Discovery Health has recently abandoned its efforts to reclaim roughly R170 million from 16 507 members following a widespread administrative error in processing medical claims. This happened after the successful intervention of the advocacy group MediCheck, which argued that the affected members were being unfairly penalised for a technical glitch which they had nothing to do with.
The glitch, which happened last year, resulted in over-reimbursement of certain medicine costs that occurred throughout 2025. Several specific technical and procedural issues were involved which caused the problem to grow undetected for nearly a year, as detailed by Moonstone.
The main error was that certain claims were incorrectly reimbursed at 100% of the Discovery Health Rate, regardless of the specific benefit limits that should have applied to those categories, when they should have been reimbursed at a lower rate.
Because these claims were incorrectly reimbursed at higher rates, they were inaccurately accumulated towards members’ benefit thresholds. This caused members who had Above-Threshold Benefit (ATB) as part of their plan to reach it prematurely. Upon reaching the ATB, subsequent medical claims were funded by the scheme. Normally, these claims would have been covered by the members’ medical savings accounts or out-of-pocket contributions.
Delayed detection allowed the problem to grow. The error was particularly difficult to identify because it was a “second-order impact”. The systemic failure only became apparent late in the year when members began reaching the ATB and the financial discrepancies were finally flagged.
This snowballing error eventually affected some 16 507 members on specific Executive, Comprehensive, and Priority plans. While Discovery Health initially sought to recover these funds, ranging from thousands of rand to as much as R80 000 per member, the Council for Medical Schemes stepped in to exert pressure amid widespread media coverage of the situation. Discovery gave in and committed to refunding any recovered funds and absorbing the total financial loss itself – estimated between R130 million and R170 million.
By Lushan Sundram, Senior Sales & Business Development Manager at Essential Employee Benefits
Despite making significant investments in employee benefits, many organisations continue to struggle with low employee engagement, growing healthcare expenses, and diminishing productivity. A lack of insight, not a lack of investment, seems to be the problem.
Even the most extensive medical coverage may fall short if the true health needs of the workforce are not thoroughly understood. Employers must first understand the individuals they are attempting to assist in order to make health benefits genuinely meaningful.
The business case for healthier workforces
It is now indisputable that employee well-being and company performance are related. Investing in the physical, mental, and social well-being of employees yields quantifiable benefits, according to numerous studies. According to research, a single unit improvement in staff health can result in an 80% boost in productivity, and well-run wellness programmes can yield a Return on Investment (ROI) of up to 6:1. Healthy workers are more engaged, more productive, and less likely to quit, demonstrating that promoting health, benefits businesses as well as individuals.
Moving from guesswork to insight
Understanding that health encompasses more than just physical well-being is the first step in creating pertinent and efficient medical coverage. Four important aspects are taken into account in a holistic approach: social, financial, mental and emotional, and physical welfare. The difficulty, though, is in understanding worker health without violating personal privacy. Data-driven platforms that provide aggregated insights while maintaining privacy hold the key to the solution. Digital nurse checks, for example, can evaluate vital signs including Body Mass Index (BMI) , blood pressure, body composition and more. Analysis of this anonymised data can then reveal patterns across age groups, genders, and departments. Employers can use these data to identify areas where their employees most need help, such as managing stress, preventing chronic diseases, or improving nutrition, all while maintaining complete compliance with privacy laws. Essentially, it gives leaders the insight they need to allocate resources strategically.
From one-size-fits-all to tailored support
Once health insights are gathered, employers can move beyond generic benefit structures. Tailored medical cover ensures that plans address the most pressing needs of specific employee groups. For example, one division might prioritise diabetes prevention, while another invests in weight management or mental health programmes.
Barriers to access are also addressed by meaningful medical cover. Employees may be deterred from obtaining private medical care by expensive premiums or difficult claims procedures. Instead, offering basic yet comprehensive cover promotes prompt treatment and keeps small problems from becoming more serious and expensive. Rather than concentrating only on reactive treatment, integrating preventative care contributes to the development of a sustainable culture of wellbeing.
Building loyalty through wellbeing
A targeted, data-driven benefits strategy does more than optimise healthcare spending, it strengthens trust and retention. Employee loyalty and engagement increase when they see that their employer truly cares about their well-being. Businesses with wellness programmes that are very successful report voluntary attrition rates of only 9%, whereas those with programmes that are less successful report rates of 15%.
This exemplifies the principles of Social Exchange Theory: when employees perceive that the organisation values them and supports their health, they reciprocate with loyalty and effort. In this way, wellbeing becomes a performance strategy, not merely a perk.
