How medical aids are hiking prices in 2021, despite an ‘increase in reserve levels’
Some schemes are hoping for hikes of up to 8%, despite healthy reserves due to Covid-19
Discovery Health’s announcement that it will delay its customary January contributions’ increases until mid-2021 means the hike for the year will be in the region of 3%, but some of its competitors are proposing far higher increases.
The Council for Medical Schemes (CMS) has advised providers that their 2021 increases must be in line with CPI; that is, no more than 3,9%.
By increasing its members’ contributions by 5.9% from July 1 — Discovery has undertaken not to impose an increase higher than that — the increase will average at about 3% for the year.
Benefits and premiums must be approved by the CMS each year and the regulatory body has the authority to refuse approval, forcing a scheme to amend premiums and benefits.
Despite that, some schemes have announced contributions’ increases for 2021 — pending CMS approval — of more than 4%, says Alison Botes, an independent financial adviser and accredited health-care consultant with Umhlanga-based brokers Sweidan & Co.
The proposed increases are:
- Momentum Health: 3.9% weighted average increase (differs per option)
- Bestmed: 4% weighted average increase (differs per option)
- Medihelp: 5,8% weighted average increase (differs per option)
- Fedhealth: 8.7% weighted increase (differs per option)
- Bonitas: 4.6% across all options
“The CMS will probably put pressure on the schemes proposing the higher increases to reduce them,” Botes said.
The single biggest impact on medical scheme claims in 2020 was Covid-19 and the effect lockdown had on elective procedures, she said.
“Essentially members stopped going to doctors unless they were seriously ill and as a result most elective procedures were delayed, with hospital visits generally being for emergencies only.
“Most orthopaedic procedures, such as knee and hip replacements, were placed on hold, along with cataract procedures. With most schemes having an ageing population, those procedures account for a relatively large portion of the claims cost.
“A single knee replacement costs more than R100,000, excluding all the associated costs, such as pathology, radiology and anaesthetists.”
As a result, most schemes would have seen an increase in reserve levels and therefore be in a stronger position to keep increases very low for 2021.Financial adviser Alison Botes,
Those savings, along with fewer than expected Covid-19-related costs, meant that medical schemes would have “or should have” saved significant claims costs, Botes said.
“As a result, most schemes would have seen an increase in reserve levels and therefore be in a stronger position to keep increases very low for 2021.”
As for the 2021 claims pattern, she said, that will also be determined by “general sentiment” regarding Covid-19.
“If there is no vaccine early next year, my view is that members will continue to be apprehensive about being hospitalised and having surgery unless it is absolutely necessary.
“If things return to normal in 2021, the concern is that elective surgeries will increase exponentially and claim costs will rise rapidly, which may necessitate a larger increase for 2022.”
REPRIEVE FOR DISCOVERY CLIENT ON MEDICINE CO-PAYMENT
“Thanks for the delayed contributions increase, Discovery, but no thanks for putting a massive co-payment on my diabetic medication!”
So said Discovery Health client Johan van Wyk of Goodwood, Cape Town, who was informed that, from January 1, the co-payment on the Novomix insulin pen he’s used for years would go from zero to R1,265.
“In the current financial situation, this is an absolute disgrace,” he said this week.
Responding, head of Discovery Health’s Centre for Clinical Excellence Dr Noluthando Nematswerani said the scheme’s chronic benefit amounts and its formulary change every year “to accommodate price changes in the pharmaceutical market”.
“To avoid a co-payment or an increase in co-payment, members are encouraged to use formulary products which are reimbursed in full,” she said.
“Regarding Mr van Wyk’s insulin, there are equivalents on the formulary that he could use, and these changes were verified to be safe and clinically appropriate by the key opinion leaders in diabetes treatment.”
Medicine prices varied considerably in the private health-care sector, she said, “even when there is little to no difference in the clinical benefit”.
A Discovery employee has since called Van Wyk to discuss his medication. “When I told her that I’d had a very bad reaction to an alternative insulin medication, she said the co-payment would be reversed ‘on appeal’,” she said. “To say that I’m happy about this decision is an understatement.”