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.”
By Raynold Tlhavani, Partner & Micaela Pather, Senior Associate from Webber Wentzel
The recent judgment in Moss v Road Accident Fund,1 handed down by the Western Cape High Court, has reignited debate regarding the Road Accident Fund’s (RAF’s) liability to compensate accident victims for past medical expenses already covered by their medical aid.
If this sounds familiar, that’s because it is. Recently, the same court in Rahldeyah Esack v the Road Accident Fund1 dealt with the same legal question raised in Moss: can a claimant’s right to compensation under the RAF Act 56 of 1996 be diminished by third-party payments? The court in Moss followed the earlier ruling in Esack, which held that the RAF is liable for a claimant’s past hospital and medical expenses, even if these were covered by a medical scheme.
The facts in Moss were that, in September 2017, the 77-year-old plaintiff sustained bodily injuries when he was struck by a vehicle while cycling. He claimed ZAR 34 286.59 in past medical expenses, of which ZAR 4 173.80 had been paid out of pocket, while the balance had been settled by his medical aid. The RAF opposed the claim, relying on its internal directives from 2022 and 2023, which instructed staff to reject past medical expense claims where the expenses had already been paid by a medical scheme. These directives were not formally introduced before the court. The defence was described as ill-conceived and procedurally inappropriate. Although the court declined to rule substantively on the legal issues raised by the RAF’s directives, it noted that the directive touches on complex areas of law, including common and statutory law, champerty, subrogation, and medical scheme law, which it would not address in context of this judgment.
The court also remarked on the RAF’s litigation practices, observing that the fund had drastically reduced its reliance on external counsel and instead “overburdened” a handful of attorneys at the State Attorney’s office.
It noted with concern that counsel from previously disadvantaged backgrounds, who had historically relied on RAF work, were no longer being briefed, undermining transformation imperatives. It further highlighted the impact on practitioners who, through no fault of their own, were forced to juggle multiple RAF matters in a single day.
Ultimately, the court’s decision in Moss mirrored that in Esack, granting the plaintiff a full award for past medical expenses, regardless of third-party payments. It remains to be seen whether this approach in the Western Cape Division, at odds with a Full Bench decision of the Gauteng Division, will gain traction in other divisions.
Dr Ali Hamdulay, Chief Executive Officer (CEO) of Metropolitan Health, a subsidiary of Momentum Health
As we commemorate Universal Health Coverage (UHC) Day on Thursday, 12 December 2024, it is essential to reflect on the progress made in advancing healthcare access and quality in South Africa. Universal health coverage means ensuring that all individuals and communities receive the health services they need without facing economic barriers. In the South African context, this involves addressing the disparities in our healthcare sectors and ensuring that every citizen, regardless of their financial or social status, has equitable access to quality care.
In South Africa, a large portion of the population lacks medical protection cover, underscoring the urgent need for affordable healthcare solutions. Employed and insured individuals seek comprehensive yet affordable healthcare, while the employed but uninsured (6 to 8 million) face financial strain accessing quality care. Workers in the informal sector and SMEs often lack medical cover too, exposing them to significant out-of-pocket expenses. Those unable to afford any medical funding rely heavily on overburdened public healthcare facilities, highlighting the necessity for accessible and inclusive universal healthcare across all economic groups.
For over 60 years, South Africa’s healthcare sector has been characterised by a dual system of providers. Government has invested heavily in healthcare infrastructure and services and has made notable strides in improving access to quality healthcare. However, there is a significant opportunity for greater collaboration and meaningful partnerships within South Africa’s healthcare sector, focused on developing solutions that cater to the diverse needs of the population.
The healthcare ecosystem relies on the interdependence of various role players, including healthcare professionals, facilities, funders, administrators and government entities. Each of these contributors play a crucial role in ensuring the health and wellbeing of every citizen.
For the system to be sustainable, we must understand, recognise and cater to the unique contributions and requirements of each role player. This approach is vital for maintaining service continuity, quality, and access to necessary healthcare services through collaboration. Effective partnerships across these functions are critical to the success of the healthcare ecosystem.
To address the needs of low-income earners who are privately employed but uninsured, Momentum Health launched Health4Me, a healthcare insurance product that enables employer groups to provide affordable healthcare cover to those who might not otherwise be able to afford it. Our approach goes beyond merely paying claims; we focus on promoting health, wellbeing, and productivity, ultimately enhancing quality of life. This is achieved through primary healthcare facilities, technology, and incentivising wellbeing. The rapid growth of this healthcare insurance solution speaks to its success and its impact on offering more healthcare for more South Africans, for less. By expanding access to universal healthcare through primary healthcare, technological capabilities, and healthcare-strengthening initiatives, there are opportunities to collaborate and address the needs of additional population cohorts.