Partnering for precision and impact
To move from assumption to precision, many organisations are partnering with experts who use innovative, privacy-preserving tools to provide data-backed insights into workforce health. These insights enable executives to create inclusive and appropriate benefits that yield quantifiable increases in retention and productivity.
The capacity to act on data-driven health insights is a strategic imperative in a setting where healthcare expenditures and talent competitiveness are both on the rise. The healthiest, most resilient, and most dedicated workforces of tomorrow will be created by employers who make the investment to understand their employees today.
Cancer is one of the fastest-growing health challenges in South Africa, with over 100 000 new cases diagnosed annually, according to the National Cancer Registry. While most conversations focus on the physical and emotional impact, the financial strain of the disease often goes unspoken.
According to the South African Medical Journal, treatment costs for cancer can exceed R1 million per year, particularly when advanced therapies and prolonged care are required. This leaves many families facing difficult decisions that extend far beyond the hospital ward. With medical aid often falling short and with only 16% of South Africans covered by medical schemes, as reported by the Council for Medical Schemes the financial burden of cancer can be as devastating as the diagnosis itself.
“Medical aid alone often isn’t enough to cover the full cost of treatment, especially when it comes to critical illnesses like cancer,” says Matthew Green, Product Portfolio Manager at FNB Life. “We’ve seen firsthand how having the right insurance can make a real difference.”
The true impact of cancer is often measured in rands and cents: savings depleted, debt accumulated, and households forced to sacrifice essentials to pay for treatment. Myths about affordability and a lack of awareness mean that too many people enter this battle unprepared. The result is a financial shock that can be as devastating as the diagnosis itself. Beyond the direct medical expenses, families often face a range of additional costs from transport to and from treatment centres, specialised nutrition, home modifications, and caregiving support, to lost income due to time off work. Critical illness cover is designed to help bridge these financial gaps, providing a lump-sum payout that can be used not only for treatment, but also for these broader, often overlooked expenses that impact the entire household.
“Against this backdrop, insurers are under growing pressure to offer support that reflects the lived realities of ordinary South Africans. FNB Insure is among those stepping in to help close the gap – focusing on making financial protection more accessible, flexible, and relevant to everyday needs,” says Green.
Rather than positioning insurance cover as a luxury, the emphasis is on practical tools that help households navigate the rising costs of treatment and the economic strain that often follows a serious diagnosis. Whether it’s support during hospital stays, assistance with unexpected medical shortfalls, or a payout that enables immediate action after a diagnosis, the goal is to empower customers to focus on recovery – not financial survival.
This is evident from our customer feedback, where individuals have shared how timely access to cover helped them act quickly, avoid financial delays, and prioritise their health during some of life’s most difficult moments. “And its stories like this underline the importance of early financial planning and the role of accessible insurance in giving families space to focus on recovery rather than financial survival,” says Green.
With October marking Breast Cancer Awareness Month and November bringing the spotlight on men’s health through initiatives like Movember, FNB Insure is adding its voice to the broader call for awareness. “The message is clear: cancer doesn’t only affect health; it reshapes every aspect of life. Building resilience means preparing not just medically, but financially too,” concludes Green.
By Tony Singleton, CEO at Turnberry Management Risk Solutions
21 October 2025
You plan for retirement, save for your child’s education, and try to build a financial cushion, but what happens when medical co-payments chip away at those plans, year after year? It starts small: a R5,000 co-payment for a scope. Then a few months later, a R12,000 shortfall for a hospital admission. Fast forward five years, and you’ve spent tens of thousands on out-of-pocket medical costs that your medical aid didn’t fully cover.
Medical aids cannot keep pace with the rate of medical inflation while still maintaining affordable premiums, so co-payments grow each year, more sub-limits are introduced, and specialist fees continue to outpace medical aid rates. This means more and more South Africans are finding themselves forced to draw from their retirement funds or take on debt to cover medical aid shortfalls. Medical aid alone is no longer enough to protect your financial future – gap cover has become essential.
How medical expense shortfalls silently accumulate
Medical scheme members, especially those on higher-end plans, often assume they are covered for any medical eventuality – until it is time to actually claim for a significant medical event. Even comprehensive plans can fall short when it comes to specialist charges, hospital procedures, or newer, high-tech treatments. Many specialists charge as much as five or six times the scheme rate, and certain procedures have limits to what medical aid will pay or require an up-front co-payment. While your medical aid might pay a portion, the remainder becomes your responsibility.
