Hospital and medical group Netcare has flagged a new trend where existing scheme members are downgrading due to cost pressures in South Africa.<\/p>\n\n\n\n
This is an exacerbation of a different trend that started in 2023, where new medical scheme entrants were being priced out of more inclusive plans and were looking for cheaper, restricted plans.<\/p>\n\n\n\n
At the time, Netcare noted that current medical scheme members were retaining their plans and only new entrants were being impacted by the cost pressures – but this is has now changed and existing members are downgrading.<\/p>\n\n\n\n
As part of its interim results for the 2024 financial year, the group noted that the macroenvironment in South Africa remains “challenging”.<\/p>\n\n\n\n
In particular, this has hit the medical schemes industry quite significantly, with the prevailing elevated unemployment rates and a financially constrained consumer base forcing households to make changes.<\/p>\n\n\n\n
The persistent downturn in formal sector employment has led to sluggish growth in medical aid membership in the country, where approximately 9.1 million South Africans now have coverage.<\/p>\n\n\n\n
This is only slightly higher than the 9 million figure in the year before.<\/p>\n\n\n\n
“The ‘buy-down’ trends continue, with falls in membership of comprehensive plans versus growth in low cost networks or partial cover plans, which attract lower contributions but have similar healthcare expenditure<\/strong>,” the group noted.<\/p>\n\n\n\n This is adding pressure to medical schemes as a whole as healthcare demand is increasing due to a growing disease burden and aging patient population, but the pool of comprehensive members (who pay the highest premiums) is sinking.<\/p>\n\n\n\n Making matters worse, Netcare flagged disposable income pressures impacting self-pay activity, while high scheme contribution increases in 2024 likely to have a continued adverse impact on pool of funds.<\/p>\n\n\n\n “The outlook for GDP growth and formal employment remains muted,” it said.<\/p>\n\n\n\n Uncertain future <\/strong><\/p>\n\n\n\n The high cost of medical aids in South Africa is one of the key criticisms levelled against the industry by the government, and often cited as a big reason the country needs to reform healthcare.<\/p>\n\n\n\n This culminated in President Cyril Ramaphosa signing the National Health Insurance bill into law on 15 May, which the president claims will remove the imbalances in healthcare – specifically where the private sector only caters to a tiny percentage of the population while the public sector remains overburdened and underfunded.<\/p>\n\n\n\n However, the bill has faced significant backlash from businesses and healthcare groups and professionals – particularly the medical aid industry, which the government hopes to make obsolete with universal healthcare coverage.<\/p>\n\n\n\n Under the NHI, medical aids will not be able to provide coverage for anything the NHI covers, with the state being the single purchaser of services in the country.<\/p>\n\n\n\n While the government has argued that medical aids will be able to continue to exist, critics have noted that this will likely only be allowed for a small (as yet to be determined) selection of services, and will result in members having to pay even higher fees.<\/p>\n\n\n\n Given the uncertainty and vagueness around the bill, it is also highly likely that medical aid users will be triple-taxed to maintain a decent level of healthcare – having to pay normal taxes, the NHI surcharges, and keeping their medical aids while the government meanders to implement the system.<\/p>\n\n\n\n Despite the NHI’s lofty objectives – which many critics support in principle – groups like Nedcare have pointed to many fundamental areas of weakness in the new laws, including the manner in which it was rubber-stamped through parliament, the lack of funding for its goals, and the inability of the state to implement it.<\/p>\n\n\n\n
\n\n\n\n