Financial Mail and Business Day

SA clings to medical scheme cover despite economic woes

Tamar Kahn Health & Science Writer kahnt@businesslive.co.za

SA’s two biggest medical scheme administrators, Discovery Health and Medscheme, have reported growth in membership among their client schemes, despite the downturn in the economy and widespread job losses during the coronavirus pandemic.

“We’ve seen an unbelievable growth in Discovery Health Medical Scheme since December,” said Discovery Health CEO Ryan Noach.

The growth was contrary to expectations, and appeared to be because people were prioritising health cover over other spending, even if they lost their jobs, he said.

Discovery Health is SA’s biggest medical scheme administrator and counts Discovery Health Medical Scheme among its 19 client schemes. It is owned by JSE-listed health and life insurer Discovery.

The growth in medical scheme membership was primarily among individuals seeking cover, rather than among businesses adding to their pool of subsidised employees, he said.

Noach speculated that the intensity of SA’s second wave of coronavirus infections, which began to surge in early December, contributed to consumers’ decisions.

“People are afraid of the health-care challenges they are facing, and want to be sure they are covered,” he said.

He declined to quantify the growth in Discovery Health Medical Scheme, as the figures have yet to be audited.

A similar trend has been seen in Medscheme, SA’s secondbiggest medical scheme administrator, which is owned by JSE-listed Afrocentric.

“We were expecting a dropoff but it hasn’t happened at all,” said Afrocentric CEO Ahmed Banderker. “People are holding on to medical aid for dear life, and we are seeing no more buydown than usual,” he said.

SURPRISING TREND

Medscheme has 3.9-million lives under administration and counts Bonitas and the Government Employees Medical Scheme (Gems), which covers public servants, among its clients. Medscheme provides managed care services to Gems and had seen growth of 5,000 lives in this part of the business since January, said Banderker.

The trends in medical scheme growth are surprising, as the market has stagnated for the past decade and failed to keep pace with population growth, leaving monthly premiums unaffordable for an increasing proportion of consumers. While membership is closely correlated with income and employment, it is also linked to affordability, and in the run-up to the coronavirus pandemic annual premium increases consistently outstripped consumer price inflation.

RISING COSTS

The five-year health market inquiry, which published its final report in late 2019, said the lack of competition in the private hospital sector, the absence of tariff negotiations between medical schemes and healthcare professionals, and weak government oversight were among the factors contributing to the rising costs of private health care and medical scheme membership.

The Council for Medical Schemes, which regulates the industry, moved in 2020 to cushion the blow for consumers and capped premium increases for 2021. Many schemes were able to hold contributions steady or keep them to low single-digit increases because they had accumulated reserves in 2020 as patients deferred non-urgent care and claims dropped.

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2021-07-26T07:00:00.0000000Z

2021-07-26T07:00:00.0000000Z

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