Discovery announces long-deferred medical aid increases

Discovery Health has announced its finalised contribution increases for the Discovery Health Medical Scheme (DHMS) for 2022. These will only be in effect from October to December. The changes were to take effect from May, but Discovery said it would defer them to October.

The country’s largest medical aid provider originally told members in October last year that contributions for 2022 would increase by 7.9%, but that this would only be effective from 1 May. It said this “was to maintain short-term affordability for all our members”.

Read: Priciest Discovery Health plans still losing members

DHMS says its contribution increase, effective 1 October 2022, will remain at May’s planned level, “to make sure that contributions remain on par with future medical inflation while giving [members] financial relief through a delayed contribution increase”.

It sent communication to members last week informing them that details on contribution changes would be made available soon.

Because the increase is only in place for three months – a quarter of the year – the annualised increase across the whole of 2022 is effectively around 1.98%.

The actual effective ‘annual’ increase for members was 2.9% last year because Discovery deferred increases to mid-year.

Read: Discovery defers medical aid increases for a third time

The average increase (unweighted) from October across all its plans is 7.94%, right on the edge of what would not be an 8% increase (ie. 7.95%).

The increases on DHMS’s various plans range from 7.85% to 7.98%, as seen in the table below.

Main member contributions
	2020	July 2021	Oct to Dec 2022	Increase
Executive Plan	R7 257	R7 688	R8 298	7.93%
Classic Comprehensive	R5 954	R6 309	R6 810	7.94%
Classic Delta Comprehensive	R5 362	R5 681	R6 133	7.96%
Essential Comprehensive	R5 003	R5 301	R5 723	7.96%
Essential Delta Comprehensive	R4 507	R4 775	R5 155	7.96%
Classic Smart Comprehensive	R4 327	R4 585	R4 949	7.94%
Classic Priority	R3 814	R4 041	R4 362	7.94%
Essential Priority	R3 278	R3 472	R3 749	7.98%
Classic Saver	R3 290	R3 485	R3 762	7.95%
Classic Delta Saver	R2 628	R2 784	R3 006	7.97%
Essential Saver	R2 615	R2 770	R2 990	7.94%
Essential Delta Saver	R2 085	R2 209	R2 385	7.97%
Coastal Saver	R2 608	R2 763	R2 983	7.96%
Classic Smart	R1 954	R2 070	R2 235	7.97%
Essential Smart	R1 400	R1 483	R1 600	7.89%
Classic Core	R2 449	R2 594	R2 800	7.94%
Classic Delta Core	R1 960	R2 076	R2 241	7.95%
Essential Core	R2 104	R2 229	R2 406	7.94%
Essential Delta Core	R1 681	R1 781	R1 923	7.97%
Coastal Core	R1 946	R2 062	R2 226	7.95%
KeyCare Plus 0-8550	R1 207	R1 279	R1 380	7.90%
KeyCare Plus 8551-13800	R1 659	R1 758	R1 897	7.91%
KeyCare Plus 13801+	R2 450	R2 595	R2 801	7.94%
KeyCare Core 0-8550	R949	R1 005	R1 084	7.86%
KeyCare Core 8551-13800	R1 183	R1 253	R1 352	7.90%
KeyCare Core 13801+	R1 809	R1 916	R2 068	7.93%
KeyCare Start 0-9150	R914	R968	R1 044	7.85%
KeyCare Start 9151-13800	R1 538	R1 629	R1 758	7.92%
KeyCare Start 13801+	R2 394	R2 536	R2 737	7.93%
				7.94%

Last October, Discovery said its estimate for medical inflation for this year of 7.9% was made up of a 4.4% increase in the cost of healthcare services (tariff inflation), an increase in claims of 1.5% (utilisation changes) and 3% due to changes in the demographic profile of the scheme (demographic risk). Discovery said this was unaffected by Covid-19.

Medical inflation

Projected medical inflation for 2022 totalled 8.9%. This was then offset by a 1% reduction in expected future claims in “benefits derived from risk management and Vitality”. It is able to pass on the savings from incentivising members to be healthier.

This year was the third time DHMS had delayed its contribution increases since the onset of the Covid-19 pandemic. In 2021, it deferred increases to July and originally deferred planned contribution increases for 2022 to May, which then became October.

In February, Discovery said the deferral in 2021 “has protected DHMS members in real terms, cumulatively saving members approximately R2 billion during 2021″.

It added that this concurrently ensured “that DHMS is correctly priced for forecast medical inflation”.

“DHMS capital reserves have increased to an unaudited solvency level of 38%, pursuant to the reduction in non-Covid-19 healthcare utilisation, assuring members of robust financial strength.”

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In communication to clients earlier this year, it said that since the original pricing announcement for 2022, the claims and investment experience of DHMS had been better than anticipated and allowed the scheme “to defer the 2022 contribution increase by another five months.”

Including the closed schemes it administers, Discovery has in excess of 3.7 million lives under administration. DHMS itself has 2.78 million members.

It noted in February at the release of its interim results that healthcare utilisation was increasing following a drop in the latter half of 2021. It said high levels of utilisation seen towards the end of last year was indicative of what to expect this year. Some of this anticipated demand did not materialise.

Health impact of the pandemic

It further highlighted in February that population health had worsened and the overall disease burden had increased since the beginning of the pandemic. It also said there were initial signs that the pandemic was impacting overall morbidity, particularly with regard to diabetes and cardiac conditions.

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In October last year, Discovery Health CEO Dr Ryan Noach said: “The claims experience of DHMS provides guidance on the expected future cost of healthcare claims between Covid-19 waves and once Covid-19 becomes endemic.

“The trends imply that medical inflation has persisted at a rate of 3% to 4% above consumer price inflation since 1 January 2020, and that DHMS will be well positioned with contributions at the level of anticipated claims before considering contribution increases for 2023.”