Open medical schemes cap contribution increases

Momentum limits costs

AVERAGE medical scheme contribution increases look set to remain within single digits for 2013 as all open schemes that have announced increases have stayed below 8 percent.

Yesterday both Momentum Health and FedHealth said contribution premiums would increase by 7.9 percent next year. Medshield announced earlier this week that its contributions would rise by 7.5 percent across all options.

At the same time, the schemes will enhance the benefits and, so far, no benefit reductions have been announced for 2013, unlike moves by most medical schemes in 2012.

Medshield increased its dayto-day and optical benefits, as well as overall and sub-limits on some options, among other changes. Momentum Health said it would implement inflation-linked increases on its existing benefits.

Discovery Health and Bonitas have not announced their benefits for next year.

Momentum Health’s head of marketing and sales, Damian McHugh, pointed out that low non-health-care costs and the claims ratio, which resulted from a decline in the scheme’s age profile, were some of the things that helped it keep the contribution increases low.

“We are happy that we are growing big and we are growing young. We’d rather not grow than grow with a wrong age profile,” said McHugh, who added that a one-year age increase in a scheme’s profile would lead to a 3 percent increase in the claims ratio.

Some of the benefit enhancements that Momentum Health will implement include additional general practitioner (GP) benefits with its HealthReturns programme. The programme encourages active and healthy living and rewards members who maintain the top activity levels by paying them cash back. These GP benefits will be on top of the members’ customary GP consultations.

Moreover, the scheme is looking to do away with the threshold benefit design for its new generation option, the Extender. Instead, it will allocate more benefits to members’ savings accounts. This should be well received by members as they will not need to pay what they are currently required to pay as “self-payment gaps” before they qualify for threshold benefits.

McHugh said Momentum Health had established that members were not using their threshold benefits because the self-payment gaps got wider every year.

“If we keep selling this [threshold benefit structure] in the industry, health care is going to become more and more expensive,” he said.

McHugh said it had established that members on expensive options were not using much of their savings benefits and now they would be looking at carrying those over to the following year.

This could translate in to no contribution increase for these members the year after and it could bring the average weighted increases for the whole scheme down.

“Depending on how you utilise our products, you can make the increase what you like,” McHugh said.

Mariné Erasmus, a health economist at Econex, said the lower contribution increases for 2013 might be related to improved managed care practices, which allowed the industry to contain costs more effectively.

“However, more schemes made surpluses in the past year and may therefore be able to put through lower increases to their members,” she said.

Erasmus said these increases were unlikely to be resulting from the pressure from members and health commentators, who criticised medical schemes for increasing contributions beyond consumer price inflation. Rather this was owing to medical schemes implementing required contributions based on detailed actuarial calculations.

Momentum Health is a subsidiary of MMI Holdings, which rose 0.58 percent to close at R20.72 yesterday.