, with R6.8 billion achieved in contribution savings during 2020 and 2021 through the deferred increases.
“This also achieved effective annual contribution increases that were 50 basis points below the market over these two years.”
Bonitas Medical Scheme says that, by applying low contribution increases since December 2020, the scheme has effectively passed R1.4 billion in savings back to members.
Inflation
According to the Council for Medical Schemes, the increases announced last year were the first time in over a decade that the industry had implemented contributions below the official consumer price index (CPI).
In previous years, medical scheme premium increases have typically exceeded CPI by about 4%, and Larkan says that, with a “return to normal”, many schemes have announced increases above inflation.
The good news is that the schemes that had deferred their increases to April or October this year have once again announced a deferment of increases to next April, providing some relief to members’ pockets.
However, Larkan says this is likely to be the last time the schemes will defer and that the normal January increases will revert in 2024.
One of the reasons for the back-to-normal increases has been a rise in claims.
“Coupled with this, we have seen the costs of these treatments increase, mostly in line with medical inflation, which is 3% to 4% above CPI.”
According to Discovery Medical Scheme, hospital admissions have almost entirely returned to pre-Covid-19 levels. “While hospital admissions for Covid-19 have declined with the roll-out of vaccinations and the lower severities of Covid-19 waves, hospital admissions not related to Covid-19 (including elective surgeries) have been returning to the levels seen in 2019,” says Deon Kotze, head of research and development at Discovery Health.-Fin24
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