Compulsory medical aid membership for anyone earning over R60,000 a month in South Africa
Compulsory medical aid membership for higher-income South Africans could be one way to reduce the cost of private healthcare in the country.
However, the government has warned that forcing all formally employed workers into medical schemes could place an additional multibillion-rand burden on the state.
Thoneshan Naidoo, CEO of the Health Funders Association (HFA), said compulsory medical scheme membership for formally employed South Africans should be considered.
In an interview, Naidoo said this could serve as one avenue to reduce healthcare costs and strengthen the private healthcare system.
Naidoo stressed that the proposal was not the only solution to making medical aid more affordable, but argued that South Africa’s failure to introduce mandatory membership for employed people has contributed to higher costs for existing members.
“Medical schemes are effectively 20% to 30% more expensive because we never made it mandatory for employed people to belong to medical schemes,” Naidoo said.
The basic argument is that bringing more younger and healthier people into medical schemes would expand the risk pool and spread healthcare costs across a larger membership base.
Naidoo said many South Africans are already paying for private healthcare despite not belonging to a medical scheme.
According to HFA data, around 25 million people use private healthcare, but fewer than nine million are medical scheme members.
An estimated 16 million others access private healthcare by paying out of pocket.
“People are staying out, but it doesn’t mean that they’re not purchasing healthcare already,” he said.
However, Naidoo said compulsory membership should not necessarily apply equally across the income spectrum.
Lower-income workers face difficult choices between medical coverage and other household expenses. “For somebody who’s earning R100,000 a year, it’s far more difficult to say, you must contribute,” he said.
However, he added that there is a stronger case for targeting higher-income earners who can afford medical cover but have chosen not to join a scheme.
Naidoo pointed to approximately 200,000 South Africans earning more than R750,000 annually, or around R62,500 per month, who do not currently belong to medical schemes.
“That’s an easier enrolment opportunity,” he said.
Pushback on the idea
HFA modelling suggests that expanding medical scheme membership could reduce expected benefit costs by between 10% and 13% under conservative assumptions, with other models suggesting potential reductions of between 18% and 30%.
Despite the data and argument, Nicholas Crisp, Deputy Director-General in the National Department of Health, has pushed back against compulsory membership for all formally employed workers.
In a separate interview, he warned that such a policy would inevitably include lower-income employees who could not afford contributions without government assistance.
“At the current rate of nine million people on medical schemes, it could cost us another R34 billion to R35 billion that would need to be subsidised from the fiscus.”
Crisp said even a lower cost of R20 billion would require the government to divert funding from elsewhere, potentially taking money from the public healthcare system.
“That money would come out of the public health budget and be put into medical schemes,” he said. He argued that expanding risk pools only works if new members can afford to pay for themselves.
“Yes, of course, making risk pools bigger is always an attractive option, but the issue is who pays for that risk pool,” Crisp said.
While the HFA believes compulsory membership for higher-income earners could provide immediate relief, Crisp said South Africa’s long-term objective remains the National Health Insurance (NHI) system and a broader risk pool covering the entire population.
“We should be sitting around the table and saying where the common ground is. We should be looking at the things we should be doing to alleviate the stresses that everybody feels,” Crisp said.
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