Making medical aid choices in uncertain times
2021 continues to put the spotlight on healthcare. The second wave of Covid-19 and the emergence of different variants of the virus are impacting countries, borders and businesses. The vaccination brings some hope that we will be able to fight and contain the pandemic, but until “herd immunity” has been achieved, we need to continue to follow protocols, remain vigilant and take care of our day-to-day healthcare needs.
Lee Callakoppen, Principal Officer of Bonitas Medical Fund says that despite economic pressures brought to bear during Covid-19, many South Africans want to ensure they have the access to the right healthcare for their family. “Which is why there was minimal impact on our member numbers for 2020, with a 2.2% increase in terminations compared to 2019. Of our total members, 10 019 changed their options in 2020 and, of the members who changed options, 38.1% upgraded while 61.9% downgraded their plans.
“We believe this is partly due to the increased support provided during the initial Covid-19 lockdown through the introduction of virtual care, online and WhatsApp self-service channels and the delivery of chronic medication. We put interventions in place to educate our members about the pandemic and to reassure them of the treatment protocols, which is part of the reason members have chosen to remain on their medical aid.”
South Africans remain uncertain about the level of healthcare they will receive if they are not able to access private care. However, Callakoppen advises that all medical aid options and scenarios should be considered – and that these are then balanced against the affordability of the contributions, before a healthcare choice is made.
“We know that consumers are faced with several challenges – economically, socially and psychologically - especially due to the Covid-19 pandemic. We therefore carefully weighed up all factors when deciding on our 2021 product offering. We looked at ways to balance affordability, while ensuring the Scheme remains sustainable. In this way we can continue to provide our members
with access to quality healthcare.”
Over the years, The Council for Medical Schemes (CMS) has made recommendations that medical aids accommodate standard inflation plus an additional 3% when looking at medical aid contribution increases. However, for 2021 the recommendation was to curtail increases as far as possible.
“The increases for 2021, lower than or equal to inflation, would have been a win for cash strapped consumers in the short-term, but the impact of this could be far reaching,” Callakoppen explains. “We opted to take a long-term view, to ensure that our members would not have to pay the price in coming years through significantly higher increases.
“From the outbreak of the pandemic, we experienced lower claims as elective procedures were deferred to make way for Covid-19 related hospitalisation. However, little has been said around healthcare inflation. Usually outpacing general inflation by between 3% and 5%, it has been a concern across the sector for the past decade.
“The healthcare eco-system has not escaped increasing costs and those relating to healthcare professionals, medicine, technology and supply chain optimisation all have to be taken into account. There remains uncertainty around the real costs of Covid-19 for medical aids – which will include the vaccination rollout.
“In such uncertain times, it would be remiss of us to place further uncertainty on our members - and it’s for that reason we announced our lowest increase in our history, even managing to keep one plan with a 0% increase.”
Callakoppen says it’s important to compare the actual benefits and contributions after the contribution increase, rather than the percentage increase in isolation. “The following simplistic example illustrates this point: Two schemes offer the same benefits, but Scheme A costs R100pm while Scheme B costs R110pm. If Scheme A announces a 10% increase (to R110pm) and Scheme B announces a 7% increase (to R117.70pm) and neither changes the benefits, then Scheme A still provides the same benefits at a lower cost, even though it announced a higher contribution increase.
“It has been a challenging few years for the medical aid industry, with economic pressures and runaway healthcare costs causing healthcare prices to rise at an alarming rate. Schemes with an ageing membership base generally experience increased claims costs in excess of inflation, on account of higher usage of benefits. We estimate that members tend to claim approximately 2% more every year they grow older.”
But it isn’t all doom and gloom.
“One of the positive developments of the pandemic and the subsequent lockdowns has been the industry’s ability to adapt to the new normal by swiftly embracing innovative diagnostic platforms. The use of virtual care consultations has increased, as did the adoption of telemedicine. In addition, we have been forced to become more innovative around how we interact with our members.
“This remains a core focus for us. We will continue to build on these successes and provide South Africans with affordable, quality healthcare.”
ANHEUSERBUSCH InBev (AB InBev) said yesterday that it finished the last quarter of the 2020 financial year in a strong financial position and with “momentum in their key markets,” according to chief executive Carlos Brito.
AB InBev, which operates in more than 50 countries, serves key markets such as Brazil, Argentina, Colombia, Ecuador and South Africa.
Revenue was up by 4.5 percent compared to a 3.7 percent decline for the full-year.
Its total volumes for the fourth quarter to end December increased by 1.6 percent, with own beer volumes up by 1.8 percent and non-beer volumes up by 1.7 percent, but full-year total volumes declined by 5.7 percent, primarily driven by impact of the Covid19 pandemic.
In South Africa, the group, which owns brands such as Budweiser, Stella
Artois and Corona, said the multiple alcohol bans impacted its performance, though underlying consumer demand remained strong.
“Our business in South Africa was significantly impacted by three outright government-mandated bans on the sale of alcohol over the course of 2020, which resulted in double-digit volume, revenue and earnings before interest, tax, depreciation and amortisation (Ebitda) declines and significant
Ebitda margin contraction,” AB InBev said.
However, the ban of alcohol sales had since been lifted at the beginning of February.
However, AB InBev’s overall Ebitda was down by 12.9 percent to $17.32 billion (R251.83bn) while the fourth quarter declined by 2.4 percent to $5.07bn.
AB InBev saw its full-year normalised earnings per share falling to 1.91 US cents a share, down from 4.08 US cents compared to last year.
The board has proposed a full-year dividend of 0.50 euro cents (R8.83) a share, which is subject to shareholder approval during the annual general meeting scheduled for April 28.
The group finished the year with momentum in their key markets despite experiencing an extremely challenging year due to the Covid-19 outbreak.
“We are now more closely connected than ever to the 6 million-plus customers and 2 billion-plus consumers we serve worldwide through our clear commercial strategy, revamped innovation process, digital platforms and ongoing operational excellence,” Brito said.
Looking ahead, AB InBev said while the ongoing disruption caused by the Covid-19 pandemic continued to create uncertainty, it expected its top and bottom line results in financial year 2021 to improve meaningfully compared to financial year 2020.
“We expect topline growth from a healthy combination of volume and price, translating to bottom line growth.
“We will continue to efficiently utilise our resources while fuelling investments behind our brands,” the group said.
AB InBev also expected the adverse channel and packaging mix, coupled with transactional forex and commodity headwinds, to put pressure on its financial year 2021 Ebitda margin.
The share price closed 3.5 percent lower at R907.10 on the JSE yesterday.