Medical aid 2024: Highest and lowest increases announced so far

Skirmish with the Council of Medical Schemes (CMS) aside, it is likely that the proposed increases tabled by the five under-fire schemes, including Discovery Health Medical Scheme (DHMS) will be “approved” – a technical administrative hurdle, nothing more.

Discovery Health says the average weighted increase across DHMS plans is 7.5% for 2024. DHMS last week appealed the CMS directive “to cease and retract all communication to members” regarding the proposed changes to contributions and benefits across its plans for 2024. These were announced at the end of last month.

The publicly announced 7.5% average, however, includes some sleight of hand where medical savings accounts (MSAs) on its most popular plans – including Classic Saver and Essential Saver, which together have around half a million members – have been slashed.

Were it not for these sharp reductions to MSA allocations, the contributions for these Discovery plans would’ve seen increases of between 8% and 11% from January.

This would’ve meant an average jump in DHMS contributions of 10.25% (excluding Classic Smart Comprehensive, which has been overhauled and now includes an MSA).

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Medical aid increases

Alexforbes, as an independent healthcare consultant, has published a comparison of the increases announced thus far across the industry.

It is important not to look at these increases in isolation and that a comparison needs to be done including all adjustments from 2020, where the impact of the Covid-19 pandemic on healthcare utilisation across the sector saw little to no contribution increase in many schemes.

The average increase on Bonitas Medical Fund’s plans is 6.9%, with the risk contribution on its Primary, Primary Select, BonSave, BonFit Select, BonEssential, BonEssential Select, BonStart, BonStart Plus and BonCap plans increasing by 6%. It says these “options contribute to over 70% of new business”.

Lee Callakoppen, Bonitas’s principal officer, says about two thirds of its base, or 227 000 members “will experience an increase below CPI”.

Bonitas notes that plan increases range from between 2.7% to 9.6%. The nearly 10% jumps in contributions are on its three top-end plans, where these range from R5 300 to R9 800 (for main members).

Bonitas says it has increased the allocation to savings on plans, which stands in stark contrast to DHMS.

On BonSave, it says the savings allocation increase is 25%.

Momentum, the third largest scheme by members, says that benefit limits will be “enhanced” by around 5.5% next year, in line with medical inflation, which translates to an average weighted increase across its plans of 9.6%.

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Perspective

Damian McHugh, chief marketing officer for Momentum Health Solutions, says ”as the administrator of medical schemes with almost three million members, we have seen claims costs increasing to higher than pre-Covid levels. At the same time, inflation means that the average cost per claim has also increased notably”.

“What you don’t want to see is increasing contributions, coupled with reduced benefits, of which we have recently seen a few examples,” says McHugh.

“Momentum Medical Scheme has consistently had one of the lowest increases in the market without reducing benefits and has managed to bring certainty to advisers and consumers in difficult times.”

Having enhanced benefit limits by around 5.5%, in line with medical inflation, the scheme’s weighted average increase for 2024 will be 9.6%.

Medihelp shows biggest jump in medical aid contributions

Medihelp has announced the biggest jump in weighted average contribution increases, at 15.97% from January.

It says the “scheme’s adjustment should be set off against the past three years’ average adjustments of 5.8%, -0.45%, and 7.5%, bringing it to an average increase of 7.2% per year over four years”.

It also contends that the “majority of Medihelp’s options are currently priced lowest in the market, which provides a very low base for adjustment and ensures that the product range remains well-positioned despite the increase”.

Apples-and-pears comparison

From this comparison, the increases announced by DHMS look reasonable, even downright modest. Only one scheme – Bonitas – has proposed an average increase lower than DHMS.

This will be the lived experience of DHMS members; in other words, how much extra they will pay. But because of the reduction in the MSA allocation on many of its plans, this is not technically a fair comparison.

The CMS, in an August circular, advised schemes to limit their increases for next year to 5% (inflation as per CPI) plus “reasonable” utilisation estimates. The regulator estimated this this at between 3.2% and 3.8%.

This means it recommended a total average increase of between 8% and 9%.

This article is republished from Moneyweb under a Creative Commons licence. Read the original article.