Through our vast experience in the design and management of healthcare solutions, we have learned valuable lessons that enable us to effectively collaborate across sectors. One of the critical lessons is the importance of clear communication and defined roles for all stakeholders involved in working towards establishing universal healthcare access. Successful partnerships have demonstrated that when goals are aligned across sectors to achieve a common objective, such as improving patient outcomes, success is possible.
As such, the success of creating a healthcare sector that ensures access for all hinges on flexibility and adaptability. The healthcare landscape is constantly evolving, and partnerships must be adaptable to address new challenges and opportunities. This includes being open to innovative solutions and technologies that can enhance service delivery and patient care.
Healthcare is essential not only for individuals and households, but also as a cornerstone of the economy. Without a healthy workforce, productivity declines, leading to far-reaching ripple effects on business sustainability. In this evolving landscape, preventative measures, therefore, become increasingly important. Providing wellness programmes that support both the mental and physical wellbeing of employees is crucial. Equally important is equipping healthcare consumers with the tools and knowledge to understand and improve their health status.
By investing in community health programmes and early interventions, we can address health issues before they escalate, easing the burden on healthcare systems. Collaboration across sectors can significantly increase access to preventative care by leveraging the resources and expertise of both sectors. Integrating preventative care into primary healthcare shifts the focus from reactive to proactive care.
It is advantageous to focus on co-creating platforms and mutually solving for the needs of our population through collaboration. This approach fosters consistency in service delivery and builds trust between entities. Metropolitan Health, a subsidiary of Momentum Health, has demonstrated its commitment to health strengthening by supporting leadership and professional development through its partnership with the National School of Government. By sharing and imparting knowledge, we are supporting the education and empowerment of future healthcare leaders through regular joint training and capacity-building programmes. This further improves collaboration by fostering a culture of continuous learning and development.
Building on these collaborative efforts, innovative models such as health hubs can further enhance healthcare delivery. These hubs combine offerings from both sectors, providing a range of services from primary care to specialised treatments under one roof. Telehealth is another innovative approach that has shown great promise. By utilising digital platforms, we can extend healthcare services to remote and underserved areas, ensuring that more people have access to quality care.
While effective collaboration is key to providing access to quality healthcare for more people, success cannot be achieved without fostering an environment that encourages innovation and supports conducive partnership development. By creating a more enabling environment, we can facilitate smoother collaboration and attract more private sector investment in healthcare.
Looking towards 2025, the vision for healthcare in South Africa is one of greater access, integration, and collaboration. By working together, we can create a more resilient and responsive healthcare system that meets the needs of all citizens. I envision the future of healthcare delivery as one that drives innovation and improves access to care. By leveraging partnerships and co-creation, I believe we can make significant strides towards achieving universal health coverage and ensure that no one is left behind.
By James White, Director of Sales and Marketing at Turnberry Management Risk Solutions
Photo by Alex Green on Unsplash
As South Africans prepare to review their medical aid plans ahead of the window for change leading up to December, many are grappling with the difficult decision of whether to downgrade their cover. Rising costs and ongoing economic pressures have led an increasing number of individuals and families to seek more affordable medical aid options. However, while downgrading may be an immediate cost-saving measure, it is crucial to understand how this decision impacts overall coverage and why adding gap cover should be a vital part of your strategy.
The consequences of downgrading medical aid plans
In 2025, medical aid contributions are expected to rise significantly, with many schemes projecting increases in the 10-15% range, far outstripping the Consumer Price Index (CPI) and most people’s salary increases. These hikes pose a major financial challenge, especially for the average family whose income growth may not keep pace with the rising costs of healthcare. As a result, many are choosing to downgrade from comprehensive plans to more affordable options, often focusing on hospital cover while choosing to manage day-to-day medical expenses out-of-pocket.
However, downgrading often comes with hidden costs. Lower-tier medical aid plans may only cover 100-200% of the scheme rate, while medical specialists and healthcare providers frequently charge significantly more than this. This leaves you vulnerable to substantial out-of-pocket expenses, particularly for specialist care or hospital procedures. As a result, gap cover, which is designed to cover the shortfall between what medical schemes pay and what healthcare providers charge, becomes increasingly essential when downgrading your medical aid.