This can become a compounding problem. What starts as a few isolated bills adds up. Over time, shortfalls from surgeries, diagnostics, scopes, chronic illness treatment, or specialist consultations can add up to hundreds of thousands of Rands. For example, one Turnberry client managing spinal conditions, lupus, and gastro-oesophageal reflux disease (GERD) claimed R478,000 across 27 incidents in only five years. Another has claimed R450,000 across 54 incidents related to lung disease and spinal conditions, and a third, with multiple chronic issues, has received over R448,000 in gap cover payments over the same period. As the years go by, these amounts continue to add up, and this is becoming an increasingly typical pattern. Many families are forced to pause investments, take out loans, or remove money from their retirement annuities to keep up with these uncovered and unanticipated expenses.
Gap cover has become essential
Gap cover was created precisely to tackle these medical expense shortfalls, with an affordable policy that sits alongside medical aid and offers cover for medical expense shortfalls, co-payments, sub-limit cover, oncology shortfalls, prosthesis costs, and even casualty visits. Where medical aid benefits have tightened to control premiums, gap cover has expanded to fill the void.
Many South Africans still believe gap cover is a nice-to-have or something that is only necessary later in life. The reality, though, is that shortfalls affect people no matter what age they are, from broken bones in their 20s to maternity bills in their 30s or chronic conditions emerging in their 40s and beyond. Joining early also makes a difference, as you are covered from the start and your premiums will remain lower than someone beginning their cover at 65, when age-based premium increases and health exclusions may apply. Gap cover is not just for major surgeries or cancer treatments; it is valuable for more routine procedures as well as accidents and emergencies. And its value increases over time, especially if you remain continuously covered and avoid reintroducing waiting periods.
A long-term strategy, not a short-term fix
By staying on gap cover year after year, members build a stable financial buffer against the cumulative effect of medical costs. We’ve seen clients rely on gap cover for decades of health events, not just one-off emergencies, and the value of continuous cover is evident in our lifetime claims figures. Gap cover is no longer a luxury, it is an essential tool for building long-term financial resilience. Without it, medical aid shortfalls can easily undo years of careful financial planning. Talk to your broker about finding the best gap cover solution to fit your needs.
About Turnberry Management Risk Solutions
Founded in 2001, Turnberry is a registered financial services provider (FSP no. 36571) that specialises in Accident and Health Insurance, Travel Insurance, and Funeral Cover.
With extensive experience across healthcare and insurance industries in South Africa, Turnberry offers unsurpassed service to Brokers and clients. Turnberry’s gap cover products are available to clients on all medical aid schemes, as they are independently provided and are therefore transferable in the event of a change in the client’s medical aid scheme.
Turnberry is well represented nationally, with its Head Office based in Bedfordview, Johannesburg with Business Development Managers in Cape Town and Durban. The Turnberry Team’s focus on outstanding client service comes from having extensive knowledge and experience in the financial services sector and is underwritten by Lombard Insurance Company Limited. Lombard Insurance Company Limited is an Authorised Financial Services Provider (FSP 1596) and Insurer conducting non-life insurance business.
A comprehensive five-year analysis of gap cover claims reveals a healthcare funding crisis that’s rapidly escalating across the South African private healthcare sector. Data from Sirago Underwriting Managers shows that its mega gap claims – those exceeding R50,000 – have exploded by 512% in volume and 437% in value between 2020 and 2024.
The numbers tell a stark story: where 89 mega gap claims totalling R6.2 million were paid in 2020, this figure rocketed to 549 claims worth R34 million in 2024. Perhaps most concerning is that claims exceeding R60 000 are now daily occurrences, with the average large loss gap claim sitting at R63 000 – a far cry from the R6000 to R12 000 averages seen pre-2020.
The Perfect Storm: Medical Scheme Erosion Meets Provider Cost Inflation
This upward trajectory reflects a fundamental shift in South Africa’s healthcare landscape. Medical schemes – constrained by affordability, access, aging membership populations, and where private healthcare already consumes up to 20% of household income – are systematically reducing benefits and transferring more risk onto the member, rather than increasing premiums to match out-of-control healthcare provider cost inflation.
Healthcare provider costs have consistently outpaced inflation by more than double for years, yet unlike pharmaceuticals, there’s no pricing regulation on healthcare provider tariffs. In a country facing a dire shortage of healthcare professionals, specialists are free to charge rates often 500%+ higher than medical scheme reimbursements.
The regulatory framework compounds this issue. The Registrar of Medical Schemes mandates that for Prescribed Minimum Benefit (PMB) conditions, where no Designated Service Provider agreement exists, healthcare providers must be paid in full regardless of the charge – essentially providing a blank check.
