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Medical schemes under pressure to keep hikes under 10%

Sep 21 2017 11:41
Susan Erasmus

Cape Town - Bonitas Medical Fund announced a weighted increase of 8.7% in contribution costs for next year, while Discovery announced one of 7.9%. A weighted increase is not just an average of the increases across all the options – it takes into account the number of members belonging to the various options.

The increases are the lowest seen in several years: last year Bonitas announced a 10.98% average increase, and Discovery Health one of 10.2% for 2017, and most other schemes followed suit with double-digit increases.

If the announcements from Discovery and Bonitas are anything to go by, other scheme members may also be in for lower-than-usual membership contribution increases for 2018. Most of the other schemes are yet to announce their 2018 increases.

Medical inflation is estimated at 8.93%, and is always significantly higher than CPI inflation, which came in at 4.8% for August, Statistics South Africa announced on Wednesday.

Worldwide, medical inflation is driven by the high cost of medical technology, the high cost of private medical care, and the expense of medication. In addition, in SA, the falling rand adds to the woes of consumers who are medical scheme members.

Over the last 16 years, the average year-on-year increase of medical scheme contributions has been 7.6% - 1.6% higher than the Reserve Bank's ceiling for inflation targeting of CPI between 3% and 6%.

For Discovery members, of which there are just over 2.6 million in SA, making this the largest open scheme, the increases on the various options are as follows:

 

For all schemes, the challenge lies in dealing with the rising costs of healthcare, and at the same time curbing expenditure. A further challenge lies in keeping up with new trends in healthcare, and adjusting benefit schedules to reflect this.

Bonitas has added several additional benefits for members in 2018, including an unlimited terminal healthcare benefit on all options and a separate benefit for contraception.

“Our mission is the affordability and accessibility of quality healthcare, and we have to carefully balance costs while ensuring members receive rich benefits,” says Gerhard van Emmenis, Principal Officer of Bonitas Medical Scheme.

The rising cost of medical scheme membership in South Africa has meant that membership numbers across all schemes have remained largely static over the last few years, with a total of 3.95 million principal members and 8.81 million dependents covered by the various schemes by the end 2015. There is no indication that this has changed significantly.

Other major schemes are due to announce their increases for 2018 on the following dates:

(Sources: Discovery press release, Bonitas press release, The Council for Medical Schemes, Alexander Forbes Health)


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