The vital role of gap cover
When you downgrade your medical aid plan, you may face more co-payments, reduced benefits, and sub-limits on procedures that previously had unlimited coverage. Gap cover serves as a critical financial buffer, protecting you from these unexpected medical expense shortfalls. However, it is important to note that many medical aids are making changes to existing plans for 2025, with increased co-payments and reduced benefits, and potential sub-limits on procedures that previously had full coverage. This means you need to be more informed than ever, not only if you are thinking of downgrading, because changes may affect your existing plan as well.
By incorporating gap cover, you can safeguard against these potential shortfalls and ensure that you are not caught off-guard by additional expenses. This safety net can help you navigate the complex and evolving healthcare landscape in South Africa, ensuring that you remain adequately covered, even in challenging economic times, particularly as medical schemes change the way their cover operates.
Evaluating your medical aid and gap cover options
When reviewing your medical aid policy, it is essential to assess how well it meets your current and future needs, including factors such as affordability and coverage limits. Navigating the complexity of this often requires expert advice, which is why your broker is an invaluable resource. Brokers have an in-depth understanding of the medical aid landscape and can guide you in making the most informed decision for your unique needs, whether you are downgrading your plan or considering other options.
Your broker can help you understand the potential shortfalls that come with a downgrade and ensure you have the right gap cover to supplement your plan. They will also assist you in reviewing your policy schedule, interpreting medical aid terminology, and comparing plans to ensure that you are fully aware of the benefits and changes heading into 2025. The right broker will work with you to find a medical aid plan and gap cover that align with your life stage, financial situation, and healthcare needs.
Ultimately, working with your broker to ensure you have the right medical aid plan and gap cover will provide peace of mind and protect your financial wellbeing in an ever-changing healthcare environment. With the right guidance from a knowledgeable broker, you can make informed decisions that safeguard both your healthcare and your financial future.
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.
By Reo Botes, Managing Executive at Essential Employee Benefits
Cross-subsidising medical aid contributions is a long-standing practice in South Africa and is and one of the benefits companies can use to make themselves stand out as employers of choice. This approach allows employers to support their employees in managing healthcare costs, which can be particularly burdensome in a country where healthcare expenses continue to rise. However, despite this subsidy, medical aid remains unaffordable for many individuals, especially those in lower income brackets and even for middle-income earners. The reality is that even if half of the cost is subsidised by their employer, many employees find it challenging to allocate a significant portion of their income toward medical aid contributions.
The challenge of affordability
The affordability challenge is exacerbated by the annual increases in medical aid contributions, which frequently exceed the rate of salary increases. For instance, a medical aid plan that costs R2,000 a month will still require the employee to pay R1,000 a month should the employer subsidise at least 50%. For someone earning a modest salary, such as entry-level employees, this R1,000 can represent a substantial chunk of their monthly income, making it an untenable option, this means that the employee then loses out on this benefit if the only employee benefit option is medical aid.
Furthermore, medical inflation has continued to soar, leading to dramatic increases in the cost of even entry-level medical aid plans. These plans, which were once within reach for some, have become prohibitively expensive. The rising cost of living, coupled with stagnant wages, has forced many individuals to reconsider their insurance cover. With limited options available when employers subsidise the costs, employees often find themselves in a difficult position, needing to balance health needs with financial realities.
The need for alternative solutions
Given these challenges, it has become increasingly important for businesses to explore additional more affordable healthcare options in the mix. While this may introduce some administrative tasks, the decision ultimately boils down to whether the cost of the employee not being able to perform their tasks optimally outweighs the costs of a Health Insurance solution. The key is to find the balance between keeping people healthy and productive, which necessitates a shift towards enhancing accessible health products.
There is an obvious and direct correlation between employee health and productivity, and so the primary objective of employee healthcare benefits should always be to maximise employee health. Including alternative subsidised healthcare options, particularly for lower-income earners and those looking to step down their cover, allows employers to provide greater choice and flexibility. This not only benefits employees but can positively impact the company’s bottom line.
Health insurance products offer a cost-effective solution that enhances access to healthcare at a fraction of the cost of medical aid. While this type of insurance is not as comprehensive as medical aid, it is significantly more affordable. When subsidised by employers, health insurance can cost employees just a few hundred Rands a month, making it a feasible option for many.
