Medical Schemes' Healthy Reserves Underpin Lower Premium Increases

The medical aid scheme industry is faced by stagnant membership as South Africans suffer from economic headwinds. Nevertheless, schemes are well positioned to buffer the effect of Covid-19.

Jaco Visser

Medical aid schemes have experienced a drop in the number and value of members’ claims due to the coronavirus pandemic, resulting in higher reserve levels, even as healthcare inflation continues to bite privately insured South Africans.

In a response to questions, Fedhealth’s principal officer, Jeremy Yatt, said that between 1 January and 31 August, the medical aid scheme’s claims experience was 24% below budget. As claims were higher than budgeted in the first three months of the year, the total claims experience from 1 January to the end of August was 14% below their budget.

Bonitas experienced a similar drop in claims. “The current Covid-19 pandemic led to significantly lower claims than expected in 2020 to date (and) on a per-member basis,” Lee Callakoppen, Bonitas’ principal officer, said in a response to questions. “Including Covid-19 outgo, overall projected claim levels for April to July were on average 22% lower than the expected pre-Covid levels respectively, with notable variations between claims categories.”

Elective surgeries

One of the results of the government’s initial hard lockdown of the economy in March and April, was that patients postponed or cancelled their elective surgeries. This happened as people tried to avoid hospitals and possible contamination with the coronavirus, and private hospitals braced themselves for an influx of Covid-19 patients. The influx didn’t happen uniformly, and private hospitals couldn’t charge patients for surgeries. The lockdown and alcohol ban led to a dramatic drop in trauma cases – usually a money spinner for private hospitals. The result was also an improved claims experience for medical aid schemes.

Bonitas has seen a 60% drop in hospital authorisation requests, compared with 2019, says Callakoppen. “Providers are best placed to make these clinical decisions in the interest of their patients and elective surgeries are now almost back to normal,” he says. “The backlog of surgeries, not considered emergency during lockdown, is being addressed. These include slow-growing cancers, orthopaedic and spine surgeries, airway surgeries, as well as heart surgeries for stable cardiac issues.”

Fedhealth’s Yatt says they have also seen a “rebound in claims” of late.

Cost of Covid-19

Being treated for Covid-19, however, doesn’t come cheap. The cost of this writer’s mother for a 16-day stay in private hospital to treat the disease with attendant doctors and physios ramped up to just over R123 000. Fedhealth saw 594 unique Covid-19-related hospital claimants between April and August, with a total cost of R42.2m and an average hospital claim of R71 022 per patient, says Yatt. Bonitas saw 5 556 beneficiaries hospitalised due to the disease by 9 November, at an average cost of R89 542 per admission.