Breaking Down Sirago’s Large Loss (Mega) Gap Claims Data (2020-2024)
Five-Year Trend Analysis
2021: 118% increase in claims value paid compared to 2020, driven by COVID-19 impacts and deferred elective surgeries.
2022-2024: Average annual increase of 35% year-on-year in large loss claims volumes.
Highest claims: R200,000+ for ischaemic heart disease conditions in the 50+ age group.
Age Demographics Challenge Assumptions
Contrary to expectations, healthcare crises aren’t limited to older populations:
50-65 years: 31% of claims (average: R65,065)
66-75 years: 27% of claims (average: R64,213)
76+ years: 18% of claims (average: R62,773)
30-49 years: 18% of claims (average: R58,116)
0-29 years: 5% of claims (average: R63,360)
The under-49 age group constitutes 23% of all large loss claims, dispelling notions that major health expenses only affect older demographics, and which highlights the risk transfer challenges faced and imposed by medical schemes.
Claims Distribution
62%: R40,000-R60,000
30%: R61,000-R100,000
6%: R101,000-R150,000
2%: R151,000-R210,000
Leading Conditions Driving Claims
Musculoskeletal Dominance
Over 51% of claims across all age groups involve musculoskeletal conditions, with spinal stenosis leading the charge. Medical schemes often impose strict limits on elective musculoskeletal surgeries due to high costs, particularly for internal prosthetics where co-payments can reach 30% of the hospital account if members don’t subscribe to the scheme-imposed protocols.
Cancer and Circulatory Conditions
Each representing 10% of large loss claims, these conditions reflect both the effect from the delayed diagnosis impact of COVID-19 and the high-cost nature of specialised treatments. Malignant neoplasms of the breast, prostate, and colon lead cancer claims, while acute ischaemic heart disease dominates circulatory conditions.
The Exploitation Factor
Gap insurance is increasingly becoming a target for exploitation. Healthcare providers now routinely ask patients upfront about gap coverage before determining charges, creating a troubling paradox where a R700 monthly gap policy might pay R130,000 for an orthopaedic surgery shortfall, while the medical scheme with an R8,000 monthly premium pays just R30,000. This exploitation threatens the sustainability of gap insurance itself. If current trends continue, gap insurance premiums will inevitably rise, making this crucial protection unaffordable for many South Africans.
The Critical Importance of Gap Cover
Despite these challenges, gap cover remains essential, irrespective of medical scheme option. Most medical schemes have deductibles, co-payments, and reimbursement limits that can leave members significantly out of pocket. The gap between scheme payments and specialist charges can be substantial – often 200% to 500% above scheme tariffs and this isn’t limited to basic hospital cover options. Even comprehensive, top-tier medical scheme benefits leave members facing substantial tariff shortfalls for in-hospital procedures.
The Economics of Healthcare Financial Protection
When you consider the potential financial quantum of a shortfall on your medical scheme benefits, and that a gap cover premium is around R700 per month for a family (2025 Sirago Ultimate Gap), and each family member is covered for up to a maximum of R213 000 per annum, it is clear that Gap Cover is a non-negotiable part of your healthcare financing strategy. A single gap claim of R63k, Sirago’s average large loss claim, would be the equivalent of almost 9 years of premium payments at current premium rates.
Sirago’s mega claims data reveals a private healthcare funding system under severe strain. As medical schemes transfer more financial risk to members through tariff shortfalls, co-payments, and exclusions, gap insurance becomes not just “a-nice-to-have” insurance policy, but essential for financial protection.
However, the sustainability of this model depends on addressing the root causes: unregulated provider pricing, systematic benefit erosion, and the exploitation of gap insurance by unscrupulous providers. Without intervention, South Africa’s healthcare funding crisis will continue to deepen, leaving patients to bear an ever-increasing financial burden.
For consumers, the message is clear: always negotiate pricing for planned surgeries and request formal quotes from all medical role players. In a system where healthcare providers are price makers and medical schemes and gap providers are price-takers, informed patient advocacy becomes crucial for financial survival and your continued access to quality private healthcare.
(Claims statistics drawn from Sirago’s Large Loss Claims Analysis, 2020-2025)
Sirago Underwriting Managers (Pty) Ltd is an Authorised Financial Services Provider (FSP: 4710) underwritten by GENRIC Insurance Company Limited (FSP: 43638). GENRIC is an authorised Financial Services Provider and licensed non-life Insurer and a member of the Old Mutual Group.
Note: The content of this article does not constitute financial advice. Sirago Gap cover is subject to terms and conditions and premiums are reviewed annually. For more information go to www.sirago.co.za (Ts & Cs apply).