Depending on the provider and product suite, health insurance can supply access to primary or day-to-day healthcare services, including optometry and dentistry, as well as cover for in-hospital procedures in a private hospital. This accessibility empowers employees to seek the treatment they need without the additional stress associated with financial strain and affordability, the outcome being a healthier, happier, and ultimately more productive and profitable workforce.
The importance of employee health
Healthy employees are more engaged and productive, which ultimately benefits the employer. Ensuring that employees have access to preventive care and timely treatment, allows companies to reduce absenteeism and increase job satisfaction This creates a mutually beneficial situation where employees feel their health needs are supported, and employers benefit from a stable, healthy and productive employee base.
Moreover, as the landscape of healthcare continues to evolve, businesses must remain agile and responsive to the changing needs of their employees. This includes recognising the importance of mental health and wellness programmes as part of a comprehensive employee benefits package. By prioritising employee health, companies can foster a positive workplace culture that attracts and retains top talent.
The role of employers in promoting wellness
Employers play a crucial role in promoting employee wellness beyond just providing healthcare benefits. By fostering a work environment that encourages healthy habits, employers can positively impact the overall well-being of their workforce. This can include initiatives such as:
Providing healthy snack options and encouraging regular breaks
Organising fitness challenges or subsidising gym memberships
Offering mental health support and resources
Promoting work-life balance and flexible work arrangements
Educating employees on the importance of preventive care and regular check-ups
When employees feel supported in their health and wellness goals, they are more likely to be engaged, motivated, and productive in their work. This, in turn, contributes to the overall success and competitiveness of the organisation.
The impact on employee retention and recruitment
Offering comprehensive and affordable healthcare benefits can significantly impact employee retention and recruitment. In today’s competitive job market, potential employees often prioritise companies that demonstrate a commitment to their well-being. By providing a robust healthcare benefits package that includes subsidised medical aid and health insurance options, employers can position themselves as an employer of choice.
Moreover, retaining talented employees becomes easier when they feel valued and supported by their employer. By investing in their employees’ health, companies can foster a sense of loyalty and commitment, reducing costly staff turnover rates, which ensures continuity in their workforce.
The ongoing challenges surrounding medical aid affordability in South Africa highlight the need for innovative solutions that prioritise employee health and well-being. By expanding the range of healthcare options available to employees, businesses can enhance access to necessary medical services while also addressing the financial burdens that many individuals face.
As the healthcare landscape continues to change, it is crucial for employers to stay informed and proactive in their approach to employee benefits. By investing in the health of their workforce, companies not only contribute to the well-being of their employees but also position themselves as desirable employers in a competitive job market. Ultimately, the goal should be to create a healthier, more productive workforce that can thrive in the face of ongoing economic challenges.
Incorporating health insurance into employee benefit packages is a cost-effective strategy to achieve this objective. While it’s not necessary to complicate matters with an array of product options, offering more affordable choices aligned to the employee segment is crucial. Partnering with an independent advisor or engaging with different product suppliers can assist businesses in understanding the broader spectrum of available products and selecting a basket that will offer the best balance between benefit and affordability for all parties concerned.
The idea of mandatory medical scheme coverage for employed people has made a comeback after the case for it was made at a recent conference. The policy move was previously on the cards in South Africa but faded after the ANC opted for National Health Insurance (NHI) at its 2007 national congress where Jacob Zuma was elected as the party’s new leader. Chris Bateman unpacks how a system with mandatory medical scheme membership for the employed might work and asked local experts whether it represents a viable alternative to government’s NHI plans.
A vigorous public debate has ensued since outgoing Netcare CEO, Dr Richard Friedland, on behalf of the Hospital Association of South Africa (HASA) delivered a strongly argued case for a return to what he described as the original ANC healthcare plan. He was speaking on “Viable and Near-term Opportunities to Providing Enhanced Healthcare in South Africa,” at HASA’s annual conference in Sandton held early in September.
Since then, the leadership of Business Unity SA (BUSA) met with President Cyril Ramaphosa and Health Minister Dr Aaron Motsoaledi, and his deputy and other senior officials, in mid-September to discuss “matters of concern” related to the NHI. The President requested BUSA to put forward specific proposals on “the remaining matters of concern” as a basis for re-engagement.
Some observers have suggested to Spotlight that these consultations are a first sign of government openness to changing or tweaking its NHI plans. But whether this means the door is actually open for a system of mandatory health insurance, or for mandatory health insurance as a stepping-stone toward NHI, is still unclear.
