Big medical aid price increases in South Africa

South African medical aid members should brace for big price increases with big providers, including Momentum and Discovery, announcing above-inflation price hikes.

Last month, Discovery announced that its medical aid contributions will increase by a weighted average of 9.3% for 2025.

Depending on the medical aid plan, the contributions will increase between 7.4% and 10.9%. Half of Discovery’s members will experience a contribution increase of 8.4% or less.

Discovery explained that the varying increases are so that the group can manage the different levels of medical inflation across the various schemes.

The contribution increases and benefit updates for 2025 have been submitted to the Council for Medical Schemes (CMS) for their approval.

The contribution increases and benefit updates will be effective from 1 January 2025, subject to approval by the CMS.

More recently, Momentum Medical Scheme announced it will implement an annual contribution increase of 9.4%.

Momentum said that no medical aid members will see a double-digit increase and that benefits will not be reduced.

Momentum Health Solutions’ chief marketing officer, Damian McHugh, said the company’s price increases are guided by an analysis of healthcare cost trends.

Momentum Health Solutions also looks at member utilisation patterns and economic factors to inform its contribution adjustments.

“By taking a data-driven approach, Momentum Medical Scheme made informed decisions that benefit both members and the scheme,” he said.

On Wednesday, 2 October 2024, Bonitas Medical Fund announced that they would increase prices by an average of 10.2% from 1 January 2025.

Lee Callakoppen, principal officer of Bonitas Medical Fund, said the medical scheme industry has faced turbulent conditions over the past year.

“We’ve had to take measures to prevent instability in our environment in arriving at our weighted increase of 10.2%,” he said.

With three of the biggest medical aid providers announcing above-inflation price increases, most other providers are expected to follow suit.

This means that South African medical aid members should prepare for significantly higher premiums next year.

Big price increases explained

Discovery explained that the rise in healthcare costs in South Africa is much higher than inflation, forcing them to significantly increase medical aid fees.

“Across the world, medical inflation is estimated to exceed consumer price inflation (CPI) by 6.4% in 2024,” Discovery said.

The company explained that there has been an increase in chronic illnesses and a higher ratio of older people on medical aid.

This means that the average cost per medical aid member is rapidly increasing, forcing them to adjust their fees to remain sustainable.

Discovery said chronic beneficiaries rose from 15.8% in 2008 to 33.1% over the last fifteen years.

The company further explained the medical aid contribution increases align with the increases seen in medical inflation.

Other factors leading to the sizeable increases are:

• Increases in the price of healthcare services, which are typically in line with CPI.
• The demand for healthcare services increases due to a gradually ageing membership.
• Increasing prevalence of chronic illnesses and an increasing proportion of high-cost claimants.
• Increases in the supply of healthcare services through new medicine, new medical technologies, advances in medical procedures and increased need for specialised care.

Momentum said that although there is more positivity around the South African economy, unemployment remains high, and consumers must make tough choices.

The medical scheme industry is also not immune to this trend. Consumers select their medical scheme based on what they can afford rather than what they need.

This trend puts pressure on medical aid providers in South Africa, with higher average claims per member.

“When considering a medical aid option for the upcoming year, it is crucial to understand how these adjustments impact choices,” Momentum said.

“Prioritising value over cost is essential; cheaper plans often come with limited benefits and higher out-of-pocket expenses.”