Discovery’s plan to make health insurance much cheaper

Discovery is set to launch new products in 2025 that will change the way health insurance is offered in South Africa. It will use technology to combine high-quality service with low prices.

This is part of Discovery’s plan to expand its offering by targeting the significant number of South Africans who cannot afford traditional medical aid schemes. 

Discovery’s more affordable health insurance offerings have experienced strong growth in recent years as the company expanded its Flexicare product range. 

It has since added to this offering and is set to launch its Emergency Cover range on 1 January 2025. This will culminate in the launch of a new medical aid scheme called Active Smart on the same date by Discovery Health Medical Scheme.

In an interview with Daily Investor, Discovery Health’s chief growth officer, Maria Makhabane, outlined the growth of these offerings and how they fit into the company’s larger ecosystem. 

Makhabane said the Flexicare product range has experienced particularly strong growth in recent years, growing by over 70% in the past thirty months. It now covers over 120,000 South Africans and is offered through 550 employers. 

Flexicare provides individuals access to a range of primary care benefits in the private healthcare system. 

It is funding nearly 22,000 GP visits per month, meaning one in five Flexicare members consult with a GP each month. One in 10 members also gets a script filled out monthly.

What is unique about Flexicare is that it offers digital clinic consultations, eliminating factors such as travel and waiting times to treat a patient, driving the cost of healthcare down. 

Makhabane explained that this enables Discovery to offer high-quality healthcare insurance at a lower price point by reducing admin costs as well as wait times. 

“What we are looking to do with these products is create more affordable access but maintaining the quality of healthcare and not compromising that at all,” Makhabane said. 

“We have made significant progress with our healthcare professionals and providers to meaningfully improve the affordability of services without compromising quality.”

Makhabane said this specifically looks at reengineering some of the practices of healthcare professionals to minimise time spent by doctors on administrative tasks. 

This can be done by using more assistance, such as nursing or medical assistance, in terms of triaging care or taking on more administrative functions for doctors so they can use their time more effectively. 

The total addressable market for this offering is between four and five million South Africans, indicating that there is still substantial room for growth. 

Traditional medical aid schemes only cover 16% of South Africa’s population, with a further 27% paying for their medical bills out of their own pocket. 

“So, as you could imagine, we are just scratching the surface of the total addressable market for these products,” Makhabane said.

Crucially for Discovery, these new products tap into a client base it previously did not have access to and bring them into its ecosystem. 

Makhabane said the vast majority of their clients are completely new to Discovery and do not have any existing products with the company. 

She also explained that when new clients sign up for these products, they tend to also engage with the company’s Vitality rewards program and some even open a bank account. 

While Discovery’s overarching goal is to make people healthier, Makhabane said her team is at the forefront of making more people healthier by bringing them into the Discovery ecosystem. 

As these products attract more “non-traditional Discovery clients”, the company can increase the cross-utilisation of its products and offer them a new segment of the population. 

“We’re seeing that as they enter our ecosystem, some of them also tag on Vitality to their product suite alongside the likes of the Emergency Cover or the gap cover product.” 

This works both ways, with Discovery’s Flexicare products and other offerings benefitting from access to banking clients. 

“I think the first and most paramount part of our purpose is actually just expanding that access to healthcare. If not just in terms of expanding the addressable market for the Discovery Health ecosystem.” 

As part of this expansion, Discovery is also set to launch a more affordable medical aid scheme next year. 

Active Smart will launch on 1 January and is specifically targeted at the needs of young professionals and those beginning their working careers. 

On the other hand, products such as Flexicare are more targeted at those who cannot afford traditional medical aid schemes. 

Active Smart is priced at R1,350 per principal member monthly and offers coverage specifically for younger individuals. 

Discovery Health data analysis shows that for members aged 20-29, approximately 7% of their income goes toward medical scheme contributions, whereas older adults only spend around 4% on medical scheme contributions.

Discovery Health research estimates that 109,000 uncovered young professionals would take up medical scheme cover if there were an affordable option and where contributions amount to roughly 5% of their income.