2020 was a true outlier of a year. While nobody could have predicted how chaotic it would be, luckily at Fedhealth we still managed to capitalise on our sound financial position from the end of 2019. When it comes to planning for 2021 though, we took a number of factors into account when deciding on our premium increases for the coming year:
- COVID-19 and our future healthcare needs relating to it
19438 members were tested for COVID this year, with 2772 positive cases, 696 hospital admissions and unfortunately 88 deaths. These “first wave” numbers were lower than we expected, which was a huge relief, but we simply cannot tell how the second peak or resurgence will affect Fedhealth members, nor how long this pandemic will continue to affect our collective health well into 2021.
- Lower claims, but for how long?
There were lower claims in general this year for elective procedures such as colonoscopies, as many people chose to remain at home for their own personal safety reasons, as well as to free up doctors and resources for emergency COVID care. Since the lockdown levels have lowered though, we have seen that these elective procedures have gone back up once again (just like the traffic, unfortunately). These procedures are likely to surge again next year, which could cause larger year-on-year premium increases, until medical aid could become unaffordable for many.
- We want to keep our benefits stable
A medical aid scheme does not exist to make a profit, so it’s certainly not a case of trying to grow our revenue year-on-year by charging members more. Since our primary objective is to serve our members, we never charge more than we absolutely have to. In deciding on increases, we look at several factors. These include the average age of our members, medical inflation, and the Rand/dollar ratio when it comes to costs of equipment and pathology reagents, for example.
We may be taking a more cautious approach in 2021 then other medical aid providers, but this is because we certainly don’t want to cut benefits, or introduce a huge increase in contributions after next year. We also don’t want to take some of our members’ MSA away to fund Risk Benefits, which some providers do, hoping that the members don’t notice. In general, we know that if a medical aid is reckless with premium increases, these mistakes are very difficult to fix in future.
- We never cut benefits
That tiny annual premium increase for next year may seem great on paper, but have you checked the fine print? Are you sure that a benefit you were relying on has not actually been cut, and you’ll suddenly find yourself not covered for it when you need a certain procedure next March? Fedhealth has retained every single benefit for next year, as we want our members to remain covered no matter what the future brings.
It’s also important to remember that many of our unique benefits are paid for from Risk, and not from a member’s MSA. These include things like unlimited network GP visits, seven days of take-home medicine after discharge from hospital, specialised radiology, upgrades within 30 days of a life-changing event, and female contraceptives, among others.
We certainly don’t see the point in providing short-term “artificial” relief that leads to a longer-term irrevocable loss.
- Our rates are still highly competitive
Don’t compare percentages: It’s much better to compare Rand values, as that gives you a concrete example of the bang you’re getting for your buck each month. MSA options from other schemes may have a lower percentage increase than Fedhealth for 2021, but that does not mean an actual lower increase in Rands. That’s because their increases are based on both Risk and MSA contributions, whereas ours are based only on your contributions (and not on the Medivault).
Here’s an example to explain:
Taking all of this into account, we want to be conservative with our premium increases, while also bearing in mind that many people find themselves in difficult financial positions due to the economic knock-on effect of the Covid-19 situation.
Therefore, our overall average member weighted increase for the Scheme across all options will be 8.8% for 2021. We trust that this will ensure we can provide the same level of care that Fedhealth members trust us to, while protecting the sustainability of the Scheme as a whole.