The financial health of SA medical schemes during COVID-19 looks positive for 2020 but could deteriorate next year due to a ‘significant’ rise in costs, with additional claims of R7.3-R31.8bn, reports MedicalBrief. This is according to an analysis by Discovery, which also indexes the raised risks of hospitalisation for older people, those with chronic conditions, or not living healthily. The 2.4% fatality rate across Discovery Health compares with 6.8% worldwide.
The research found that people with COVIC-19 who are older than 50 are more likely to be hospitalised; from the age of 70 there is a much higher fatality risk; patient complexity – the number of co-morbidities – has a strong impact on the risk of severe illness; patients with five chronic conditions have an 80% chance of admission to hospital; and increased physical activity reduces the chances of being admitted to hospital for COVID-19.
Counting the Cost of COVID-19
The Discovery White Paper, Counting the Cost of COVID-19 – Initial projections of the potential financial impact of the virus across the medical scheme industry, provides insights on the South African COVID-19 outbreak analysing the experience of members on medical schemes administered by Discovery Health, and examining the effect of screening, testing and hospital costs related to COVID-19 on the medical scheme industry.
Discovery Health – administrator and managed care provider to 19 medical schemes with 3.5 million members – is in a unique position to offer insights on COVID-19, the White Paper says.
Initial experience highlights that costs related to COVID-19 vary significantly by type of hospital admission – for instances, cases that require ventilators cost on average more than R340,000. Older members with known health problems are most at risk of complications, the severity of cases worsens with age, and the proportion of fatalities increases sharply from 70.
The White Paper says that most COVID-19 related additional costs will be due to screening, testing and hospital admissions. “The impact of the cost will vary among medical schemes – schemes with an older membership base, and lower levels of reserves per beneficiary, are likely to be relatively worse off compared to others as a result of COVID-19.
“The impact of COVID-19 on the financial position of medical schemes over the next couple of years is uncertain,” and will depend on factors such as the severity of the pandemic and the extent of claims for discretionary and elective healthcare episodes.
“That being said, medical schemes are expected to generate a surplus of contributions over claims in 2020, given the decrease in elective hospital admissions in the first half of 2020, without a commensurate increase in COVID-19 claim costs. Medical schemes are expected to need this surplus to cover potential significant COVID-19 related costs during 2021.”
Early insights into the COVID-19 related experience
As of 15 May 2020, the Discovery White Paper says, there were 1,539 confirmed COVID-19cases of members on medical schemes it administers. The vast majority of cases are in the Western Cape (41%) and Gauteng (38%) of cases respectively. (Across South Africa, the Western Cape reported 58% of cases and Gauteng 16%.)
Some 36% of coronavirus cases have at least one chronic condition. The median age of members with a confirmed diagnosis is 41 years. Only 3% of confirmed cases are among children less than 10 years old, and there has been a similarly low proportion of infected members between 10 and 19 years. This is consistent with findings globally.
Across all medical schemes administered by Discovery Health, approximately 23% of confirmed COVID-19 cases have been admitted into hospital. “The median age of confirmed cases that required hospital treatment is 52 years.” Further: “65% of positive COVID-19 cases in the highest age band of 80 to 90 years old have been admitted to hospital.”
The research showed that the admission rate increases with the number of chronic conditions members have:
- One in six members who have COVID-19 but no chronic conditions are admitted.
- Around half of members with between two and four chronic conditions who have COVID-19 are admitted to hospital.
- The admission rate is 79% for members with at least five chronic conditions.
Symptoms members with COVID-19 present with can be considered mild (confirmed cases not admitted to hospital), moderate (confirmed cases admitted to hospital but not ICU), or severe (confirmed cases admitted to ICU).
To date, 77% of confirmed cases for Discovery Health were mild. “Of the 23% that required treatment in hospital, 4% of cases required admission to ICU.”
The White Paper continues: “The vast majority of members with COVID-19 below age 50 recover without the need for treatment in hospital. At older ages, members are at greater risk of complications. For members aged 60 and above, 37% of cases are considered moderate and 15% are considered severe.”
Studies in China showed that overall, 81% of COVID-19 cases were mild, 14% were severe and 5% were critical. “This is in-line with the Discovery Health experience where 75% of cases are considered mild, 20% moderate and 3% severe.”
The hospital admission costs related to COVID-19 vary significantly by type of admission:
- The average cost of all COVID-19 hospital admissions is R84,708.
- Hospital admissions which require ventilators (7%) cost on average R340,737.
- ICU admissions, which account for 7% of admissions, have the largest variation in cost with an average of R169,525.
At time of publishing, medical schemes administered by Discovery Health had experienced 37 fatalities as a result of COVID-19 – 16% of deaths experienced across South Africa.
