The Discovery Health Medical Scheme (DHMS) will again delay the implementation of its annual contribution increases due to “the decline in non-Covid-19 health care demands seen during the pandemic,” said the Discovery Health CEO Dr. Ryan Noach.
The annual contribution increases of 7.9% will not be implemented until May 1 of next year. This follows a six-month delay in implementing increases for this year. Discovery says this makes DHMS the only medical plan to have increased deferred contributions twice since the start of the pandemic. He indicates that the relief of contributions to members amounts to more than 4 billion rand.
Noach says: “The postponement of increases for 2021 and 2022 means that members will have an actual effective increase in total contributions of 2.9% in 2021 and 5.3% in 2022. At the same time, the contributions of the plan follow. the pace of medical development. expected inflation once Covid-19 becomes rampant in the healthcare system and avoids having to increase ‘shocks’ at that time. ”
Breakdown of medical inflation
The 7.9% estimate of medical inflation in 2022 includes a 4.4% increase in the cost of health services (tariff inflation), a 1.5% increase in claims (changes in use) and 3% due to changes in diet medicine demographic profile (demographic risk). Discovery says it is unaffected by Covid-19.
This amounts to 8.9% and will be offset by a 1% reduction in expected future claims for “benefits derived from risk management and vitality”.
Noach says the downward trend in health care utilization “has strengthened the plan’s reserve position relative to regulated solvency requirements.”
The plan maintained its strong reserve position through 2021 and expects solvency well above regulatory requirements by year end.
To read: Discovery: profitable in the event of a pandemic
“While reserve levels remain high, medical plans must take into account the return of non-Covid-19 healthcare demand once Covid-19 becomes a stable endemic infection. Strong reserve levels are essential to manage short-term peaks in Covid-19 and the return of latent and non-Covid-19 healthcare demand.
“This is why the increases in contributions must be priced absolutely correctly to take into account the expected future use of health care,” he says.
“Setting premiums below medical inflation will cause premiums to lag behind claims and result in continued losses to the medical plan, ultimately leading to future premium ‘shocks’ to maintain sustainability. ”
While claims for medical plans are currently depressed due to Covid-19, the trend is temporary and does not reflect underlying medical inflation.
Higher claims between waves
Discovery says the experience of DHMS claims for 2021 shows healthcare claims between waves of Covid-19 are higher than pre-pandemic levels.
It indicates that as an example, between waves of Covid-19 infection, elective surgical admissions such as major arthroplasties and cataract surgery increased to 113% and 120% of pre-Covid levels, respectively. -19.
Noach adds, “The DHMS claims experience provides insight into the expected future cost of healthcare claims between waves of Covid-19 and once Covid-19 becomes endemic.
“The trends imply that medical inflation has persisted at a rate of 3% to 4% above consumer price inflation since January 1, 2020, and that the DHMS will be well positioned with contributions at the level anticipated claims before considering contribution increases for 2023. ”
Discovery did not confirm the contributions from May, but applying the 7.9% increase to the current contributions provides the following estimates. Some of them may end up being R1 or R2 higher or lower.
|Principal member contribution||2020||2021||July 2021||Estimated contribution from May 2022|
|Executive Plan||R7 257||R7 257||R7 688||R8 295|
|Classic Complete||R5 954||R5 954||R6 309||R6 807|
|Delta Classic Complete||R5 362||R5 362||R5 681||R6 130|
|Essential Complete||R5 003||R5 003||R5 301||R5 720|
|Essential Delta Complete||R4 507||R4 507||R4 775||R5 152|
|Classic Smart Complete||R4 327||R4 327||R4 585||R4 947|
|Classic priority||R3 814||R3 814||R4 041||R4 360|
|Core priority||R3 278||R3 278||R3 472||R3 746|
|Classic economizer||R3 290||R3 290||R3 485||R3 760|
|Classic Delta Economy||R2 628||R2 628||R2 784||R3 004|
|Essential saver||R2 615||R2 615||R2 770||R2 989|
|Economy Delta Essential||R2 085||R2 085||R2 209||R2 384|
|Coastal economizer||R2 608||R2 608||R2 763||R2 981|
|Smart Classic||R1 954||R1 954||R2 070||R2 234|
|Essential Smart||R1 400||R1 400||R1 483||R1 600|
|Classic core||R2 449||R2 449||R2 594||R2 799|
|Classic Delta Core||R1 960||R1 960||R2 076||R2 240|
|Essential core||R2 104||R2 104||R2 229||R2 405|
|Essential Delta Core||R1 681||R1 681||R1 781||R1 922|
|Coastal core||R1 946||R1 946||R2 062||R2 225|
|KeyCare Plus R0-8 550||R1 207||R1 207||R1 279||R1 380|
|KeyCare Plus R8 551-13 800||R1 659||R1 659||R1 758||R1 897|
|KeyCare Plus R13 801+||R2 450||R2 450||R2 595||R2 800|
|KeyCare Core R0-8 550||R949||R949||R1 005||R1 084|
|KeyCare Core R8 551-13 800||R1 183||R1 183||R1 253||R1 352|
|KeyCare Core R13 801+||R1 809||R1 809||R1 916||R2 067|
|KeyCare R0-9 start 150||R914||R914||R968||R1 044|
|KeyCare R9 start-up 151-13,800||R1 538||R1 538||R1 629||R1 758|
|KeyCare R13 801+ Starter||R2 394||R2 394||R2 536||R2 736|
Discovery says there has been a reduction in the number of members retiring from DHMS and an increase in the number of new members joining the program.
By the end of August, the regime had increased its membership to more than 27,000 by 2021.
Listen to Fifi Peters’ interview with Profmed CEO Craig Comrie (or read the transcript here):