Medshield suffers membership losses as inflation, interest rate pain bite

Medical aid provider Medshield Medical Scheme has seen a decline in member numbers, with the strain of slow economic growth and high levels of unemployment forcing members to forego their policies, the company said on Friday.

In the year to 31 December 2022, it saw a decline in member numbers to 71 917, losing more than 2 280 principal members as the impact of increased load shedding, inflation, and higher interest rates weighed on consumers’ spending power.

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The scheme lost more than 6 000 beneficiary members, dropping from 149 513 in 2021 to 143 338 in 2022. It posted the financial update following holding its 54th annual general meeting on Friday.

Medshield principal officer Kevin Aron said the 2022 year was marked by a number of economic difficulties. He cited the effects of the Covid-19 pandemic, which were exacerbated by other medical diseases and conditions including mental health issues.

“In addition, South Africa experienced economic challenges compounded by the increase in fuel prices and interest rates, coupled with the impact of the rolling blackouts affecting member affordability and placing strain on the retention of members,” Aron said.

“All these factors significantly influenced the entire healthcare industry.”

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For the 2022 period, the company reported a deficit of R28.8 million before investment income, from a surplus of R11.3 million in the previous year. After accounting for its investment income, it posted a surplus of R118.6 million, which was R129.4 million better than what was budgeted for, Medshield said.

Despite the constrained economic environment, Medshield Medical Scheme managed to maintain an excellent solvency ratio, it said, as well as an AA- credit rating by the Global Rating Agency for 2022.

“As a result, the Scheme’s solvency ratio increased to 64%, now more than twice the statutory requirement of 25%,” Medshield said.

However, the company noted that the scheme remains a going concern while maintaining confidence in its position for the foreseeable future.

“The board trusts that under the leadership of the Principal Officer and the executive management, Medshield will continue to be sustainable and achieve its strategic objectives,” it said.