By James White, Director of Sales and Marketing at Turnberry Management Risk Solutions
Photo by Alex Green on Unsplash
Rising medical costs can be a major burden that negatively affects employees’ health, wellness and productivity. Even with medical aid in place, unexpected shortfalls for hospital stays, surgeries and specialist treatments can run into tens of thousands of Rands – creating financial stress that spills over into the workplace.
Group gap cover offers an affordable, accessible and highly effective way to bridge the growing divide between what medical schemes pay and what private healthcare actually costs. This makes a tangible difference for both employers and their employees.
A practical solution for reducing stress and improving productivity
Medical expense shortfalls can add up to significant amounts of money and can be enough to seriously impact an individual’s financial wellbeing. Employees who cannot afford the co-payments or gaps in cover may delay treatment, manage ongoing pain with temporary measures, or fall back on high-interest loans, all of which can negatively affect their focus and performance at work.
Group gap cover can help to prevent this type of scenario. Cover includes medical expense shortfalls, co-payments, and sub-limits, and some providers also offer value-added benefits like casualty cover, trauma counselling or additional cancer cover, depending on the plan.
This allows employees to access the care they need without having to worry about paying large sums of money out of their own pocket. It helps them get treatment sooner, making it more likely they will recover faster and return to work sooner, as well as offering improved peace of mind. All of this benefits the business as much as the individual.
Empowering brokers to support a broader wellness strategy
Brokers are ideally placed to support employers in designing employee benefits that do more than tick boxes by positioning group gap cover as an essential component of an organisation’s wellness strategy.
It is, however, essential to tailor group gap cover plans to align with the medical aid options that are already in place. The key is to create solutions that fit the needs of the organisation and its employees and add tangible value, taking into account elements like demographics, income bracket, life stage and so on. For brokers, this is an opportunity to drive innovation in employee benefits and demonstrate deeper advisory value.
Affordability that matters in a tough economy
As medical inflation continues to outpace the Consumer Price Index (CPI), comprehensive medical aid has become less attainable for many companies and their employees. Some organisations have been forced to downgrade their medical scheme contributions, leaving employees more exposed to shortfalls. Group gap cover offers a cost-effective way to mitigate that risk.
With preferential premiums, favourable underwriting terms, and often no waiting periods, group gap cover is cost-effective and affordable, especially when compared to the costs of upgrading a comprehensive medical aid plan that will typically also experience certain shortfalls. It is also tax efficient as a payroll deduction and can be implemented with minimal administrative burden.
Attracting and retaining talent in a competitive market
Today’s job seekers are looking for more than a payslip. They want to feel valued and supported. Offering group gap cover as part of a holistic benefits package can set a company apart, especially in sectors where high turnover is common.
Candidates take note when employers show they care about more than just performance metrics. A company that helps its people avoid financial distress during a medical emergency is a company that builds loyalty, trust and long-term engagement. Gap cover is an investment in human capital that pays dividends far beyond the balance sheet.
Genuine benefits build genuine loyalty
Medical costs are rising, and economic pressures are continually increasing. In such an environment, employers need benefits that do more than look good on paper – they need to add real value to the lives of their employees. Group gap cover is one of the most practical, cost-effective ways to support employees’ health and financial wellbeing while also protecting business performance.
By helping people access the treatment they need without incurring crippling debt, it reduces stress, shortens recovery time and fosters loyalty. For businesses looking to attract and retain talent, boost productivity and show genuine care for their people, group gap cover is a benefit that makes a real and lasting difference.
About Turnberry Management Risk Solutions
Founded in 2001, Turnberry is a registered financial services provider (FSP no. 36571) that specialises in Accident and Health Insurance, Travel Insurance, and Funeral Cover.
With extensive experience across healthcare and insurance industries in South Africa, Turnberry offers unsurpassed service to Brokers and clients. Turnberry’s gap cover products are available to clients on all medical aid schemes, as they are independently provided and are therefore transferable in the event of a change in the client’s medical aid scheme.
Turnberry is well represented nationally, with its Head Office based in Bedfordview, Johannesburg with Business Development Managers in Cape Town and Durban. The Turnberry Team’s focus on outstanding client service comes from having extensive knowledge and experience in the financial services sector and is underwritten by Lombard Insurance Company Limited. Lombard Insurance Company Limited is an Authorised Financial Services Provider (FSP 1596) and Insurer conducting non-life insurance business.
The health insurance sector is undergoing significant changes that insurers, healthcare professionals and brokers need to be aware of. For one, healthcare costs have risen above the national inflation rate, forcing individuals and corporate entities to reassess their healthcare management strategies.
