- Momentum Medical Scheme will only increase contributions in September 2022.
- With a 6% increase from September to December, the scheme's effective contribution increase for 2022 will be 2%.
- But the scheme says there are still many unknowns on how Covid-19 will affect future claims.
Momentum Medical Schemes will hold off contribution increases until September next year.
It plans to increase the average monthly contributions by 6% across the scheme in the last four months of 2022, which will effectively translate to a 2% increase for the year.
"That equates roughly to over R200 million relief back to members over that period. And that does not put the Momentum Medical Scheme in any financial difficulty at all. In fact, the scheme will still be well above the [required] 25% reserve [levels]," said Momentum Health Solutions executive Damian McHugh.
2022 medical aid contribution increases so far
Although the Council for Medical Schemes (CMS) recommended that medical aid companies limit their 2022 contributions increases to 4.2% or less, some said the uncertainty of future Covid-19 claims made it hard to do so.
Medshield has announced a 6.3% weighted average contribution increase across the scheme. Bonitas said it will implement an average weighted contribution increase of 4.8% across all plans, but the premium on its BonStart option will decrease by 7.9% in 2022.
Among smaller schemes that have announced their 2022 contributions, Bestmed's contributions will go up by 3.9%, and Key Health Medical Scheme's premiums will increase by 4.6%.
McHugh said Momentum Health Solutions has also experienced the trends that are making other schemes uncomfortable.
While in 2020, hospital admissions and the utilisation of other medical aid benefits fell to record lows, McHugh said it has become clear in 2021 that the trend is reversing.
"We've already seen a lot of services, particularly the day-to-day component and even surgical admissions in hospitals are already getting over [the 2019] level. So, we anticipate that somewhere during the course of 2022, utilisation is going to go back to where it was in 2019," he said.
He said if Momentum's expectations materialise, medical schemes' claims cost could start to inflate at "normal" levels, which is somewhere around 2% to 3% above the consumer price inflation.
The unknown cost of future Covid-19 claims
Medical schemes need to keep their contribution increases as close as possible to the rate at which the cost of providing healthcare escalates. With the record reserves that many built up in 2020 when people were not going to hospitals and skipping doctors' appointments, they have money to help absorb some of the costs next year if Covid-19 and other claims accelerate.
But most schemes have increased 2022 premiums to keep their contribution increases sustainable in the long run. McHugh said the rationale is to implement some increase now than shock members with a 16% to 20% increase in the next two years.
Even though Momentum Medical Scheme is using the same strategy as others of letting its members take minimal pain now, the effective increase of 2% for the entire 2022 financial year makes it the lowest hike so far and considerably lower than the CMS recommended.
McHugh said the 6% increase from September 2022 will ensure that the scheme contributions the scheme collect don't fall behind the cost of healthcare.
"In September, we are increasing [contributions] at the right rate, although between now and September, people will be paying the same amount. So, we are able to do both things; keep our increases low and increase the costs to ensure the sustainability of the price in the subsequent years," said McHugh.
Covid-19 makes it harder to plan
In a normal year, Momentum Health Medical Scheme would have implemented that 6% contribution increase from January instead of delaying it until September. Having that 6% increase later in the year provides some sort of a hedge for the scheme to increase 2023 contributions from a higher base should it need to.
But there's still much unknown about what will happen with Covid-19-related claims, especially when more people get vaccinated. So, there is a chance that even in 2023, the scheme may delay contribution increases again and observe emerging trends before deciding where it should pitch its premiums.
"There are unknowns of the vaccine, the unknown of the boosters. Are we going to be a country that's going to require boosters? So, we need to understand some of that and keep some of those reserves back," said McHugh.
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