With high annual increases, medical schemes are becoming less affordable, but SA’s health insurance market is bringing in previously uninsured South Africans into private healthcare for the first time.
19 OCTOBER 2026, Johannesburg: South Africa’s biggest medical schemes are increasing rates by 7% to 9% for 2027, more than double the Council for Medical Schemes (CMS) guideline, pushing medical scheme cover further out of reach for working South Africans. Meanwhile, a different part of the private health insurance market is growing, reaching South Africans who have never had private cover before.
According to the CMS, medical scheme membership has held steady at nine million lives for more than a decade, slipping from about 17% of South Africans a decade ago to under 15% today. Over the same period, health insurance has grown to approximately 1.5 to two million lives, according to industry estimates.
Depending on the options selected, health insurance may provide access to defined primary healthcare, medication and specified accident or emergency benefits. These insurance offerings are deliberately different from medical schemes, which must cover prescribed minimum benefits (PMBs), and offer additional benefits depending on their rules and benefit options.
Kaelo, which provides health insurance, gap cover, and other employee benefits primarily through employers, says demand has risen sharply. Its membership has grown by more than 30% per year over the past two years, and over the same period it has quoted on cover for nearly 1.5 million lives.
“Health insurance and medical schemes are largely two distinct markets,” says Jordan Bortz, actuary at Kaelo. “The typical health insurance member has never been on a medical scheme. Several of our largest clients are employers whose staff earn around R10,000 a month or less. Many cannot afford the monthly cost of medical scheme cover.”
“Some of the employees may never buy private cover on their own, but when the employer provides it, or subsidises a portion of the cost, a significant number of people gain access to private healthcare for the first time,” says Bortz.
For lower-income earners, the affordability gap keeps widening. Health insurance products can cost as little as R300 per month, while entry-level medical scheme cover starts at approximately R1,500. Because health insurance premiums have risen more slowly than medical scheme contributions, that gap grows each year. “Every year, medical scheme cover moves a little further away from what many working South Africans can afford,” says Bortz. “After the latest increases, the gap is wider than it’s ever been. Health insurance gives those employees a way into private healthcare that they otherwise wouldn’t have.”
Group-based cover can cost up to half the price of the same benefits bought by individuals. Employers can also subsidise all or part of the cost of health insurance.
For employers, the business case goes beyond price. Workers without cover often go untreated for everyday illnesses and chronic conditions, and lose working hours queuing for care. So, employers face reduced productivity and increased absenteeism.
Access to primary healthcare and chronic medication supports improved attendance, wellbeing and workplace productivity. “Based on Kaelo’s internal modelling, the value to employers may be many multiples higher than programme spend, depending on factors such as the industry and utilisation. Even if the employer subsidises only a portion of the premium, they get almost the full benefit,” says Bortz.
Kaelo’s health insurance plans range from accident and emergency cover to a comprehensive offering covering 27 chronic conditions, GP consultations, dentistry and optometry through the Prime Cure network. Kaelo Gap and Western Gap cover address the other side of rising increases: as schemes contain price rises by narrowing hospital networks and tariff limits, gap cover may pay qualifying medical expense shortfalls and co-payments, subject to the policy terms. Direct-to-consumer demand for both health and gap cover is growing at a similar double-digit pace.
The focus on mental health also differentiates Kaelo, as it has been built into Kaelo’s gap, health and life products for close to two decades. “We consider the whole person,” says Bortz. “Mental health has a knock-on effect on mortality and morbidity, and on how people perform at work.”
Health insurance does not replace medical scheme cover, but it does offer a first step into private healthcare for those who have never had it. “For most of the people we cover, the choice was never medical scheme or health insurance,” says Bortz. “It was health insurance or nothing.”
