Discovery Health’s 2020 medical aid increases

Members can expect to pay up to 11% more ….

Total monthly contributions for plans in the Discovery Health Medical Scheme (DHMS) will increase by between 8.88% and 10.96% for main members from January.

The increases are mostly skewed to the higher-end plans, with those in the Comprehensive range and the Executive plan increasing by very close to 11%. Discovery contends that “Only 19% of members will have the 10.9% increase, while 60% of members will have an 8.9% increase.”
One outlier is the lowest income band of the most comprehensive of the entry-level KeyCare plans, KeyCare Plus (R0-R8550), which increases by a similar amount.
With the exception of the Coastal Core plan (9.94%) and Coastal Saver Plan (9.9%), contributions for all other plans will increase by just under 9%. The Classic Comprehensive Zero MSA (no medical savings account) plan falls away. In its place is the Classic Smart Comprehensive plan, also with no medical savings account. Exact differences between the two are not immediately apparent from the pricing table.
Discovery cites a market survey of financial advisors representing over 250 000 lives, which shows that “market expectations are for increases between 10% and 12% across the industry”.
“Following the success of its digitally enabled, network-based Smart Series, the Scheme has extended the design to its Comprehensive Series, to offer families attractive options for efficient, affordable comprehensive cover in 2020.”

According to a pricing document made available to brokers, the weighted average increase is 9.5%. This takes into account contributions for main members, adults and children. DHMS generally shares price changes publicly in October/November.

 

Main member monthly contribution 

(per salary range where applicable)

Plan 2019 2020 Increase
Executive Plan R6 541 R7 257 10.95%
Classic Comprehensive R5 368 R5 954 10.92%
Classic Delta Comprehensive R4 834 R5 362 10.92%
Essential Comprehensive R4 509 R5 003 10.96%
Essential Delta Comprehensive R4 062 R4 507 10.96%
Classic Smart Comprehensive R4 327
Classic Priority R3 501 R3 814 8.94%
Essential Priority R3 010 R3 278 8.9%
Classic Saver R3 021 R3 290 8.9%
Classic Delta Saver R2 412 R2 628 8.96%
Essential Saver R2 400 R2 615 8.96%
Essential Delta Saver R1 915 R2 085 8.88%
Coastal Saver R2 373 R2 608 9.9%
Classic Smart R1 794 R1 954 8.92%
Essential Smart R1 285 R1 400 8.95%
Classic Core R2 248 R2 449 8.94%
Classic Delta Core R1 799 R1 960 8.95%
Essential Core R1 931 R2 104 8.96%
Essential Delta Core R1 543 R1 681 8.94%
Coastal Core R1 770 R1 946 9.94%
KeyCare Plus R0 – R8 550 R1 088 R1 207 10.94%
KeyCare Plus R8 551 – R13 800 R1 523 R1 659 8.93%
KeyCare Plus R13 801+ R2 249 R2 450 8.94%
KeyCare Core R0 – R8 550 R871 R949 8.96%
KeyCare Core R8 551 – R13 800 R1 086 R1 183 8.93%
KeyCare Core R13 801+ R1 661 R1 809 8.91%
KeyCare Start R0 – R9 150 R839 R914 8.94%
KeyCare Start R9 151 – R13 800 R1 412 R1 538 8.92%
KeyCare Start R13 801+ R2 198 R2 394 8.92%

The detailed contributions document for 2020 is available here.

 

Last year, DHMS attempted to consolidate the income bands for its entry-level KeyCare plans. On KeyCare Core and KeyCare Plus, it removed the middle income bracket, and on KeyCare Start, it consolidated the lower two brackets. This meant increases of between 20% and 47% for some members. It reversed the plan to consolidate these after a strong backlash. The same brackets as 2019 remain in force next year.

Given DHMS’s position in the market – it held 56.6% market share of members in September 2018, according to the Council for Medical Schemes – these price changes are far-reaching. It nonetheless continues to grow. In 2018, it added a net 41 193 members, versus a combined 9 048 decline for the next seven largest schemes (Bonitas, Momentum Health, Medihelp, BestMed, Medshield, Fedhealth, and Sizwe).

According to its annual results presentation, medical inflation from July 2018 to end-June 2019 was 10.6%. Over the past decade, this has been 10.9%, with both supply and demand-side factors contributing to the rate which is more than double the Consumer Price Index (CPI).

Source: Discovery Health Medical Scheme annual results presentation

 

Discovery Health estimates total medical inflation for 201at between 10.5% and 12.5%, with the variance due to utilisation trends on the different health plan options. However, risk management by Discovery Health and the ongoing positive impact of Vitality on engaged members’ health, reduce medical inflation by 1.6%, resulting in plan specific contribution increases  between8.9% and 10.9%.”

Because of its size and overall population dynamics, the average age of its member is trending up over time.

Source: Discovery Health Medical Scheme annual results presentation

 

As members get older, there is an increase in claims. Higher-risk members also drive up demand-side inflation.

 

Source: MoneyWeb – Hilton Tarrant