Tough economic times cause medical scheme members to downgrade

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The Times reports that an increasing number of medical aid members who are downgrading because of tough economic times.

Medical aid broker Alexander Forbes said the number of corporate clients who reviewed their plans for this year had doubled. For the first time, more people had downgraded than upgraded. Tracy Janssens, branch head at Alexander Forbes Health, said: “This is the first year we have seen a big shift in the number of downgrades, and the reason is the economy. Even executives are questioning their medical aid costs, and the feedback to brokers is that it is unaffordable to continue on high-cover plans that many people are not using.”

But medical aids warn spending less means higher premiums ultimately because less is paid into the pool for all to share. Profmed principal officer Craig Comrie said 2019 was the first year the scheme had introduced low-cost options and about 3,500 of its 70,000 members had switched. He said the problem with downgrading was that members tended to lower their monthly instalments but did not change their claiming patterns. “What you see happening is, say, an 8% decline in contributions, but only a 3% decline in claims,” he is quoted in the report as saying. Schemes then had to make up the shortfall in premiums and this made the “lower-cost plans become less affordable”.

Discovery Health CEO Jonathan Broomberg said a more important trend than downgrading was “that members joining Discovery Health Medical Scheme are tending to join at lower plan levels than they have in the past. This situation does pose increasing cost challenges in the long term and is impacting negatively on consumers.”

Bonitas principal officer Gerhard van Emmenis said new members preferred cheaper plans. While 94% of members had not changed their plans this year, 10,949 had downgraded and 7,345 had upgraded. Johannesburg resident Dori van Loggerenberg said she had cut her premium from R4,800 a month to R2,400. “It was unaffordable and you get nothing for the money.”

Aubrey Kwela and his 18-month-old son are saving R600 a month after downgrading to a cheaper Government Employees Medical Scheme (GEMS) option this year. Kwela, a Pietermaritzburg civil engineer, said that “sometimes a lower option is difficult to cope with”. One of the restrictions of the new plan, Emerald Value, is that he is restricted to one GP. “There are very tight conditions, which become a problem if you travel and get sick. If you get sick and you are in Johannesburg, you need to call the medical aid and ask which doctor you can use that side. It’s a hassle. You can only use certain hospitals.”

GEMS COO Stan Moloabi said the Emerald Value option had been introduced to address the financial risk to the scheme of people buying cheaper cover.

The Times report

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