Discovery Health Increases Medical Aid – Report

According to Moneyweb, Discovery Health Medical Scheme (DHMS) will increase the contributions on all plans by 5.9% from July 1. This comes after it deferred any increases in January for six months. It was the “first and only” open medical scheme to do so.

It says the 5.9% increase “recognises the full impact of medical inflation on the scheme, and ensures that the scheme can offer affordable contribution increases in 2022 and beyond, which are expected to be below market averages”.

“By deferring the contribution increase to 1 July 2021, members saved in excess of R2.2 billion and will only experience an increase of 2.95% in their total contributions paid to the scheme during 2021.”

DHMS says “this is substantially lower than the next six largest open medical schemes in the industry, whose members have experienced an average increase of 5.5% in total contributions paid over the same period”.

The drivers of the 5.9% increase are as follows:

  • +3.3% for “tariff inflation” based on projections of the prevailing CPI rate for the year;
  • +3.0% for the “additional healthcare demand for managing Covid-19 waves”;
  • +2.0% for the cost of procurement and rollout of Covid-19 vaccines for members;
  • -0.9% for the “net impact of the decrease in non-Covid-19 demand occurring during peaks of the pandemic”, which is “substantially offset by the latent return of non-Covid-19 demand and supply expected from Quarter 3”; and
  • -1.5% for the “impact of Discovery Health’s advanced risk management techniques and participation in the scheme’s wellness programme, Vitality”.
Main member contribution
20202021July 2021Change
Executive PlanR7 257R7 257R7 6885.94%
Classic ComprehensiveR5 954R5 954R6 3095.96%
Classic Delta ComprehensiveR5 362R5 362R5 6815.95%
Essential ComprehensiveR5 003R5 003R5 3015.96%
Essential Delta ComprehensiveR4 507R4 507R4 7755.95%
Classic Smart ComprehensiveR4 327R4 327R4 5855.96%
Classic PriorityR3 814R3 814R4 0415.95%
Essential PriorityR3 278R3 278R3 4725.92%
Classic SaverR3 290R3 290R3 4855.93%
Classic Delta SaverR2 628R2 628R2 7845.94%
Essential SaverR2 615R2 615R2 7705.93%
Essential Delta SaverR2 085R2 085R2 2095.95%
Coastal SaverR2 608R2 608R2 7635.94%
Classic SmartR1 954R1 954R2 0705.94%
Essential SmartR1 400R1 400R1 4835.93%
Classic CoreR2 449R2 449R2 5945.92%
Classic Delta CoreR1 960R1 960R2 0765.92%
Essential CoreR2 104R2 104R2 2295.94%
Essential Delta CoreR1 681R1 681R1 7815.95%
Coastal CoreR1 946R1 946R2 0625.96%
KeyCare Plus R0-8 550R1 207R1 207R1 2795.97%
KeyCare Plus R8 551-13 800R1 659R1 659R1 7585.97%
KeyCare Plus R13 801+R2 450R2 450R2 5955.92%
KeyCare Core R0-8 550R949R949R1 0055.90%
KeyCare Core R8 551-13 800R1 183R1 183R1 2535.92%
KeyCare Core R13 801+R1 809R1 809R1 9165.91%
KeyCare Start R0-9 150R914R914R9685.91%
KeyCare Start R9 151-13 800R1 538R1 538R1 6295.92%
KeyCare Start R13 801+R2 394R2 394R2 5365.93%

Discovery says all plan benefits and hospital networks will remain unchanged and that “as a result of the mid-year increase, members will be allowed a once-off concession to upgrade to any Discovery Health Medical Scheme option effective 1 July 2021”. These need to be submitted by June 15.

All plans with a medical savings account will have a 5.9% increase on their savings contributions, which will also increase their savings account balance from July 1.

Discovery says members who “have reached their Above Threshold Benefit (ATB) before 1 July 2021 will remain in their ATB and continue to access the associated risk funded benefits”.

“The additional medical savings account allocation will be carried over to the next year or can be used for healthcare expenses not funded from the member’s ATB in 2021.”

Importantly, “limits, co-payments, deductibles and thresholds were increased on 1 January 2021, and will remain at their current levels for 2021”.

Smoother increases going forward

Discovery says the 5.9% “contribution increase is better aligned to healthcare utilisation experience expected over 2021, and partially accounts for the return of latent non-Covid-19 demand already experienced this year”.

Because of this, it says “future contribution increases will therefore require a lower contribution adjustment than other medical schemes in the market, creating smoother contribution increases for members in 2022 and beyond”.

It says that over time “DHMS has offered its members greater value through contribution increases that have been consistently lower than the industry average”. This equates to 17.3% “additional value” – in effect, its increases have been 17% lower than the next six largest schemes.

In its communication to financial advisors, Discovery is incentivising sign-ups to Vitality and Discovery’s Gap Cover products.

Until June 30, DHMS clients who are not yet on Vitality or Gap Cover “can join at no additional cost for three months”.

Source: Moneyweb

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