Among the top six open medical schemes, Bestmed, Fedhealth and Medihelp have reported the highest weighted average increases of 12.75%, 12.4% and 10.8% respectively. Following closely are Bonitas with 10.2%, Momentum with 9.4%, and Discovery with 9.3%.
Jeremy Yatt, principal officer of Fedhealth, says external factors played a role in price formulation. “Medical inflation, currently 3% to 5% higher than general inflation, is driven by factors such as the rise in lifestyle diseases, with chronic conditions among younger people more than doubling in 15 years, and chronic claims increasing by around 28% since 2008,” he said, adding that these were industry-wide trends.
Dr Ron Whelan, CEO of Discovery Health Medical Scheme administrator Discovery Health, said contribution increases had to account for medical inflation and expected claims for healthcare by members in 2025.
Whelan explained that medical inflation was driven by:
- increases in the price of healthcare services, typically in line with CPI;
- increases in the demand for healthcare services, as a result of a gradually ageing membership, increasing prevalence of chronic illnesses, and an increasing proportion of high-cost claimants; and
- increases in the supply of healthcare services through new medicine, new medical technologies, advances in medical procedures and increased need for specialised care.
Although Discovery’s weighted average contribution increase is 9.3%, contribution increases will range from 7.4% to 10.9%, depending on which benefit option members are on.
Paresh Prema, head of healthcare actuarial at Alexforbes, says contribution increases need to allow for CPI, plus an additional margin to account for ageing and utilisation (on average usually 2.0%-4.0%), benefit changes, as well as an allowance to maintain reserves, as these are needed to protect a scheme during unexpected events.
According to the August 2024 Consumer Price Index from Stats SA, the component relating to healthcare cost inflation stands at 5.1%, outpacing the overall CPI of 4.4%. “A combination of inflation and utilisation rates over recent periods, along with the need for enhanced margins to provide a cushion against adverse experience, has necessitated contribution increases that exceed the rate of CPI,” Prema says.
Contribution increases announced for 2025 have been driven by deteriorating claims experience, due to the delayed diagnosis of serious and costly illnesses, compounded by an ageing membership and the emergence of new technology that contributes to increased costs of providing healthcare.
Prema says significant increases in healthcare costs are neither affordable nor sustainable in the long run. “Medical schemes have implemented substantial short-term increases to rebuild reserves and enhance the sustainability of loss-making options. However, we do not anticipate that these high increases will persist in the future. Instead, we expect to see more moderate increases as reserves strengthen and the sustainability of previously loss-making options improves,” he noted.
Although schemes have tried to keep increases on the lower end of double-digit increases, the additional expenses are likely to be a shock to the system for consumers already battling a cost-of-living crisis. A recent reader survey by Daily Maverick revealed that most readers using medical schemes run out of medical savings for day-to-day costs as early as April or June, forcing them to fund doctor visits and medication on their own.
Voices unplugged
This is what Daily Maverick readers had to say:
Poor communication: Margaretha says her problem is that her medical scheme will only pay for specific generic medication, which is often not stocked by the pharmacy she uses. “We moved to a less-expensive option this year and it took the scheme eight months to inform us what the actual benefits and limits are (and some of this is still unclear),” she says.
Financial distress: Emma had really great feedback – she pointed out that you can make an application to downgrade your plan based on financial distress. She was paying R12,000 a month for a particular (standard) option, and still found herself forking out R3,000 a month for medication. The option included a R6,000 annual cap for medication, and this was usually exhausted by March. “I phoned my medical scheme with my conundrum, and was advised to make an application to change my plan out of the window for plan changes – there are a few bases on which you can make this application, but mine was based on financial distress. The process is to request the form, fill it in and provide all the requested supporting documentation (bank statements, payslip, detailed budget for a financial distress application). I was contacted about five days later, and though they couldn’t offer me the plan I had asked for, they could offer me a basic hospital plan that would cover us in case of medical disaster, but day-to-day expenses I would pay myself. The new premium was less than R5,000, which then gave me the wiggle room I needed to pay the out-of-pocket expenses,” she says.
Expensive prescriptions: Karen says she is always surprised when the pharmacist expects that she will still have savings available after April – after having her annual optometrist, dentist, mammogram, bloods and dermatologist checks. “HRTs are not considered chronic and they are over R700 a month! Doctors are also specific in their prescription advice re taking vitamins to keep healthy – Metagenics – at R800 a bottle plus omegas and vitamin D (not covered)!” she points out.
Resigned acceptance: Martin says his medical aid savings run out quite early in the year, so his plan is to switch to a hospital plan in 2025 and simply accept that he will cover all day-to-day costs himself. DM
Daily Maverick has chosen to use first names only when sharing anecdotes related to personal finance, to preserve confidentiality.