Johannesburg - If the contribution increase rates announced by the medical schemes that have so far launched their 2014 benefits are anything to go by, the industry could have the lowest increases in years.
Yesterday Momentum Health announced an average premium increase of 7.2 percent for members, with no benefit reductions, only additions. Last week the country’s largest open medical scheme, Discovery Health, and KeyHealth announced average contribution increases of 8.9 percent for next year. Fedhealth’s contribution increases range from 7.9 percent to 10.9 percent.
With medical inflation outstripping consumer inflation by 3.8 percentage points, hikes of below 8 percent have been rare in recent years.
Many schemes implement increases equal to the consumer price index (CPI) rate plus 3 percentage points as allowed by the Medical Schemes Act. They can implement increases beyond that if they obtain approval from the regulator.
As the consumer inflation rate rose to 6.4 percent last month, increases announced by the four schemes have not come near the medical inflation mark.
“Many times in the past, when you have increases of this level, benefits have been eroded,” said Damian McHugh, Momentum Health’s head of sales and marketing. “And it’s what the industry had to do because its members are getting older and sicker. The combination of the increase with the benefit additions are positive.”
Momentum Health announced that existing co-payments such as for MRI scans and certain hospital procedures would remain flat. Where there are co-payments for using out-of-network doctors, they have been reduced to 10 percent from 20 percent.
Benefit limits have been increased by an average of 5.5 percent and self-funding gaps, when members have exhausted their risk pool benefits, have been reduced.
In recent years the medical aid industry has been characterised by shrinking benefits and premium increases above inflation, so the addition of benefits should bring much relief to consumers who are increasingly taking up gap cover for medical costs not covered.
To further lessen the need for gap cover, Momentum has added an incentive to pay 100 percent more than it is eligible to pay specialists if the member reaches certain levels of activity. For instance, where a member belongs to an option that reimburses specialists at 200 percent of the scheme’s rate, Momentum would pay 300 percent for active members.
The scheme has launched a free loyalty programme for its Multiplier plan, which is similar to Discovery’s Vitality.
Momentum has been building up its solvency reserves for years as the scheme had been below the required minimum of 25 percent. Last year it exceeded the threshold with a 29 percent solvency level. It said this had been one of the contributors to the adjustments announced.
“Obviously, now we don’t have to increase the solvency at the same rate. We are at a stage where we are giving back,” McHugh said.
The scheme has not held negotiations with the health-care providers for their 2014 rates but it assumed increases of 6 percent across the board. - Business Report