Money and Markets

Discovery medical scheme freezes price hikes for six months

Business Insider SA
Discovery headquarters in Sandton (Boogertman and
Discovery's headquarters in Sandton (Boogertman and Partners)
  • After an average membership contribution hike of 9.5% last year, Discovery will freeze increases for the first six months of 2021.
  • Prices will increase by an expected 5.9% across all plans in the second half of the year.
  • Discovery says it is in a "strong surplus position" after Covid-19 had a positive impact.
  • There were fewer medical scheme claims as South Africans stayed away from hospitals and doctor rooms.
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Discovery Health Medical Scheme will not increase membership fees for the first six months of 2021.

Contributions will only be hiked on 1 July 2021. The increase will be announced in the second quarter of 2021, but a maximum hike of inflation plus 2%, currently 5.9%, across all schemes is expected.

This will be the equivalent of a maximum average increase of 2.95% for all members over the year, Discovery says.

Last year, Discovery hiked its contributions by an average of 9.5%.

The net impact of Covid-19 has been to improve its financial position, says Discovery. This is due to a reduction in non-Covid claims “without a commensurate increase” in Covid-related claims.

There was a sharp decline in elective operations, as well as claims for health screenings as South Africans stayed away from hospitals and doctor rooms for fear of contracting the virus.  

Discovery reported last week that 51% fewer mammograms were performed during April to July, compared to 2019. In the same period, there was a fall of 51% in the number of members who registered for depression.

READ | Vitality members to get a once-off points top-up to compensate for lockdown      

Also, due to the alcohol ban and curfews during the first months of lockdown, schemes benefited from lower emergency and trauma-related claims

"This strong surplus position provides the scheme with greater flexibility in offering unique 2021 contribution increase strategies.”

"Through the Contribution Freeze, the scheme enables members to retain existing levels of healthcare cover, without being forced to downgrade their plans due to affordability constraints."

Earlier, the Council for Medical Schemes (CMS) urged medical schemes to freeze prices for next year – or at least to limit hikes to 3.9%, around the current inflation rate. So far, for 2021, Bestmed has announced an average premium hike of 4%, while Medshield has announced a low 5.9% average increase for members.

The CMS warned that the long-term economic consequences of the Covid-19 global pandemic are likely to be dire, and that medical schemes may see “a significant drop in membership, as households grapple with shrinking household budgets or total loss of income”.

To “insulate members facing financial hardship”, the CMS recommends that medical schemes that are in a strong financial position, must consider freezing contribution increases for 2021.

While they had to pay for Covid-19 treatments, the schemes are expected to have enjoyed lower claims during lockdown as South Africans stayed away from hospitals and doctors for fear of getting infected.

 “Since the outbreak of the pandemic locally, schemes have built up surpluses due to lower claims as elective procedures were deferred to make way for Covid-19 related hospitalisation," says  Phoenix Financial Services Group (PFSG) CEO Clayton Samsodien. ". As a result, the lower than expected claims could help alleviate annual increases bringing much- needed relief to consumers."

The CMS expressed concern about the fact that medical scheme contribution hikes have been consistently above inflation in recent years. Last year’s average increase of 8.2%, was double the average CPI of 4.1%.  

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