Press release -
Financial relief provided to members of Discovery Health Medical Scheme as 2023 contribution increase deferred to 1 April, with the Scheme optimally priced for expected claims
- Discovery Health Medical Scheme members to save almost R1.9bn in the first three months of 2023, access exciting new health-enhancing benefits and an innovative new network-based plan.
- Judicious use of excess Scheme solvency provides both financial relief and new benefits to members.
21 September 2022 – Today, Discovery Health Medical Scheme (DHMS) announced that its members will only pay more for their membership from 1 April 2023, instead of 1 January 2023. Yet, from 1 January 2023, they will have access to a range of exciting new and enhanced benefits.
This is the third time the scheme has deferred annual contribution increases to provide financial relief for its members. DHMS is once again extending the innovative strategy implemented over the first two years of COVID-19 and fuelled by related disruptions to the healthcare system. DHMS is the only South African medical scheme to have followed this approach, now for three years in a row.
The 2023 increase will be announced in February, to ensure careful alignment with medical inflation
Dr Ryan Noach, CEO of Discovery Health explains, “We will formally announce April 2023’s exact contribution increase, close to the end of February next year.”
“For now, both the Consumer Price Inflation (CPI) and healthcare utilisation outlook remain volatile. It’s important that the contribution increase accurately reflects underlying price and utilisation changes for 2023. The eventual increase will be in line with medical inflation which is typically 3% to 4% above CPI, though members will experience a real annual increase of between CPI and CPI + 2%, considering the deferral. As always, DHMS aims to accurately balance its long-term sustainability with short-term affordability for its members.”
The 2023 increase deferral amounts to an estimated R1.9 billion in savings for Scheme members for this year, bringing total member savings to almost R8.7 billion since 2020
“Reflecting on 2020 and 2021 and the carefully-considered contribution-increase freezes, it is pleasing to note that the brilliant actuarial calculations that informed the strategy, achieved almost exact alignment of our projections with actual claims expenditure for the Scheme,” says Dr Noach.
“The Scheme’s reserves strengthened relative to regulated solvency requirements because of the significant decline in non-COVID healthcare claims recorded during the pandemic and into 2022. The Scheme’s excess solvency has been used to the benefit of members, with R6.8 billion achieved in contribution savings during 2020 and 2021 through the deferred increases. This also achieved effective annual contribution increases that were 50 basis points below the market over these two years.”
“The deferral of the 2023 contribution increase generates an additional R1.9 billion in savings for members in the first three months of 2023, bringing the cumulative member savings (returned to members from excess solvency) over the past three years close on R8.7 billion.”
New WELLTH Fund and Disease Prevention Programme: Two channels of unprecedented investment in members’ long-term health
“In 2023, DHMS is making an unprecedented investment in members’ long-term health and, by extension, into overall Scheme sustainability. The scheme’s aspiration is to help members understand their health status, and take action to address elevated health risks, to ultimately extend their years of healthy living,” says Dr Noach.
“It is well documented both locally and globally, and it is evident within our own database, that the COVID-19 pandemic caused people to defer non-COVID related healthcare. People who were fearful of contracting COVID-19 at healthcare facilities missed essential screening and health checks.
Dr Noach confirms that Discovery Health’s data clearly shows screening rates among members are worryingly below pre-pandemic rates. To mention a few key tests, general health checks are down 50%, mammograms down 15%, pap smears down 12 % and prostate cancer screening checks are down 10%.
“The time has come for us to focus our attention on reversing this trend,” he adds. “When it comes to diseases such as cancer or any form of chronic illness, early detection is fundamental to limiting serious complications and reducing costs in the long term. For example, our data confirms that on average, a person diagnosed at the age of 40 with an early-stage breast cancer has a three times higher likelihood of surviving for five years post diagnosis."
