Rising prices for medical aid in South Africa – what to expect

Medical plans are expected to announce contribution increases for 2022 that are in line with recommendations from the Council for Medical Schemes (CMS), said Jill Larkan, head of health counseling at GTC.

Before the Covid-19 pandemic in 2020, medical plans typically exceeded CMS increase guidelines by around 4%, Larkan said. The CMS publishes an annual set of guidelines for increases in health insurance contributions in South Africa.

These guidelines are based on a review of the national and global macroeconomic outlook and, this year, the significant effects of the coronavirus pandemic on medical plan reserves and member hospitalization trends.

In 2020, the CMS recommended that companies implement a freeze where possible. Where that was not possible, he recommended that increases be capped at 3.9%, depending on inflation.

While not all medical aids have accessed it, the biggest funds, including Discovery and Bonitas, have managed to keep prices low, with the former even freezing prices for the first six months of 2021.

For 2022, CMS recommended that contribution increases be limited to 4.2%, in line with the projected CPI figure from the National Treasury. Larkan expects medical plans to align very closely with this recommended premium increase.

“The smaller-than-expected increases are due to financial constraints facing South African consumers on the one hand and record reserves held by medical plans on the other.

“Sub-normal use of medical plan benefits among members who generally feared doctor visits and hospitalization resulted in increased combined medical plan reserves to a record R 73.29 billion. “

However, this behavioral pattern could be reversed if vaccinations and infections combine to confer herd immunity to the population, she said.

“In that case, members could come back to doctors to catch up on the backlog of procedures and some conditions that might have worsened after a year of delayed care,” she said.

“Medical plans therefore have a precarious balance before them so as not to overburden members in difficulty on the one hand and ensure sufficient reserves for their future care on the other.

CMS believes that medical regimes with adequate reserves should be “well insulated” against such a spike.

The regulator also issued a specific warning for medical plans whose financial viability was already questionable before the pandemic, advising them to consider “interventions such as merging with other plans”.

Larkan said increasing contributions around the CMS suggested level of 4.2% would significantly affect members’ budgeting and forecasting future results.

“Since financial planning forecasts typically assume contribution increases of at least 2-3% above the CPI, GTC would consider it prudent for members of the South African medical scheme to reconsider their projections for the year 2022 if the increases announced in October 2021 are at the expected level. lower levels.

“Many South Africans will then have the opportunity to reallocate the budget allocations of increasing medical aid earmarked for increasing savings or retirement savings contributions instead. “

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