Consumers can prepare themselves for a rude awakening, as medical schemes are struggling to balance the costs of the Covid pandemic.
This could result in rate hikes higher than the usual above inflation increases, as there are no signs of the pandemic ending soon, with concerns that SA will soon be entering a fourth wave.
With experts predicting that full recovery from the pandemic may only be achieved in 2024 and a possible two-year period of medical schemes balancing Covid cases, as well as normal claims, medical schemes will be looking to financially recover.
Ordinarily, medical schemes would have announced their rate increases in December 2020. This was put on hold as Covid impacted the country.
Medical schemes have had to deal with the crisis without the luxury of increased revenue from rate increases. The costs that some schemes have had to face are astronomical.
Jeremy Yatt, principal officer for Fedhealth Medical Scheme, says up to July, it had paid R375 million in Covid expenditure since the onset of the pandemic.
The largest driver is the cost of hospital care at R240 million, followed by pathology (mostly Covid tests) claims that amounted to R55 million.
He says so far this year the average cost per Covid hospital admission has been R163 000, with an average stay of 10 days.
Fedhealth’s largest Covid hospital account so far has been R4 million. Yatt says that when looking at 2020 and 2021 in isolation, it has been a tale of two distinct halves.
He says the scheme was positioning itself to implement rate increases for 2021, as were other medical schemes, but this had to be put on hold.
Fedhealth will be implementing rate increases for 2022 along with the rest of the industry, based on the 2021 claims experience and future predictions.
“However, an important factor to consider this year is how much of an impact the return of elective surgeries will have post-Covid. Pre-Covid statistics indicated some overservicing related to elective surgeries and the scheme would like to try and ensure that we don’t go back to old habits.”
Yatt says 2020 was a year characterised by hard lockdowns and, consequently, a large number of procedures were postponed, as people tended to stay away from hospitals and opted to be admitted only when absolutely necessary.
The reduction in non-Covid claims in 2020 was significantly larger than expected.
But, schemes that experienced a large reduction in previously postponed procedure claims will at some point likely experience a large resurgence of these procedures.
That may compound the costs due to inflation and/or exchange rate differences. Again, as Yatt warns, this may be a key determinant of future increases.
As lockdowns eased, Fedhealth saw a catch up of postponed procedures, leading to big increases in non-Covid claims.