The NHI Act, that was signed into law by Ramaphosa in May, envisages a single-payer system where medical schemes are only allowed to cover health services that are not covered by the NHI fund.
How mandatory health insurance would work
Under mandatory health insurance, everyone who is in formal employment, or who earns above a certain threshold, would be forced by law to be a member of a medical scheme. This will result in medical scheme membership swelling substantially and some pressure being taken off the public healthcare system. It is also expected to result in medical scheme premiums being reduced because more healthy, younger people will join the schemes. People who are unemployed or who cannot afford health insurance will still be dependent on the public healthcare system.
Friedland said such mandatory healthcare insurance will triple the medical scheme market from 9.2 million to potentially 27.5 million beneficiaries over time and reduce those dependent on the state from 53.8 million to 35.5 million. In so doing, it would boost public healthcare per capita spending by 52%, (from R5 054 to R7 659), without any additional funding of the public sector budget, alleviate the strain on public hospitals and clinics, shorten waiting lists, and free up money to hire more staff and improve infrastructure. He said it is a “far faster and more efficient tool” for achieving health equity.
Responding to the counter argument that a mandatory health insurance system would entrench existing health inequalities, Professor Alex van den Heever, Chair of Social Security Systems Administration and Management Studies at the University of the Witwatersrand, said the opposite is true. “It accelerates convergence between the two systems faster than the NHI proposals,” he told Spotlight.
The relief for people who can afford medical scheme cover could also be significant. Friedland said mandatory medical scheme membership would bring more young and healthy people into the system, thus reducing the cost of monthly premiums by 25% to 30%.
Mandatory contribution schemes for civil servants have been implemented in more than half of the countries in Africa, while Thailand and many other Asian countries have started with mandatory cover for the formal sector before expanding to the non-formal sector. Such systems with what amounts to many medical schemes, rather than a single large fund, are also in place in several European countries, including the Netherlands and Germany.
Not a new idea
Mandatory health insurance, or an expanded role for medical schemes, are by no means new ideas in South Africa. Friedland told Spotlight that the ANC government’s own broad ranging 2002 inquiry into the various social security aspects of the South African health system concluded that national health insurance or the complete nationalisation of the private sector, could not be seriously considered as a reasonable option. (The inquiry itself was based on the Health Subcommittee Findings of the Committee of Inquiry into a Comprehensive System of Social Security.)
That 2002 report concluded: “National health insurance is not an option that emerges overnight as an alternative to social health insurance. Instead, it becomes feasible within market economies where formal employment levels are high. Prior to this, mixed systems are inevitable.”
One indication of how committed government was to such a mixed system with an expanded role for medical schemes in the early and mid-2000s, is the fact that the legislative framework to enable the expansion of medical scheme coverage was incorporated into the 2008 Medical Schemes Amendment Bill. That bill did not go as far as making scheme membership mandatory, but a mandatory system was clearly a next step on the reform agenda, as outlined in the very wide-ranging 2002 Taylor report on social security in South Africa. But presumably because of the NHI proposals, the 2008 amendments were allowed to lapse – and the scaffolding for a progressive expansion of medical scheme coverage collapsed.
There have since been several committees of inquiry and technical processes that validated an ongoing role for medical schemes, of which the Competition Commission’s Health Market Inquiry (HMI), that ran for five years (2014 to 2019), was the most technically detailed, consultative and authoritative. The HMI report did not recommend that medical scheme membership be made mandatory for people who are employed, but it did recommend a continued role for medical schemes and suggested that the most viable path to NHI may well involve first fixing the regulation of medical schemes.
Van den Heever said South Africa needs to quickly return to the pre-2008 reform trajectory to help stabilise the health system, “before more harm is done”. Government needs to summon up the political will to address the systemic governance failures of the public health system, removing the “bad actors and provincial cabals” that were destroying the integrity of South Africa’s free public health services, he added.
Better regulation also needed
For a system of mandatory health insurance to work, medical schemes will have to be more effectively regulated. Here the HMI report found that government had dropped the ball. It attributed the private health market failure and rampant medical inflation directly to government neglecting to regulate the private healthcare industry.
Health actuarial consultant, Barry Childs, joint CEO of Insight Actuaries and Consultants, told Spotlight private healthcare sector reforms urged by the HMI were ignored, resulting in ongoing confusion, high costs, complicated products and waste, among other problems. “Our incomplete medical scheme regulation keeps costs up, (for example anti selection, Prescribed Minimum Benefits), with benefits out of reach of most. We still don’t have a proper framework for lower cost-lower benefit products for those who cannot afford medical schemes,” he said.
