Discovery delays medical aid contribution again

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.

Read: How Much DHMS Pays Discovery to Administer Your Medical Aid

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.”

Reserves

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. ”

Membership changes

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):