“This is why we have introduced two dynamic new benefits through which to support members’ health and wellbeing,” he says. “Effective 1 January 2023, the Scheme will make its excess solvency reserves available to fund an expanded range of screening and preventive healthcare for members through the new WELLTH Fund. The Scheme will complement this introduction with a unique new Disease Prevention Programme to proactively identify and support members with elevated health risks.”
The WELLTH Fund is designed to help members resume and reset their understanding of their health status and empower them to manage and improve their long-term health.
Through deploying excess solvency within DHMS to the benefit of members, all members will have once-off access to up to R10,000 per family for an expanded range of screening and preventative healthcare to be used during 2023 or 2024.
Dr Noach explains: “The WELLTH Fund represents the best possible use of the Scheme’s excess solvency reserves. It is centrally aligned to our core purpose of caring for our members health and wellness. It is also economically astute, considering that an improvement in the Scheme members’ health means a long-term and lasting reduction in claims, with a nine-fold return on investment for funding the screening and preventive healthcare offered through the Fund.”
- The WELLTH Fund is activated by completing a Health Check during 2022 or 2023 (covered by the DHMS Screening and Prevention Benefit). This sets the baseline for a member’s health status. Once the member and all their dependants have completed their Health Checks, they will have access to up to R10,000 in their WELLTH Fund - R2,500 per adult and R1,250 per child - for a range of additional screening and preventative healthcare. Members have access to six broad categories of health screening and preventative healthcare services, including general health, physical health, mental health, women’s health, men’s health, and children’s health. Medical monitoring devices for certain health measurements are also covered.
The Disease Prevention Programme – targeting diabetes and cardiovascular disease
Diabetes and cardiovascular disease are two of the leading causes of death in South Africa. The prevalence of diabetes has tripled since 2010 and today, this disease is the leading underlying cause of death amongst South African women.
While DHMS diabetes data shows a 19% prevalence increase since 2018, it also highlights that 86% of members living with diabetes receive regular treatment for a cardiovascular disease. In addition, the data shows that those members living with high blood pressure, elevated blood sugar, abnormal cholesterol, elevated blood triglycerides and high Body Mass Index (BMI) - which is collectively known as cardiometabolic syndrome - have a significantly elevated risk of developing diabetes and cardiovascular disease.
“Since diabetes and cardiovascular disease can have a significant impact on life expectancy and years spent in good health, it is critical that we can predict, intervene and support those members who are at risk of developing these conditions, especially as the Scheme makes a significant investment in health screening in 2023,” says Dr Noach.
Members identified as at-risk, through powerful predictive analysis of screening outcomes and personal health records, will be prompted to consult with a GP to confirm their risk and enrol them in the 12-month management programme, with risk benefits in place for clinical support and treatment. The programme includes access to a GP, dietitian, pathology testing and 12 coaching sessions.
On completion of the programme, members will either exit, remain on medication to keep their risk under control, or they will be able to register for the DHMS Chronic Illness Benefit.
The new Essential Dynamic Smart plan: Innovation in hospital networks and the most affordable plan in the Smart Series in 2023
In 2023, DHMS is introducing another innovation in hospital network management – the first dynamic hospital network. Through this innovation members will be able to assess the most efficient hospital for their admission requirements at a specific point in time. This includes specialist requirements for tertiary care based on their location, health status and healthcare needs.
Dr Noach explains: “DHMS introduced hospital networks over 20 years ago to ensure that access, affordability, and private hospital care for members remain at a high quality yet are accessible at a lower cost. Today, more than one million DHMS beneficiaries are on plans with hospital networks, and more than 60% of new members joined hospital network plans in 2021. The new Dynamic Smart Hospital Network represents a step forward in offering a new-age network that delivers further value for members who wish to select hospital network plans.”
- Discovery Health has developed a sophisticated proprietary artificial intelligence algorithm which dynamically optimises the ideal network choice for members. The Dynamic Smart Plan offers funding in full for hospitalisation and care within this preferred network, optimally balancing cost, and quality choices.
The Dynamic Smart Hospital Network will support the introduction of a new plan on 1 January 2023 – the Essential Dynamic Smart plan.