The HMI report recommended a framework that went “way beyond naïve approaches to price control”, said Van den Heever, and addressed the powerful incentive structures driving unproductive forms of competition. In addition, he said, the industry-wide pooling approaches (risk equalisation and social reinsurance) followed international best practice and fully addressed issues of pooling fragmentation.
In the five years since the publication of the Commission’s HMI report, none of its major recommendations have been implemented.
Jobs and taxes
One common thread running back to the 2002 report, is the idea that South Africa is not economically ready for NHI and that a mixed system, possibly with mandatory health insurance, is more compatible with the current realities of high unemployment and a relatively small tax base.
“The root cause of inequity and inequality is not just a new form of apartheid. The real reason is the catastrophic level of unemployment. Until we address that, we will not solve an entire range of inequities, including food security, housing, education, and healthcare,” said Friedland.
On joblessness, Childs said South Africa was on track with the rest of the world’s growth up to 2008 but thereafter flat lined for over a decade. “We have dramatically underperformed the rest of the world and our peer group of middle-income countries in long term economic growth.”
In South Africa, unemployment is at an extremely high 33.5%, while in 2002 it was at 26%.
“If an NHI was unaffordable in 2002, how much more so is it today?” Friedland asked. He said that in this context, strong partnership, collaboration, and co-operation between the public and private sector is needed to bridge the polarisation that has arisen.
Analysis commissioned by BUSA found that raising the extra R200bn the health department says it needs to fund NHI would entail unrealistic and unaffordable tax hikes. It would either increase personal income tax by 31%, push VAT from 15% to 21.5%, or require the collection of a payroll tax of R1 565 per month from everyone in formal employment.
Van den Heever said that while government has a discretion to increase tax rates to any level it chooses, it cannot control the resulting amount of funds raised. He said that once tax capacity is reached, a hard ceiling on government revenue results at any given level of economic growth. The only way to grow revenues thereafter is through economic growth, failing which, revenues stagnate beyond government control.
The “big idea”, he said, was that new taxes would fund the move of medical scheme members to the public sector, in the form of a single NHI Fund, such that both public sector and medical scheme populations were covered in the same system – with net gains in coverage for both.
However, contrary to what was “correctly understood” from 1994 to the 2002 Taylor Commission, “the maths for such an approach, just does not add up”, said Van den Heever.
“The fastest way to de-segment the system is to allocate all new government revenues arising from economic growth to the people who need it most. This is not what the NHI proposals envisage. They want to dilute the public spend by trying to cover higher income groups. It is dangerous magical thinking that allows government to avoid dealing with the complex problems of the health system. Government needs to get back to its day job and do the heavy lifting needed to get our health system working again.”
Government response
Spotlight shared an earlier draft of this article with the National Department of Health for comment. While the department did not comment directly on mandatory health insurance, Foster Mohale, the department’s Director of Communications, emphatically reiterated their support for NHI and the NHI Act that was signed into law in May.
“There is no better time than now to reform South Africa’s health system. It is time to do away with the apartheid type of health system, and to reconfigure it into one that ensures that every South African gets the health care that they need, when they need, where they need and without incurring financial hardship. With the enactment of the NHI Act, the time for piecemeal approaches that retain benefits for the few and leave the majority to the whims of the market is no more,” Mohale told Spotlight.
He said that many countries, including Japan and the United Kingdom, have implemented health system reforms directed at achieving universal health coverage during times of crisis and low economic growth. “Therefore, to say that South Africa must sit and wait for some oracle numbers to emerge before instituting NHI is merely to argue that we must consciously let those that are carving profits and dividends from the anomalies that characterise our health system to continue. This is an irresponsible position that the Department cannot adopt as health is a constitutionally enshrined right for every South African, not just a privileged few,” he said.
On the questions of taxes, Mohale said: “We will not delve into the projected tax implications because we believe this is a matter that squarely falls under the purview of the National Treasury and the Minister of Finance. Suffice to say at the right time, and after necessary deliberations through formal government structures and processes, any information relating to this will be communicated to the public for comments prior to finalisation.”
Note: The 2002 Tailor report titled ‘Transforming the present – Protecting the future’ is not readily available online. There is this PDF version (unfortunately not searchable and with poor accessibility). For ease of use, we have created a Word version of the document that you can access here. Health is discussed in chapter 8.
