Healthcare

Making the most of current medical scheme rates

By: John Cranke, Financial Adviser, PSG Wealth Employee Benefits Midlands

With the majority of medical schemes now having announced their increases for 2021, it’s evident that these are the lowest increases the industry has seen for some time – much to the relief of consumers who are feeling the pressure of an economy severely impacted by the COVID-19 pandemic. 

In the past, medical schemes have generally passed annual increases in the inflation plus 3% to 5% range, which would have meant total increases in the 6% to 8% range. However, increases for 2021 have generally been in the 4% to 6% range (with several schemes surprisingly announcing increases of even lower than 4%). 

Although the Council for Medical Schemes in Circular 52 of 2020 (released on 23 July 2020) requested schemes to contain increases to National Treasury’s expected 2021 average CPI of 3.9%, demographic and utilisation factors will always prevail to ensure schemes can ensure financial sustainability, which is why several schemes have increases at a higher rate.

Understanding why the increases have been lower for so many schemes is simple. A lower demand for elective or non-urgent surgeries for a protracted period during 2020 has meant claims were substantially lower than budgeted for. In addition, some of the prohibitive lockdown measures also resulted in lower trauma-related claims. However, this has to be countered by the fact that testing and treatment for COVID-19 was added to the Prescribed Minimum Benefits (PMBs) early in May 2020. This meant that provided any medical scheme members followed the proposed treatment pathways, medical schemes were obliged to cover COVID-19 tests from risk, as opposed to day-to-day benefits, irrespective of whether a member tested positive or negative.

The PMB guidelines were subsequently revised a couple of times, but the executive summary is that the guidelines set out what and how medical schemes must cover COVID-19 tests and treatment. By way of example, the PCR tests after referral by a healthcare professional are included at PMB level of care, but the rapid tests are not. The guidelines also cover what is not included at PMB level of care, such as the testing of employees retuning to work. If unsure about what is (or isn’t) covered, it’s best to confirm with your medical scheme.

Other factors that will come into play during 2021 are the pent-up demand for elective and non-urgent surgeries when lockdown restrictions are completely relaxed, and patients have the confidence to undergo the delayed procedures. A further expected impact will be the cost of providing cover for COVID-19 vaccines, and probably the largest and at this stage completely unknown factor, could be the cost of treatment for members during the expected resurgence (or second wave) of COVID-19. Medical schemes have therefore had to play a careful balancing act with the objective always being to protect their long-term financial sustainability.

The actual experience from scheme to scheme will also have been impacted by the underlying demographic and financial profile of the scheme. Medical schemes with younger age profiles or those in a robust financial position will in all likelihood be those with the lower increases for 2021, while the opposite will hold true for schemes with older member profiles or poorer financial positions.        

Remaining covered by a medical scheme is essential given how expensive it can be if you get sick or need to be hospitalised. If you’ve been putting off joining, use this opportunity to get the protection you need in place. Working with a financial adviser to guide you on the best choice for your unique circumstances and budget, should be the next step.




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