Discovery Health says the average cost of all Covid-19 hospital admissions of members of its schemes (open and closed) is R84 708.
This is based on 248 completed admissions thus far.
In a briefing on Wednesday, Discovery Health CEO Dr Ryan Noach highlighted that the costs vary significantly by the type of admission.
A white paper published by Discovery shows the admissions that have required ventilation cost on average R340, 737, while ICU admissions “have the largest variation in cost” with an average of R169 525.
He referenced a member currently in ICU where the cost is already R800,000.
As the largest medical scheme in the country, it would have useful insights into the outbreak. By May 15, it had a total of 1 539 confirmed cases across its member base. At that stage the majority of the cases were in the Western Cape and Gauteng (41% and 38% respectively). In updated numbers as at May 18, total cases are 1 733 with 824 of those in the Western Cape.
So far, Discovery says the median age of members with a confirmed diagnosis is 41. But, while confirmed cases are “biased” to the age bands spanning 20 to 59, the “age distribution of cases requiring hospital treatment is biased to older ages”.
Notably, 61% of confirmed cases between age 70 and 79 and 65% of those between age 80 and 89 have been admitted to hospital. It says “the admission rate has also been seen to increase with the number of chronic conditions a member has”.
It says the “vast majority of members below 50” recover from Covid-19 without the need for treatment in hospital.
So far, the average case fatality rate across Discovery Health is 2.4%, slightly higher than that for the country as a whole which is 1.8%.
More than a third of confirmed cases involving members between 80 and 89 years old have been fatal.
He says that based on the group’s modelling, expenses related to the pandemic will cost the entire medical scheme industry somewhere between R7.3 billion and R31.8 billion over the two-year period. He says 2020 and 2021 need to be looked at together.
While this is a “very wide” variation in costs, this spans three scenarios (low, medium and high). These costs include the previously unforeseen economic costs related to Covid-19, primarily out-of-hospital costs (for screening and testing), as well as in-hospital costs which typically run at least double the amount of the out-of-hospital ones for each scenario.
This translates to an additional fixed cost of somewhere between R816 and R3 561 per beneficiary, depending on the scenario
The impacts in each scheme will, however, vary based on the demographic profile of its membership. Schemes with an older membership base (higher average age and ratio of pensioners) are likely to experience admission rates and costs per admission that are higher than average.
Noach says the group is “very comfortable that Discovery Health Medical Scheme is in a resilient position” with over R20 billion in reserves.
It has stress-tested a wide variety of possibilities and looked for anything that would or could “break” the scheme’s reserves. Even in Discovery’s ‘high’ outbreak scenario its reserves will be able to withstand the additional costs.
But Discovery says these additional Covid-19 expenses “will be offset, to some degree, by relatively lower claims for discretionary and elective healthcare episodes during the lockdown period”. Even with some recovery following the hard lockdown in April, the number of medical and surgical admissions are at roughly half their normal level.
At this stage, it says medical schemes could even generate a surplus in this calendar year, despite Covid-19.
But this surplus would need to be used to cover the additional Covid-19 costs in 2021, as well as to deal with the anticipated catch up in utilisation, explains Noach. He sees this catch up occurring in the second and third quarters of 2021.
Discovery says it has already offered a ‘few hundred million rands” in premium relief to members.
In the first instance, it reached out to 250 000 principal members with positive carryover balances in their medical savings accounts. It offered these members the option of using these balances to cover premiums or portions thereof to help with cash flow challenges.
It has also engaged with employers with between 10 and 200 staff and offered premium relief for two months. This relief would have to be repaid, interest-free, over the remainder of the year.
Noach says blanket or wholesale premium relief in the medical schemes is “economically” simply “not viable”.
The statutory reserves in schemes are only equal to three months’ premiums, he explains.
“A premium holiday would wipe out all reserves, which is precisely what you wouldn’t want in a time like this.”
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