Discovery Health Medical Scheme has announced that it will delay the implementation of its 2022 contribution increases, as it did this year. After delaying the annual contribution increases for 2021 by six months to July 1, the scheme announced that the annual contribution increase of 7.9% for 2022 would only be implemented on May 1, 2022.
“With lingering Covid-19 economic effects, the deferred contribution increase provides much needed contribution relief for members of Discovery Health Medical Scheme,” said Dr Ryan Noach, chief executive of Discovery Health, the administrator of the medical scheme. “In brief, our decision to defer contribution increases in 2021, and again for 2022, is based on the decline in non-Covid-19 healthcare claims seen over the course of the pandemic. This trend has strengthened the scheme’s reserve position relative to regulated solvency requirements,” said Noach.
The scheme maintained its strong reserve position over 2021 and is projecting solvency to be well above the regulated requirements by the end of the year.
As of August, the scheme had grown its membership by more than 27 000 lives during 2021.
“While reserve levels remain high, medical schemes must account for the return of non-Covid-19 healthcare demand once Covid-19 becomes a stable, endemic infection,” said Noach. “Strong reserve levels are essential to manage short-term Covid-19 spikes, and the return of latent, non-Covid-19 healthcare demand.
“This is why contribution increases must be priced absolutely correctly to allow for expected future healthcare utilisation. Setting contributions lower than medical inflation will result in contributions falling behind claims and lead to ongoing medical scheme losses, ultimately resulting in future contribution ‘shocks’ to maintain sustainability.”
The average contribution increase of 7.9% for 2022 is based on medical inflation, made up of tariff inflation (the increase in healthcare services), utilisation changes (increased utilisation of services by members) and demographic risk (an ageing membership).