Higher medical aid premium increases are making a comeback. Momentum Health Medical Scheme, one of the medical aids that deferred new premiums and kept increases significantly lower than usual over the past two years, announced an 8.5% increase from April 2023.
But because the higher contributions will only take effect from April, the effective average increase for the full year comes to 6.4%.
This is significantly above its 2% effective increase for 2022. This year, it deferred medical scheme contributions up until September. The 2022 increase was 6%, but only for four months.
The scheme could afford to keep increases below inflation as hospitalisation and other medical aid claims fell to record lows in 2020. Even though there was an increase in 2021, claims were still way below the pre-pandemic levels. And the scheme still sat with massive reserves built from the 2020 savings.
But as life went back to normal this year, so did medical aid claims. Out-of-hospital claims are now well above pre-pandemic levels. Hospitalisations, which usually account for the lion's share of claims, are currently at 94% of 2019 levels in the Momentum Medical Scheme. In 2020, during the hard lockdown, it fell to 36%. In 2021, it hovered above 75% of 2019 levels from April onwards.
"You might say it's not really a problem until you multiply it by the price increases that we've seen over that same period," said Michael Temlett, the head of Momentum Metropolitan Holdings' health business.
Temlett said hospital admissions costs are now 21% higher than the 2019 levels – excluding Covid-19-related claims. Because of this, Momentum Medical Scheme inflation is expected to average 8.2% in 2022.
Momentum Health Solutions executive Damian McHugh said Momentum Health wants to get back to increasing premiums at the beginning of the year as it used to before the pandemic. But because its latest increase was in September, it felt that it would have been too much for its members to stomach yet another increase in four months.
By delaying the 2023 increase to April, it is giving members some breathing room. But after this, Momentum Medical Scheme will go back to increasing its contributions in January from 2024.
Earlier this month, Medshield also announced its 2023 contributions increase. At 6.7%, it came slightly above Momentum's increase. Also, it didn't defer medical aid increases in 2021 and 2022. It implemented a 6.3% average increase across its options in 2022. Medshield also announced a 5.5% average increase on specified benefits across all options for 2023.