By Thoneshan Naidoo
Healthcare funding is always about trade-offs, writes Thoneshan Naidoo, CEO of the Health Funders Association. The hardest question in healthcare is not what we would like to provide, he argues, but what we can provide sustainably, fairly and at scale.
South Africa’s healthcare debate is shifting and perhaps for the first time in years, it is becoming more honest.
With the National Health Insurance (NHI) Act tied up in legal processes and no credible funding pathway emerging from the 2026 Budget, the conversation is moving away from sweeping promises about the future to a more immediate and uncomfortable question. That is how do we fund healthcare today, and what trade-offs are we willing to accept?
At the centre of that reality is a part of the system that is often misunderstood and frequently criticised – medical schemes.
They are often portrayed as profit driven and exclusionary. In reality, they are not for profit, member owned entities built on a simple but powerful principle, social solidarity. Simply put, members pool their contributions so that those who are healthy today help fund the care of those who are sick.
In practice, around 80% of members claim less than they contribute in any given year. Their contributions help fund the care of the 20% who need it most. That is not exploitation. It is the very definition of risk pooling, and it is the same principle that underpins universal health coverage.
But solidarity comes with trade-offs.
Every Rand paid out in benefits in excess of a member’s monthly contributions is funded by other members. That means decisions about what is covered, how much is paid, and when limits apply are not arbitrary. They are the result of difficult choices about what the overall pool can afford.
These trade-offs become most visible in moments of tension, when a claim is limited, a treatment is excluded, or a dispute arises. To the individual, the system can feel uncaring. But at a system level, the alternative, unlimited funding for every possible intervention, is simply not sustainable.
Even prevention, often presented as an obvious solution, is not as straightforward as it seems.
Take colorectal cancer screening. An inexpensive test such as a faecal immunochemical test can help detect disease early. But many false-positive results lead to follow up procedures like colonoscopies, even when no serious condition is ultimately found. At the same time, some cases are still missed and only diagnosed later, when treatment is more complex and more expensive.
The question is not whether prevention is valuable, it is how to fund it at scale in a way that balances early detection, over treatment and cost.
These are not abstract policy debates but are real world funding decisions that affect millions of people.
And they are taking place in a system under pressure.
Medical scheme membership is voluntary, so younger and healthier individuals often delay joining until they need care. This drives up costs for those already in the system. At the same time, schemes are required to cover a comprehensive set of 270 Prescribed Minimum Benefits, which raises the baseline cost of cover.
The result is a system that works well for those inside it but remains out of reach for many.
This is South Africa’s so-called “missing middle” – millions of working people who earn too much to qualify for public support, but too little to afford private cover. They are left exposed, paying out of pocket, and navigating a fragmented system while waiting for reforms that may still be years away.
As the NHI debate continues, this gap can no longer be treated as a future problem. It is a present reality.
The risk is that the debate remains stuck in ideology. That private healthcare is painted as inherently problematic, or that structural reform alone will resolve access challenges.
Neither is true.
Healthcare funding is always about trade-offs. There are no perfect systems, only different ways of balancing access, quality and affordability within finite resources.
If South Africa is serious about expanding access to healthcare, the debate must move beyond rhetoric and toward practical solutions.
These include using spare capacity in private facilities to treat public patients, and allowing medical schemes, through targeted regulatory reform, to offer affordable primary healthcare cover for people who are currently excluded. Done properly, this could unlock access to private healthcare for more than 10 million uninsured South Africans at a cost of as little as R400 per person per month. Combined with existing tax credits, the impact on a family’s take home pay could be close to negligible. By providing access to preventive and primary care through the private sector, they would reduce pressure on overcrowded public facilities and ease waiting times. Importantly, a strong focus on prevention and early intervention would reduce the need for costly hospitalisation over time.
Medical schemes are well placed to deliver these options, given the principles of social solidarity, community rating and cross-subsidisation that underpin their design. This approach is aligned with the Sustainable Development Goals and the core principles of universal health coverage, and could serve as a practical transitional step as South Africa moves towards the full implementation of National Health Insurance.
After all, the hardest question in healthcare is not what we would like to provide. It is what we can provide sustainably, fairly, and at scale.
*Naidoo is CEO of the Health Funders Association, an industry group that represents several medical schemes and medical scheme administrators in South Africa.
Note: Spotlight aims to deepen public understanding of important health issues by publishing a variety of views on its opinion pages. The views expressed in this article are not necessarily shared by the Spotlight editors.
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