“For many members, the trade-off between a lower contribution and hospital networks is convincing when choosing a medical scheme,” says Dr Noach. “The new Essential Dynamic Smart plan enters the market as the most affordable in the Smart Series in 2023, at a compelling price point of R1,450 per month, also making this the lowest cost per unit of benefit among comparable plans in open medical schemes.”
Driving innovations while considering the financial landscape and member needs
Dr Noach concludes: “Alongside significant time and effort invested into ensuring the robustness of our deferred contribution increase strategy, we have also worked hard to strengthen our goal of making our members healthier and enhancing and protecting their lives.”
“The Scheme’s overall strategy is clear. Our three-year contribution deferral and 2023’s innovative approach to investing in the immediate and long-term health of the DHMS member base - and by extension, the Scheme itself – work hand-in-hand to ensure the Scheme’s sustainability now and into the future.”
Notes to editors
What is driving medical inflation for 2023?
Medical schemes increase contributions in line with the real and anticipated year-on-year increase in the cost of healthcare claims – which is also termed medical inflation. For 2023, medical inflation is expected to remain at previous years’ expectations at approximately 3% to 4% above CPI. This is informed by the following factors:
- CPI is currently experiencing unusually high volatility with a large, predicted variance for 2023 (current projections range between 4.8% and 7.5%)
- Annual tariff or price increases for medical expenses (e.g., the cost of a visit to the doctor), typically close to CPI and expected to increase 0.5% above CPI for 2023
- Demographic risk: Ageing medical scheme populations resulting in a higher demand for healthcare services with higher claims costs (expected to increase claims by 3% in 2023)
- Supply-side factors such as the cost of new healthcare technologies which increase the cost and volume of available healthcare services.
- From end July 2022, the DHMS claims experience shows a recovery towards pre-COVID-19 healthcare utilisation levels. However, healthcare utilisation increases (extent at which we expect claims to catch up after the last three COVID-19 years) remain volatile for 2023, with a 1.5% to 2.5% expected increase for 2023.
Download soundbites by Dr Ryan Noach, CEO of Discovery Health: https://we.tl/t-2UD0rYcEfj
The first two clips (Ryan Noach 1 and Ryan Noach 2) are the two main reasons for the volatility in our current environment, which are hampering contribution decisions at the moment, for 2023.
The third clip (Ryan Noach 3) is Dr Noach’s announcement of the deferment of the Discovery Health Medical Scheme 2023 contributions until 1 April 2023.
Discovery Limited is a South African-founded financial services organisation that operates in the healthcare, life insurance, short-term insurance, savings and investment, and wellness markets. Since inception in 1992, Discovery has been guided by a clear core purpose – to make people healthier and to enhance and protect their lives. This has manifested in its globally recognised Vitality Shared-value Insurance model, active in over 35 markets with over 20 million members. The model is exported and scaled through the Global Vitality Network, an alliance of some of the largest insurers across key markets, including Asia-Pacific, Europe, North America and South America.
In 2021, Vitality Health International (VHI) introduced shared-value health insurance to employer groups operating in Ghana, Kenya, Nigeria, Democratic Republic of Congo (DRC) and Zambia, as well as Travel for Treatment service to the rest of Africa.
Discovery trades on the Johannesburg Securities Exchange as DSY. Discovery Group is the holding company of Vitality Group in the USA and of Vitality UK.
About Discovery Health Medical Scheme (DHMS)
Discovery Health Medical Scheme (DHMS) is the largest open medical scheme in South Africa and independent from Discovery Group. As with other medical schemes, DHMS is a non-profit entity that pools all contributions to fund healthcare claims. It is regulated by the Council for Medical Schemes, governed by the Medical Schemes Act 131 of 1998 and administered by Discovery Health (Pty) Ltd. Medical schemes have independent Boards of trustees and belong to the members. An independent Board oversees DHMS and the Principal Officer is Charlotte Mbewu.