Small hikes for medical schemes

Most medical aid schemes have announced how much members will pay for their medical cover in 2021, giving them the usual few months’ warning of increases in one of the biggest expenses families face every month.

Most medical aids have limited their increases for the coming year to around official consumer price inflation, even though the cost of medical care goes up much faster than general retail prices.

While officials at the Council of Medical Schemes (CMS) might feel pleased that the industry it regulates has responded to its pleas to limit increases in member contributions to the general inflation rate of 3.9% or close thereto, most schemes have adjusted their rates by a little more, and for different reasons than the simplistic guideline issued by the CMS.

Commentary by Discovery, which operates the largest medical aid scheme in SA, indicates other reasons for lower increases in medical aid premiums.

Firstly, it says medical aids should have ample reserves available to make larger increases unnecessary, and secondly because the real cost of medical care is expected to increase by less than expected.

Demand down during lockdown

The general lockdown of the economy for a few months at the beginning of the year also meant that people actually used less in terms of medical services than usual.

Discovery told its members that lower claims in the first half of 2020 means “there will be no increase to your medical aid premium in the first half of 2021”.

It expects the demand for medical services to return to previous levels and premiums will be adjusted in the middle of 2021, by a maximum of 5.9% for all its different medical aid plans.

The cost of medical aid has increased by the inflation rate plus 3-4% per annum over the last four years, according to Discovery.

Now it has announced no increase for the first half of the year and a maximum increase of consumer inflation plus 2% in the second half.

This will result in an average increase of less than 3% for the year, making Discovery’s increase in premiums the lowest of the big ‘open’ medical schemes.

Range

Bonitas, the second largest open scheme, announced that its premiums for 2021 will increase by an average of 4.6% across all it different plans, but that the premiums of some of its options won’t increase at all.

“Individual plan increases ranged from 0%, with an average increase of 4.6%. This translates into 95% of members experiencing an increase of under 4%,” according to Bonitas’s announcement to its members.

Momentum Medical Scheme, the third largest open medical aid scheme in SA, says its premiums will increase by 3.9% in 2021 on a weighted average basis.

It claims the increase is lower than those of its competitors and notes that is much lower than its own previous increase of 8.2% (effective in 2020).

Bestmed, the fourth largest open scheme in SA according to CMS statistics, announced an annual average increase of 4% in premiums for 2021.

Management says this is the lowest in the history of the scheme. It also increased its benefit limits by 5%.

Medshield said in its announcement to its members that monthly contributions will increase by an average of 5.9% over its product range.

This is somewhat higher than the increases claimed by other medical schemes, but not as high as the average increase of 8.6% announced by FedHealth Medical Aid.

This article first appeared on Moneyweb and was republished with permission.

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