Important medical aid warning for South Africa

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

Despite several pledges, the Department of Health has failed to provide clarity or explanation on several key issues in the bill, said Lee Callakoppen, senior director of the Bonitas Medical Fund.

“The fact that universal health care is desperately needed in South Africa is not debated. Having only about 16% of the population under private medical care, with the rest dependent on public health, is unsustainable.

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

The end of medical aid?

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

Medical aids and related services contribute enormously to the annual tax. The industry also contributes significantly to employment and therefore to the country’s economy, he said.

“The administration of health care is a colossal undertaking that requires skills, experience and expertise. State-of-the-art technology is required to comply with international best practices. South Africa’s medical administrators are world class, it is simply not possible to envision having an administrator responsible for the health care of millions of South Africans.

“Private healthcare is also a source of excellence in terms of innovation and development, from which the public sector benefits. This essential role of private health 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 for health services, i.e. there can be no other legal entity that can purchase and pay for health services. It does not distinguish between complementary and duplicative services.

That means it would be illegal for medical plans — or health insurance companies — to exist, even in a supplemental form that contradicts other sections of the bill, Callakoppen said.

Bonitas said he does not agree with or support the proposed changes to the Medical Schemes Act (MSA) as set out in the bill.

“We believe that allowing medical plans to provide only supplemental coverage is unconstitutional. However, Bonitas supports the healthcare reforms recommended by the healthcare market survey.

“The Constitution requires the state to protect, respect, promote and fulfill the rights set forth in the Bill of Rights. The state must protect the access rights that people already have. The right of access to health care is much broader than the right to obtain health care through the public sector. This includes the right to purchase health care from the private sector if one can afford it.

Consumer purchasing power is a legitimate means of accessing health care, and consumers must have the right to use their purchasing power as they see fit, Callakoppen said.

The bill, in its current form, makes it illegal to purchase health services not covered by the NHI, he added.

“The proposed bill is full of illegalities and is in direct conflict with Medical Plans Act 31 (MSA) and applicable regulations. The administration of the proposed central health care system will require strict governance as existing medical aids are strictly regulated.

“Good corporate governance is of critical importance to prevent mismanagement of assets, corruption, inefficiency, illegality, unethical conduct, abuse of Fund resources and collapse of the Fund.”


The proposed health financing system for the NHI is a pool of funds, but no exact details were provided on that funding model, Callakoppen said.

“When first presented, the estimated cost of INSA was 256 billion randwhich is expected to be rolled out in 2026. It is unclear how this figure was reached,” he said.

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

“According to the IRR, the increase in the tax burden will weigh particularly heavily on the approximately 700,000 individual taxpayers who currently pay around two-thirds of personal income tax and a good part of VAT.”

It’s also not immediately clear what “comprehensive healthcare services” will be offered under the program, Callakoppen said.

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

“This is third-party payment for personal health services not reimbursed by the Fund, including any additional cover offered by medical plans or any other private health insurance fund.

The path to follow

The notion of NHI is laudable, but it’s a case of the “devil is in the detail” — detail that has yet to be unpacked and specified, Callakoppen said.

“The only way for the health system to evolve is through interdependent relationships. Medical schemes should be allowed to assist the NHI administratively and to bear some of the risk and burden that would be incurred by the NHI with respect to medical scheme members.

“This would ensure that funds deployed in the purchase of health services are not unnecessarily drained by the duplication of services and functions.”

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