The industry is moving towards a more personalised and customer -focused approach, companies are revolutionising traditional insurance processes with digital platforms that offer simplicity, transparency and efficiency. The role of technology and data are driving forces behind these trends. With technological advancements reshaping health insurance, other trends like shifting demographics, an ageing population, and rising chronic diseases add complexity. Navigating this landscape requires specialised knowledge. This is where health insurance brokers become essential partners for companies in need of top-quality healthcare solutions for their workforce.
Shifting patterns in the health insurance market
The health insurance industry is currently experiencing significant changes driven by various factors. Healthcare expenditures and utilisation have increased dramatically in recent years given the prevailing South African economic climate and rising healthcare costs. Organisations are scrutinising their healthcare programmes, including those that provide cover for employees. Many employers are now adopting a hybrid approach that includes both medical scheme membership and health insurance to offer maximum flexibility and choice to their workers.
The healthcare sector is also witnessing an increasing adoption of digital solutions; mobile applications with online portals for accessing benefits and services. Users can take advantage of virtual healthcare solutions, such as telemedicine consultations and online appointment scheduling, which not only reduce costs but also save time. Consequently, brokers are focusing on partnering with insurers who offer technologically advanced and user-friendly digital services.
Challenges faced in the market
The health insurance market is facing several challenges. A significant hurdle is the issue of member education. There is a widespread misconception that health insurance operates in the same manner as medical scheme cover, leading to confusion and disappointment among members. Brokers play a crucial role by clarifying the distinctions between each type of cover, and they conduct annual assessment sessions to keep clients informed about new developments or available improvements. Frequent engagements that elucidate various aspects of their benefits empower clients to make more informed decisions.
The healthcare distribution system introduces another layer of complexity as it plays a critical role in ensuring the safe and efficient delivery of healthcare products to patients and healthcare providers. South Africa’s market comprises both public and private sectors, making it difficult to identify and reach the ideal target audience. The insurance sector is heavily competitive, characterised by numerous insurers, each offering a wide range of products. These challenges are compounded by regulatory bodies, stringent rules and requirements that organisations must navigate while attempting to earn customer trust.
Financial pressures significantly impact clients’ decisions regarding attaining affordable healthcare. Financial limitations forces clients to make difficult choices often prioritising essential expenses and, leading many to opt for cheaper health insurance plans even if they have higher out-of-pocket costs or limited cover. Clients who are struggling financially need guidance and sound advice in exploring their options for affordable solutions. By reviewing their existing healthcare costs and assessing their current cover, brokers and insurers can help recommend a more effective healthcare solution that suits their needs. Clients can also consult with a financial advisor to help create a budget that incorporate healthcare costs that includes an emergency fund to cover unexpected additional medical expenses.
The value of consulting health insurance brokers
Given these complexities, one may question why companies should consult health insurance brokers. The answer lies in their expertise and advocacy. Brokers possess in-depth market knowledge and understand insurance products, enabling them to devise tailored solutions that precisely meet the requirements of both companies and employees. They represent their clients in negotiations, ensuring regulatory compliance and striving to secure the best rates and terms while providing ongoing support.
Strategic partnerships: selecting the right insurer
Choosing the right insurance partner is crucial, and brokers focus on several key attributes during this selection process. The insurance company must exhibit sound financial health, offer a comprehensive suite of products and services, and maintain effective claims procedures alongside superior customer care. Additionally, brokers seek partners that demonstrate a commitment to technology and innovation as a means of enhancing the customer experience.
Also, in today’s landscape, an insurance company’s reputation is of paramount importance, as policyholders can easily access customer feedback on social media.
Enhancing the South African healthcare system
The South African healthcare system requires careful navigation. With the assistance of informed and professional brokers, companies can tackle prevailing issues, optimise their healthcare expenditure, and deliver valuable benefits to their employees, ultimately resulting in a healthier and more productive workforce. Brokers serve not only as a source for insurance products but also as providers of expertise and trust, acting on behalf of the client in a complex and dynamic environment.
Access to affordable, quality healthcare in South Africa is a challenge for millions of people. Medical aid is out of reach for low-income earners, and while initiatives like the Low-Cost Benefit Option (LCBO) and the National Health Insurance (NHI) have been proposed, complexity has caused many delays in their implementation. As a result, the Demarcation Exemption Framework was introduced to help bridge the gap, which allows certain insurance products that technically fall under the definition of a medical scheme to operate outside of the Medical Schemes Act.
While it was originally set to expire on 31 March 2025, the Exemption Renewal Framework was recently extended for another two years to 31 March 2027. South Africans can continue to access cost-effective primary healthcare solutions, but in this shifting landscape, brokers play a vital role in guiding their clients toward the best solutions for their needs and budget.
