With COVID-19 cases on the rise again in many parts of the world, we’re all considering what 2022 will bring. Will we be forced once again into stricter lockdowns? Will hospitals be overwhelmed by the fourth wave? While we don’t have a crystal ball, we spoke to the Fedhealth team who shares some health trends that may be worth noting as we head into this new year, as we try to safeguard our health and the wellbeing of our loved ones well into the future.
Changing population growth
While population growth remains high on the African continent, it’s interesting to note that in many other parts of the world (for example Japan, China and most of the EU), there has been a dramatic decline in population growth. This will affect economies, as they are driven by consumption, and it is believed that “somewhere in the next decade, we will reach peak consumption,” says Pieter Geldenhuys, Director of the Institute for Technology, Strategy and Innovation (ITSI). “This means that our economic models, which were driven by exponential population growth over the past few decades might come to an abrupt end,” he continues. This will have a huge effect on South African exports, as the demands from these markets would start to dramatically dry up.
From biotech to energy to transport, innovation is poised to change everything. While tech has already significantly disrupted industries such as travel, transport and banking, the healthcare industry has typically lagged behind in this regard, but that’s about to change. Because tech can completely change the structure of the business model when it comes to health.
For example, instead of someone having a heart attack, calling the ambulance and then spending weeks in hospital recovering, wearable tech like smartwatches can alert health professionals of any upcoming problems (by monitoring heart rates and other health parameters), possibly preventing the heart attack entirely. Instead of providing health care services with a reactive function, healthcare providers will instead offer proactive services. The entire service offering could be flipped onto its head.
Democratisation of healthcare
Access to healthcare is a basic human right but in many parts of the world much work still needs to be done to make this a reality. Fortunately, technology has the power to accelerate this process. Specifically, the power of mobile phones, and the ubiquitous nature of them, can help erase physical boundaries and enable care wherever the patient is. An example listed in a recent report by PWC* lists how a pregnant woman in India can receive relevant health messages on her mobile device that give her instructions on prenatal care and any alerts on symptoms to watch out for. Similarly, we’ve seen virtual GP consultations on the rise globally during the pandemic, another way that doctors can reach more patients, in wider geographic locations.
Changes in financial planning by medical aid providers
The Covid situation has certainly prompted discussion on how medical schemes should plan for future pandemics from a financial perspective. Actuaries have had to relook their worst-case scenarios during these highly uncertain times.
In South Africa, medical schemes are tightly regulated by the Council for Medical Schemes (CMS). One particular piece of regulation from the CMS states that medical schemes are required to hold a statutory solvency reserve of at least 25% of contributions. These reserves are meant to serve as a buffer against any adverse claim experiences which may arise due to a variety of reasons (such as the pandemic that we find ourselves in today).
2021 has been completely different, in that Fedhealth is being financially impacted much more severely by the pandemic. As lockdowns eased, postponed procedures could not be put off indefinitely, so we saw a “catch up” of these pent-up procedures, leading to large increases in non-Covid claims. Furthermore, the peak of the second wave and the severe third wave both happened in 2021, leading to far more Covid claims than we’d seen in 2020. The projection for Covid claims for 2021 is around 10% of contributions, which would be double that of 2020.
The moral of the story? Fedhealth Principal Jeremy Yatt says that scheme reserves must be maintained at a sufficiently high level to deal with potential future Covid claims, as well as catch-up claims for elective procedures that were delayed due to the pandemic.