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Mediclinic News : Discovery delivers on hefty premiums hike

Title

Discovery delivers on hefty premiums hike

Date

2016-09-21

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News Description

BUSINESS DAY In line with its warnings earlier this year, Discovery Health Medical Scheme (DHMS) is to raise its premiums by a weighted average of 10.2 percent in January, slightly higher than the 8.6 percent weighted average increase it implemented in 2016. Members belonging to different options will face contribution increases ranging between 7.8 percent and 14.9 percent but will not face significant changes to their benefits. DHMS is the biggest medical scheme on the open market, and had 2 715 864 members at the end of July. It is administered by Discovery Health, a subsidiary of JSE-listed Discovery, and as a result is closely watched by the industry. Earlier this year, Discovery Health CEO, Jonathan Broomberg, warned that medical scheme members were likely to face higher than usual premium increases, as a result of increased claims. He said the whole industry has experienced a definite increase in utilisation over the past 12 months. The best explanation we have for it is that it is the cumulative effect of several new hospitals opening in the past few years and hitting their stride. He noted that new hospitals typically took between 18 months and three years to optimise their occupancy levels. Broomberg said medical schemes could not sustain this kind of supplier-induced demand and would need to look more closely at how they managed their use of hospitals. He said we are moving into an era where the idea that any new private hospital that opens will be funded by a medical scheme is coming to an end. That rule does not apply to new medicines or treatments. Funders are going to have to look at regional efficiency and more network arrangements. While DHMS’s planned contribution increases are higher than the consumer price index (CPI) projections for 2017 this is not unusual as medical inflation typically outstrips CPI by several percentage points. The Reserve Bank projected CPI would be 6.2 percent in 2017 and Treasury forecast it would be 6.8 percent according to a circular issued by the Council for Medical Schemes in July. DHMS’s increases are in line with the predictions made by Global Credit Ratings, which warned earlier this month that the contribution increases introduced by open medical schemes in 2015 could not be sustained. Its analysis found the average increase in 2015 was 9.1 percent.
Created at 2016/09/27 11:26 AM by Mediclinic
Last modified at 2016/09/27 11:26 AM by Mediclinic