Cash-strapped consumers grappling with rising food, fuel and mortgage costs are paring back their medical cover, opting for cheaper and leaner packages to make ends meet, according to Bonitas, SA’s third-largest medical scheme.
Bonitas had 727,041 beneficiaries in 2022, representing 8% of the approximately 9-million medical scheme market. It trails Discovery Health Medical Scheme, which covers 2.8-million lives, and the Government Employees Medical Scheme, which has about 1.9-million beneficiaries.
Bonitas’s analysis of seven medical schemes shows the only options reporting strong beneficiary growth in 2022 were those priced below R3,000 per member per month, with membership of more expensive options and more comprehensive benefits stagnating or shrinking.
The same trend was reflected among its own plans. Its cheapest plan Bonstart reported net growth of more than 200% between 2019 and 2023, while membership declined in its most expensive plans, CFO Luke Woodhouse said on Wednesday. “It just shows the macro-economic factors at play,” he added.
Salary increases have lagged consumer price inflation, placing an additional squeeze on households’ disposable income, and forcing people to make difficult choices between food and medical cover, Woodhouse said.
Bonitas reported a net surplus of R699m and a record solvency rate of 41.3% at the end of 2022 as member claims continued to track below expectations even as the coronavirus pandemic waned. The solvency ratio is a key metric to gauge a scheme’s ability to pay claims and measures the ratio of accumulated funds to gross annualised contributions. The minimum is 25%, according to the Medical Schemes Act
Woodhouse cautioned that while Bonitas was still seeing lower than expected claims post Covid-19, there was a large degree of uncertainty over how the disease would play out in the years ahead. Bonitas nevertheless planned to reduce its solvency ratio to 31.4% by 2025, he said.
“We want to maintain a small buffer (above the statutory requirement of 25%), but we are not in the business of building massive reserves. We want to take that money and give it back to the members either through low increases to remain competitive or by enhancing our benefit design,” he said.
Bonitas principal officer Lee Callakoppen said the scheme supported the principal of universal health coverage, but the National Health Insurance Bill would not achieve that. The bill was passed by the National Assembly in June, and is being considered by the National Council of Provinces.
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