Addressing the healthcare coverage gap
The proposed LCBO framework aims to provide affordable, regulated primary healthcare coverage to lower-income South Africans. It was designed to address the gap between expensive medical aid plans and basic healthcare needs so that more people have access to essential medical services. Unfortunately, it has faced continuous delays, partly because of challenges with integrating it into the NHI. At the same time, the NHI is still a work in progress, and there is no clear timeline for its implementation.
“While South Africa’s regulatory frameworks evolve and have the worthy goal of providing healthcare access to all, the reality is that people need access to affordable primary healthcare solutions today. The extension of the Demarcation Regulations is an important step. It means people can continue to receive the healthcare services they need, like GP consultations, chronic medication, basic health screenings and more, while the challenges with LCBO and NHI are resolved. It also means health insurance providers and brokers can carry on improving affordability and access with innovative product offerings,” says Reo Botes, Managing Executive of Essential Employee Benefits.
Solutions for the now
Under the Demarcation Exemption Framework there are many innovative primary healthcare insurance products that act as a bridge while LCBO and NHI are still being developed. They are by no means a replacement for medical schemes, but they play a very important role in helping people mitigate primary health risks.
“By giving you access to affordable and flexible cover for day-to-day medical expenses, healthcare insurance can provide protection from unexpected medical costs, giving you peace of mind to focus on your health, rather than worrying about bills,” says Len Deacon, head of the health division at Lion of Africa Life Assurance “These products also often cover preventative care, like vaccinations, screenings, and check-ups, which can help detect and prevent illnesses early on. The upshot is that they can improve health outcomes by allowing people to seek treatment without worrying about the financial impact, potentially preventing more serious problems down the line.”
Navigating the uncertainty
When or if LCBO will come to fruition is not clear, and the timeline for the implementation of the NHI remains uncertain. The role of brokers is more important than ever in helping clients to understand their options, simplify processes and find the right cover for their needs during these times. Brokers assess individual needs, compare plans, provide expert advice, and assist with ongoing support, claims, policy adjustments and more.
While we wait for industry reforms to take effect, primary healthcare insurance options offer exceptional value and a variety of products to protect financial and physical wellbeing. The expertise of brokers is invaluable in helping clients to secure affordable and effective primary healthcare that works for now and in navigating this changing landscape in the future.
The Health Funders Association (HFA) has launched a legal challenge against the National Health Insurance (NHI) Act. The organisation filed its application on the 4th of June in the Pretoria High Court, challenging the Act on constitutional grounds. This marks the sixth legal challenge against the Bill, with others being brought by professional medical associations and other healthcare funding associations.
“South Africa needs a healthcare system that delivers equitable, quality care to all. We fully support that vision,” said Thoneshan Naidoo, the HFA’s chief executive. “However, in its current form, and without private sector collaboration, the NHI Act is fiscally impossible and operationally unworkable, and threatens the stability of the economy and health system, impacting everyone in South Africa.”
Prior to this, the Board of Health Funders had launched its own legal effort to have President Cyril Ramaphosa make public his decision-making process for approving the NHI Bill. So far, he has refused, arguing that opponents would lead to a courtroom “fishing expedition” in search of flawed reasoning.
HFA pointed to research that it had commissioned from economic consultancy Genesis Analytics. The Genesis report showed that unsustainable tax increases were necessary to fund NHI, while also reducing healthcare access for members of medical schemes.
NHI unaffordable even with generous assumptions
Assuming a cost efficiency of 45.5% from state-centralised healthcare funding, R15 432 per capita expenditure would be required, which works out to R941 billion for South Africa’s 61 million. (For comparison, the 2024 budget for US space agency NASA was R440 bn.) This is a 77% increase over SA’s total of R532.2bn for public and private healthcare expenditure in 2022, making healthcare 33% of the budget. Personal income tax rates would rise to over 40% for even the lowest income bracket – more than doubling from 18.5%. The highest income bracket would increase from 45% to 68.4%. Those earning R92 000 a year would have R10 000 less income – if they were already paying for medical aid. If not, that would be R21 000. [One wonders how South Africa can afford this when we cannot easily replace the US$500 million worth of US aid for HIV and other healthcare programmes under PEPFAR. – Ed.]
“Such tax increases are fiscally impossible, particularly given South Africa’s narrow personal income tax base of 7.4 million taxpayers,” the HFA said.
