The exorbitant cost of medical scheme membership could be reduced by as much as 30% if everyone earning above the tax threshold were required to sign up, according to research commissioned by the Health Funders Association (HFA), and published last week.
While 9.9m people belong to medical schemes, another 8.7m taxpayers don’t – yet they already make extensive use of private healthcare services, but pay out of pocket, it pointed out.
Business Day reports that the analysis considered the impact of introducing mandatory membership and a risk equalisation mechanism between schemes. These measures would help stabilise the industry and ensure its long-term sustainability, said HFA CEO Thoneshan Naidoo.
These reforms were previously planned by the Health Department under its social health insurance policy, but abandoned when the ANC resolved to pursue National Health Insurance instead. They were intended to balance the Medical Schemes Act’s requirements that schemes accept anyone who can afford their monthly premiums and that they charge everyone the same rate, regardless of their risk profile.
But annual medical scheme contribution increases have risen much faster than consumer price inflation over the past 10 years, slashing numbers of those who can afford membership.
Membership fell from 16% in 2014 to 14.5% in 2024, according to the HFA, with younger and healthier members pulling out and leading to an ageing risk pool with greater, thus costlier. healthcare needs.
The HFA said the 8.7m people who are uninsured group are younger and healthier than the medical scheme population, and that bringing them into the net could reduce the cost of cover by 10%-30%, according to its analysis, commissioned from actuarial consultancy Insight.
The lower figure uses only age to adjust for risk, while the upper figure considers other factors such as anti-selection and the higher burden of disease in the present medical scheme population.
Anti-selection refers to the phenomenon in which people sign up in anticipation of planned health events, like pregnancy and childbirth, and resign when their needs have been met.
Medical scheme members who have a maternity event are five times more likely to resign within the next three months than other members, said Insight CEO Christoff Raath.
A risk equalisation framework could redistribute about R5.9bn a year between schemes to compensate those that had older, sicker members, shows Insight’s modelling.
A few medical schemes are about to collapse due to their poor risk profile and could be saved if mandatory enrolment and risk equalisation were introduced, Raath added.
The HFA’s “State of Medical Schemes” report analysed anonymised data provided by South Africa’s biggest medical scheme administrators, covering about 5.74m beneficiaries, or 62% of the market, for the year to December 31 2025.
Business Day article – How the cost of medical aid could be cut by up to 30% (Restricted access)
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