Major medical aid warning for South Africa

 ·28 Feb 2022

While the public hearings around South Africa’s proposed National Health Insurance (NHI) have now concluded, there is still a distinct lack of clarity around what exactly the scheme means for the country’s health sector and the pockets of taxpayers.

Despite several engagements, the Department of Health has failed to provide clarity or explanations on several key issues within the bill, says Lee Callakoppen, principal officer of Bonitas Medical Fund.

“The fact that universal healthcare is desperately needed in South Africa is not being debated. Having only around 16% of the population on private medical aid, with the rest relying on public health, is unsustainable.

“What is worrying is the lack of detail around the implementation of this national health blueprint.”

The end of medical aids? 

Callakoppen warned that there are significant ramifications for curtailing the role of medical aids in the country as proposed by the NHI.

Medical aids and associated services make an enormous contribution to the annual fiscus. The industry also contributes significantly to employment and, in turn, to the economy of the country, he said.

“Healthcare administration is a massive undertaking that requires, skills, experience and expertise. State of the art technology is needed to comply with international best practices. South Africa’s medical administrators are world-class, it is simply not feasible to consider having one administrator in charge of the healthcare of millions of South Africans.

“Private healthcare is also a source of excellence in terms of innovation and development, which benefits the public sector. This essential role of private healthcare will be strangled if it is not able to continue in a private setting.”

The Bill states that the NHI will serve as the single purchaser and single payer of healthcare services, ie., that there can be no other legal entity that can purchase and pay for healthcare services. This doesn’t distinguish between complementary and duplicative services.

This means it would be illegal for medical schemes – or health insurance firms – to exist, even in a complementary form that contradicts other sections of the Bill, said Callakoppen.

Bonitas said it does not agree or support the proposed amendments to the Medical Schemes Act (MSA) as set out in the Bill.

“We believe allowing medical schemes to provide only complementary cover is unconstitutional. Bonitas does, however, support the healthcare reforms as recommended by the Health Market Inquiry.

“The Constitution requires the state to protect, respect, promote and fulfil the rights in the Bill of Rights. The state must protect the rights to access that people already have. The right of access to healthcare is much wider than the right to obtain healthcare through the public sector. It includes the right to purchase healthcare from the private sector if one can afford it.”

The purchasing power of the consumer is a legitimate means of access to healthcare and consumers must have the right to apply their purchasing power as they deem fit, said Callakoppen.

The bill, in its current form, makes it unlawful for people to purchase healthcare services not covered by NHI, he added.

“The proposed bill is fraught with illegalities and is in direct conflict with the Medical Schemes Act 31 (MSA) and prevailing regulations. The administration of the proposed central system of healthcare will need strict governance as existing medical aids are strictly regulated.

“Sound corporate governance is of critical importance in preventing mismanagement of assets, corruption, inefficiency, illegality, unethical conduct, abuse of the Fund’s resources and the collapse of the Fund.”


The proposed health financing system for the NHI is a pool of funds, but nowhere has exact detail been provided on this funding model, said Callakoppen.

“When first presented, the estimated cost of NHI was R256 billion, with it due to be rolled out in 2026. It is not known how this figure was reached,” he said.

“The Institute of Race Relations (IRR) recently stated that NHI is likely to cost around R700 billion a year when fully operational in 2026, as the government now envisages.

“According to the IRR,  the increased tax burden will fall particularly heavily on the 700,000-odd individual taxpayers who currently pay about two-thirds of all personal income tax and a hefty chunk of VAT.”

It’s also not immediately clear what ‘comprehensive health care services’ will be offered under the scheme, said Callakoppen.

“No further indication of the details of these services/benefits is provided except to indicate that medical schemes will offer what is referred to as ‘complementary cover’.

“This is defined as third party payment for personal healthcare service benefits, not reimbursed by the Fund, including any top-up cover offered by medical schemes or any other private health insurance fund.”

The way forward

The notion of NHI is commendable, but it’s a case of the ‘devil is in the detail’ – detail which is yet to be unpacked and specified, said Callakoppen.

“The only way for the healthcare system to evolve is through inter-dependent relationships. Medical schemes should be allowed to assist the NHI administratively and take over some of the risk and burden which would lie with the NHI in respect of members of medical schemes.

“This would ensure that the funds deployed in the procurement of healthcare services are not unnecessarily exploited through duplication of services and functions.”

Read: Major price hikes hitting South Africa from March

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