Medical schemes: The biggest winners and losers in 2020

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The Council for Medical Scheme's latest annual report shows that the Discovery Health Medical Scheme lost almost 50 000 beneficiaries in 2020.
The Council for Medical Scheme's latest annual report shows that the Discovery Health Medical Scheme lost almost 50 000 beneficiaries in 2020.
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  • Discovery Health Medical Scheme lost almost 50 000 beneficiaries in 2020.
  • But it is still the largest medical aid in SA, with 2.8 million beneficiaries; that's nearly four times bigger than the third-largest scheme, Bonitas.
  • The scheme that gained the most beneficiaries in 2020 was Makoti Medical Scheme, which grew beneficiaries by 20.3%.

The Council for Medical Schemes' latest annual report shows that the Discovery Health Medical Scheme (DHMS) lost almost 50 000 beneficiaries in 2020. The report detailed medical scheme membership movements between the end of 2019 and the end of 2020.

Following DHMS's 49 770 beneficiary loss was Fedhealth. It lost 13 015 beneficiaries. Bonitas lost 12 858.

The relatively unknown smaller schemes caught the CMS' attention, with high overall growth in beneficiaries in the middle of a pandemic.

Makoti Medical Scheme grew beneficiaries by 20.3%. LA-Health Medical Scheme gained 7.1% more people and Building & Construction Industry Medical Aid Fund's beneficiaries grew by 5.9%.

The fastest-growing Makoti Medical Scheme targets low-income earners. Although it's not well known, it has been around for 21 years. People earning less than R3 240 a month paid R279 for adult beneficiaries in 2020 and R181 for a child dependent.

Of the bigger, prominent schemes, only the Government Employees' Medical Scheme (GEMS) stood out by registering 71 463 more beneficiaries, a 3.8% growth year-on-year.

"Covid-19 undoubtedly negatively impacted the exposure data, with many individuals being laid off or losing their jobs, resulting in many members being unable to afford private health care," wrote the CMS in the report.

Discovery remained the biggest, by far

Nevertheless, DHMS remained the biggest medical scheme in the country, despite the loss of beneficiaries. It covered almost 2.8 million people at the end of 2020. GEMS had over 1.9 million beneficiaries. The third-biggest scheme, Bonitas, only had just over a quarter of DHMS's market share at 714 989 beneficiaries.

DHMS's size, however, does not seem to deliver the economies of scale members might expect n terms of administration costs they pay. The scheme had the highest administration fees among its peers at R336.84. The industry average for open schemes was R305.54 per average member per month.

Of the three fastest-growing medical schemes in 2020, LA-Health was the biggest in terms of people covered by the scheme. It is as big as Bankmed and bigger than Bestmed and Medshield. But like DHMS, it also has higher administration fees than most of its peers in the restricted schemes, arena, save for Profmed.

A stagnant industry

The regulator said the number of people covered by the medical scheme has not been growing for a decade now and refuses to surpass the nine million mark. The proportions of beneficiaries covered by medical schemes now make up 14.78% of SA's population, declining from 16% in 2000.

The last time the medical scheme industry recorded positive growth in members and dependants was between 2008 and 2013. But this came mainly from restricted schemes that only accept people employed by certain companies or in specific industries.

So, whoever is growing, is taking from those who are losing beneficiaries.

But if the current trend is any indication of what to expect in the future, smaller schemes that are taking market share from big medical aids might start vanishing.

The CMS data showed that the total number of registered medical schemes in the country has consistently been on a decline in the past decade. The number of medical schemes decreased from 144 in 2000 to 76 in 2020.

The regulator said voluntary amalgamations – or profit-generating companies call mergers and acquisitions – mainly drive the consolidation of medical schemes.

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