The HFA also argued that the NHI is not a reasonable solution to the constitutional requirement for progressive realisation of the right to healthcare. By making private healthcare only valid for conditions not covered by the NHI, its much-maligned Section 33 infringes on individuals’ healthcare access. Legislative authority is delegated to the Minister of Health, violating the constitutional separation of legislature and executive power. It is fertile ground for tenderpreneurs, as discussed by Jeff Wicks in a News24 article (paywalled). The HFA also notes that the government has admitted in legislation brought by Solidarity that no thorough NHI costing was performed.
Healthcare quality impacted
Even if South Africa were to find the money for NHI between the couch cushions, there have to be skilled people who can provide the services. Nearly 300 000 healthcare professionals would be required, and given the time needed to train new ones, there would be a huge strain.
Worse, analysis shows that the NHI will make things even worse than they currently are. According to Naidoo, “what NHI will do actually is worse than healthcare for the uninsured because combining your medical scheme population, who are older, within a single risk pool, will actually usurp more funds and actually disadvantage the vulnerable.”
But the country is not without options and inherent advantages, Naidoo says, citing the strengths of its private healthcare system. “We can bring to the table the skills, the knowledge and experience on how to build a sustainable funding solution for the entire country. So that’s what we can bring, and we want to make sure we build this country for everyone.”
Lungile Kasapato, Chief Executive Officer of PPO Serve
The South African commercial health sector is at a critical juncture, grappling with a severe imbalance that threatens its sustainability and the accessibility of quality care. The dominance of the hospital sector and the deficient state of primary care, are creating an unsustainable system that demands urgent reform, says Chief Executive Officer of PPO Serve, Lungile Kasapato, speaking at the Board of Healthcare Funders (BHF) conference, held in Cape Town from 10-14 May.
“Primary care in the South African commercial health sector is underpowered, compared with a dominant hospital sector, that is pulling the system off-kilter, as a consequence,” Kasapato said.
She identifies a weak and disjointed primary care system as a key driver of this imbalance, underfunded by limited out of hospital benefits and exacerbated by the fee-for-service payment model, which incentivises fragmented care and counterproductive competition. This model leads to GPs competing with specialists for limited out-of-hospital benefits, hindering the collaborative approach needed for optimal patient outcomes.
“Incentives exist to deliver high volumes of covered services, rather than those which will produce the best outcomes and value,” she explains, highlighting the misalignment of financial incentives that the patient, and the medical scheme, needs.
The problem is further compounded by managed care models, which Kasapato suggests can inappropriately shift clinical accountability to funders who lack direct patient interaction. She is also wary of the conflicting roles of scheme administrators, who can profit from being both payers and providers, undermining the “not for profit” ethos of medical schemes and stifling innovation.
Kasapato stresses the crucial role of payers in strategically purchasing care from professionals working in multidisciplinary care teams. By doing so, payers foster healthy competition among these teams, with performance measured by outcomes and efficiency. She points to the contracting model between Government Employees Medical Scheme (GEMS) and PPO Serve’s The Value Care Team as an example, which involves a monthly global fee, adjusted for patient risk. Significant additional fees are linked to performance.
The effectiveness of this approach has been demonstrated in a three-year pilot with GEMS, which resulted in a 29.6% reduction in medical admissions and a 7% decrease in patient bed days, along with a 39% increase in flu vaccine uptake amongst at-risk patients. “That’s not just better care – it’s better use of every rand spent,” she said, highlighting the financial benefits of improved care co-ordination.
Kasapato proposes a fundamental shift towards healthy partnerships built around multidisciplinary GP-led teams. This is the approach of The Value Care Team, which emphasises co-ordinated care delivery. In this approach, clinical teams, allied health workers, alternative care facilities, and community-based organisations are integrated, with care co-ordinators guiding patients through the system. This structure aims to reduce waste, minimise unnecessary hospitalisations, and prioritise preventative care.
“Teams work together to deliver quality, efficient care within local resources, including collaboration with allied health workers, alternative care facilities and community-based organisations,” explains Kasapato.
Looking ahead, Kasapato stresses the urgency of addressing unhealthy competition and rebalancing the system to ensure long-term sustainability and progress towards universal healthcare. She cautions against short-sighted solutions like discounted fee-for-service networks and scheme-led managed care, which offer only temporary relief.
“After decades of imbalance, we’ve found ourselves in a situation where the vast majority of people living in South Africa cannot afford to access our badly structured healthcare resources,” says Kasapato.
Instead of sustaining a flawed system with solutions like isolated telehealth and pharmacy nurse clinics, Kasapato is calling for a fundamental transformation; “Let’s stop propping up a system in need of transformation and focus our efforts on partnerships that strengthen primary care delivery, bringing it into balance with hospital-based care and addressing the major challenges that the commercial sector is facing.”