“An average case fatality rate across Discovery Health has been calculated to be 2.4%, slightly higher than the case fatality rate of 1.8% calculated for South Africa.”
Case fatality rates (number of deaths as a proportion of the number of confirmed cases) differ by country. Reasons include differences in demographics, the characteristics of the healthcare systems, differences in the number of people being tested, and the approach to reporting deaths.
“Currently, Italy has the highest case fatality rate at 14.1% compared to 6.8% for the world,” says the White Paper. “South Korea has a case fatality rate of 2.7%, in line with the current experience across Discovery Health.”
Impacts on medical schemes’ finances
Additional claims related to COVID-19 screening, testing and hospital admissions are projected to cost medical schemes between R7.3 billion and R31.8 billion until June 2021, the White Paper reiterates.
If these additional claims are spread out across all beneficiaries of medical schemes, it is equivalent to an additional cost of between R816 and R3,561 per beneficiary.
Schemes with a relatively older membership base are expected to experience a greater impact from COVID-19, the research found. “Schemes with lower levels of reserves per beneficiary are likely to be compromised in terms of future sustainability after COVID-19.”
COVID-19 expenses covered by medical schemes will be offset, to a degree, by relatively lower claims for discretionary and elective healthcare during the lockdown period.
Claims for discretionary and elective healthcare decreased materially after lockdown, especially in-hospital admissions – but the extent and duration of this decreased use remains “very uncertain”. Most elective procedures have been delayed rather than cancelled.
Schemes are expected to generate a surplus of contributions over claims in 2020. “Medical schemes are expected to need this surplus to cover potential significant COVID-19 related admissions and testing costs during 2021, as it is expected that contributions will not be sufficient to cover these claims.”
THE COVID-19 RESILIENCE INDEX
Discovery also published a report, The COVID-19 Resilience Index – An indicator of an individual’s relative risk of being hospitalised, should they be diagnosed with COVID-19, which it describes as an emerging predictive model for COVID-19 admission risk.
There has been extensive research around the COVID-19 pandemic, says the report, but there are limited findings when assessing the impact of health and lifestyle on risk.
Discovery says it used advanced machine learning techniques to identify the impact of demographic, health and lifestyle-related factors on the risk of being hospitalised if diagnosed with COVID-19.
“The modelling approach isolates the extent to which an individual factor increases the risk. The model considers 32 demographic, health and lifestyle factors, isolating the most relevant factors to predict an admission.”
The research found the most relevant demographic, health and lifestyle factors in predicting COVID-19 admission risk to include:
1- Age is the strongest predictor of COVID-19 related admission risk, with older members having a 19% to 25% elevated risk of hospitalisation if diagnosed with COVID-19. While males have a higher risk of admission, more important risk factors relate to specific chronic diseases, such as diabetes.
2- The incidence of chronic conditions can increase the risk of COVID-19 related admission by up to 18%, dependent on the number of chronic conditions. Hypertension, diabetes and
hypercholesterolemia have the largest impact on COVID-19 related risk – between 11% and 13% per condition. “Overall clinical complexity and current healthcare use are also strong predictors of elevated risk.”
3- Vitality Age is a risk-adjusted health assessment tool giving individuals a snapshot of their overall health based on self-reported lifestyle choices and clinical risk factors. Members with a Vitality Age lower than or equal to their actual age are at 11% lower risk of COVID-19 related admission compared to those with a Vitality Age four years older than their actual age. Members who engage in Vitality have an 11% lower risk of hospitalisation than non-Vitality members.
4- Positive effects of healthy living can offset the elevated risks of chronic conditions and
aging. An individual who is 65 years but engaged in health and wellness has the same COVID-19 hospital admission risk as an unengaged 55-year old. Similarly, members with chronic conditions can offset their elevated risk through healthy living
Discovery is applying these insights to provide a personalised COVID-19 risk index for all South Africans, says the report. The risk index allows further segmentation of high risk members using available demographic, health and lifestyle characteristics.
“For those South Africans that are not members of Discovery Health Medical Scheme, the index will use self-reported data allowing the individual to understand their risk to the virus and take the necessary steps to limit their exposure,” says Discovery.
[link url="https://discovery-holdings-ltd.mynewsdesk.com/documents/counting-the-cost-of-covid-19-initial-projections-of-the-potential-financial-impact-of-the-virus-across-the-medical-scheme-industry-96412"]Counting the cost of COVID-19 – Discovery white paper[/link]
[link url="https://discovery-holdings-ltd.mynewsdesk.com/documents/the-covid-19-resilience-index-an-indicator-of-an-individuals-relative-risk-of-being-hospitalised-should-they-be-diagnosed-with-covid-19-96413"]he COVID-19 Resilience Index[/link]