Medical schemes in South Africa may not charge you more for being older or sicker. The Medical Schemes Act requires everyone in a scheme to pay the same contribution and to receive the same industry-wide minimum set of benefits, regardless of age or health. That rule is why the industry has spent this week arguing about who else should be made to join.
The Health Funders Association, an industry body whose 26 members include Discovery Health Medical Scheme, Momentum and Fedhealth and which covers about half the market, released its first State of Medical Schemes report on Wednesday. Its central claim, from modelling it commissioned from the actuarial consultancy Insight, is that making membership compulsory for everyone earning above the tax threshold would cut the cost of cover by 10% to 30%.
The range is doing a lot of work. The low end adjusts only for the age of the people who would come in; the high end also assumes they are healthier and cheaper to treat than the current membership. News24 reported the same modelling as a saving of 25% to 30% and possibly more, which is the same ceiling and a much higher floor.
Why the maternity ward explains the problem
Antiselection is the industry's word for people signing up when they know they will need cover and resigning once they have used it. Insight chief executive Christoff Raath put a number on one version of it: members who have a maternity event are five times more likely to resign within the next three months than other members. “That's perfectly rational behaviour in the current environment,” he said.
The result is a pool that keeps getting older. The average beneficiary was 31.7 years old in 2005 and 34.5 by 2024, and younger, healthier members have been opting out as contributions rose faster than consumer inflation.
Coverage has thinned with it. The HFA says the share of the population belonging to a scheme fell from 16% to 14.5% over roughly the same stretch.
The R5.9 billion that would move between schemes
Compulsory membership is only half of what the report models. The other half is a risk equalisation framework, a pot that moves money from schemes with younger members towards those carrying older and sicker ones, which Insight's modelling puts at about R5.9 billion a year. Raath says a small number of schemes are close to collapse on their risk profile alone and could be saved if both reforms came in.
Neither idea is new. Both were planned by the health department under its social health insurance policy and dropped when the ANC resolved to pursue National Health Insurance instead.
The association is not actually calling for compulsory cover yet. Wider participation “cannot be considered without first addressing affordability”, chief executive Thoneshan Naidoo said, which leaves the 8.7 million taxpayers it counts outside the schemes where they already are: using private healthcare and paying for it themselves.
