According to Momentum Health’s marketing officer, Damian McHugh, South Africans with medical aid coverage should brace for significant above-inflation price increases in 2025.
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McHugh highlighted that rising demands on medical funds drive up costs, while efforts to keep contribution increases in check are leading to additional expenses for medical schemes.
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As a result, medical schemes have had to reduce or tighten benefits to keep premium increases lower than would otherwise be necessary – a trend that may continue into 2025.
Despite efforts to manage costs, medical aid contributions in 2024 still exceeded inflation rates, a trend McHugh anticipates will continue into 2025.
According to BusinessTech, in 2024, medical aids raised monthly contributions by 8% to 9%, in line with recommendations from the Council for Medical Schemes (CMS). However, these increases varied widely.
Members with higher-end, comprehensive plans experienced much steeper hikes.
For instance, Discovery, the largest medical aid provider in the country, saw increases ranging from 3% to 13%, with the most significant rises in its premium segment, which offers extensive coverage.
Momentum, like BestMed, implemented a weighted increase of 9.6% for 2024.
Bonitas had the lowest weighted average at 6.9%, yet even its comprehensive coverage faced a 9.6% surge due to the premium adjustments.
Ahead of the 2024 price adjustments, the CMS recommended that medical aids cap their increases at 5%, plus reasonable estimates for utilisation.
The CMS noted that historical data suggested these utilisation estimates typically add between 3.2% and 3.8% to the hikes, setting the ‘reasonable’ increase target around 8.5%.
Headline inflation for 2024 is projected to average around 5%, making the anticipated medical aid increases significantly out of step with overall inflation.
Historically, medical aids have contended that medical inflation exceeds headline inflation, running 3% to 4% above the Consumer Price Index (CPI).
As South Africa approaches the hiking season, various medical aid schemes are poised to announce their increases for the coming year.
The CMS reports that medical aids have regularly raised contributions above inflation, aiming for CPI+4%.
The Covid-19 pandemic disrupted this pattern, leading to smaller increases in 2021 and 2022 and a slight uptick in 2023 due to delayed hikes.
In 2024, increases have returned to the CPI+4% target, helped by changes in benefits and pandemic delays.
However, costs in private healthcare are rising faster than inflation, and membership growth for medical schemes has stalled.
Medical aid schemes usually begin announcing price hikes and benefit changes in September and October.
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