Discovery Health, which has thus far deferred its annual increases, will finally push up its 2022 prices but these will only come into effect from October to December. The changes were to take effect from May, but Discovery said it would defer them to October.
South Africa’s largest medical aid provider told members in October last year that contributions for 2022 would increase by 7.9%, but that this would only be effective from 1 May. It said this “was to maintain short-term affordability for all our members”, reports Moneyweb.
DHMS says its 1 October contribution increase will remain at May’s planned level “to make sure contributions remain on a par with future medical inflation while giving (members) financial relief through a delayed increase”.
Because the increase is only in place for three months – a quarter of the year – the annualised increase across the whole of 2022 is effectively around 1.98%.
The actual effective “annual’” increase for members was 2.9% last year because Discovery deferred increases to mid-year.
The average increase (unweighted) from October across all its plans is 7.94%, right on the edge of what would not be an 8% increase (i.e. 7.95%). The increases on Discovery’s various plans range from 7.85% to 7.98%, as seen in the table below.
Last October, DHMS said its estimate for medical inflation for this year of 7.9% was made up of a 4.4% increase in the cost of healthcare services (tariff inflation), an increase in claims of 1.5% (utilisation changes) and 3% due to changes in the demographic profile of the scheme (demographic risk). Discovery said this was unaffected by COVID-19.
Projected medical inflation for 2022 totalled 8.9%. This was then offset by a 1% reduction in expected future claims in “benefits derived from risk management and Vitality”. It is able to pass on the savings from incentivising members to be healthier.
This year was the third time DHMS had delayed its contribution increases since the onset of the pandemic. In 2021, it deferred increases to July and originally deferred planned contribution increases for 2022 to May, which then became October. In February, Discovery said the deferral in 2021 “has protected DHMS members in real terms, cumulatively saving members about R2bn during 2021”.
It added that this concurrently ensured “that DHMS is correctly priced for forecast medical inflation”.
Including the closed schemes it administers, Discovery has in excess of 3.7m lives under administration. DHMS itself has 2.78m members.
It noted in February at the release of its interim results that healthcare utilisation was increasing after a drop in the latter half of 2021. It said high levels of utilisation seen towards the end of last year was indicative of what to expect this year. Some of this anticipated demand did not materialise.
At the same time, it said population health had worsened and the overall disease burden had increased since the beginning of the pandemic. It also said there were initial signs that COVID-19 was affecting overall morbidity, particularly diabetes and cardiac conditions.
Moneyweb article – Discovery announces long-deferred medical aid increases (Open access)
See more from MedicalBrief archives:
High levels of premium inflation ‘unavoidable’, says Discovery CEO
CMS move to scrap low-cost plans is ‘catastrophic and unconstitutional’
CMS survey: Medical scheme members divided over funding vaccines for others
Fear of public hospitals may be a cause of buoyant membership for Discovery and Medscheme