Skip links

A commitment to social solidarity and equitable healthcare


28 October 2024
Thoneshan Naidoo, Chief Executive Officer at Health Funders Association

Thoneshan Naidoo

Thoneshan Naidoo

Championing member protection and healthcare sustainability through medical schemes

Medical schemes are dedicated to delivering patient-centred care and operate on principles of social solidarity. While there are occasionally critiques suggesting a focus on profits, these views overlook the fundamental mission of medical schemes: to provide equitable healthcare access and financial protection for all members.

By adhering to these principles, medical schemes effectively meet healthcare needs and contribute to a healthier, more resilient society.

Understanding medical schemes: Principles of social solidarity

Medical schemes operate as non-profit entities, guided by the following social solidarity principles:
• Community rating: Members contribute equally, irrespective of their health status.
• Open enrolment: Schemes must accept all applicants, regardless of age or health risks.
• Prescribed Minimum Benefits (PMBs): These benefits ensure access to essential healthcare services, including chronic and emergency care.

Principles of social solidarity safeguard members from financial distress while promoting equitable healthcare access. Members contribute to a collective risk pool used to cover healthcare expenses. However, rising medical inflation and an incomplete regulatory framework challenge the system’s affordability and sustainability.

Factors contributing to rising healthcare costs

The increasing cost of healthcare is a global issue influenced by several factors:

Stagnant membership growth and limited cross-subsidisation: A pool of younger, healthier members cross-subsidise older, sicker members. However, stagnant membership growth, which has remained at around nine million, is limiting the ability of medical schemes to balance costs. When the Medical Schemes Act was introduced, it envisioned mandatory membership and a risk equalisation fund to ensure broader participation, especially from younger individuals. Since these mechanisms were never implemented, the increasing cost burden falls heavily on an ageing membership.

An ageing population: The average member age increased from 32.5 in 2016 to 34.0 in 2022, with pensioner membership rising from 7.9% to 9.3%. This demographic shift requires more medical care, increasing the demand for services and, ultimately, costs. In effect, every additional year that a medical scheme’s membership’s average age increases requires a three to four per cent increase in annual contributions.

Increasing disease burden: The prevalence of chronic conditions is rising, with lifestyle factors such as smoking, alcohol consumption, sedentary lifestyles, and poor nutrition contributing to this trend, along with the growing prevalence of comorbidities, which include patients with multiple chronic conditions. Currently, one in three members require long-term medication, up from 1 in 4 previously.

Advanced medical technologies: While enhancing health outcomes, new medical technologies often come with high costs, sometimes exceeding R1 million per treatment, adding financial strain on schemes.

To sustain mandated benefits, several factors have driven increases in contributions.

Delivering value through medical schemes

Despite rising costs, medical schemes provide substantial value:

• Healthcare claims: In 2022, 94% of every R100 collected was used for healthcare claims, with only 6% allocated to administration and operational costs.
• Financial protection: Schemes are legally required to cover PMBs, protecting members from catastrophic healthcare costs. Notably, out-of-pocket expenses for South African medical schemes are just 5.5%, among the lowest globally, illustrating comprehensive cover.
• Access to world-class care: South Africa’s private healthcare sector offers services comparable to international standards. Members benefit from faster access to healthcare services; for example, while UK patients might wait 18 weeks to see a specialist, South African members can secure appointments within hours.

South Africa’s private healthcare sector is world-class, including its medical schemes. In a country where public healthcare faces severe strain, medical schemes provide nine million people with financial protection and access to high-quality comprehensive healthcare cover, protecting against financial hardship while contributing to a healthier society.

Leave a comment

This website uses cookies to improve your web experience.
Explore
Drag