In a modest conference room in Johannesburg, the board of a typical medical aid scheme flips through a spreadsheet that shows contributions rising faster than inflation. The numbers are not just abstract; they translate into higher monthly payments for the scheme’s members and a tighter margin for the organisation that runs the plan.
According to Kevin Aron, Principal Officer for Medshield, the sector is caught “between a rock and a hard place”. New members of all ages are either joining lower-tier plans or moving down from more comprehensive cover. That shift forces schemes to spread the cost of claims across a smaller pool of healthier contributors, which in turn pushes contributions higher.
Medical aid schemes are required by law to cover Prescribed Minimum Benefits (PMBs), a set of essential health services that every scheme must provide. Covering PMBs adds a baseline cost of roughly R1 000 per member each month. Because the regulation does not apply to private health insurance products, those cheaper alternatives can be offered at around R500 a month, making them attractive to price-sensitive consumers.
The consequence is a pricing spiral. When younger, healthier members either downgrade or avoid joining altogether, the average age of the scheme’s membership rises. Older members tend to claim more, especially for costly procedures that fall outside the PMB list. With fewer low-cost claims to offset the high-cost ones, the scheme raises contributions to keep the fund solvent.
Why younger members matter
Younger members, typically aged 21 to 26, are the lifeblood of any health-insurance pool. Their lower utilisation of services helps keep overall costs down. Aron notes that this group is increasingly drawn to private health insurance that is not bound by the same regulatory requirements. Those products can be priced at R500 a month, compared with the most affordable medical aid plans that start around R1 100, “if you’re lucky”, he said.
The broader economic backdrop does not help. South Africa is grappling with job losses, stagnant growth and rising living costs. For many consumers, a medical aid contribution of R5 000 to R6 000 a month is simply out of reach. As a result, they either opt for the cheapest tier or forgo cover altogether, leaving them vulnerable to large medical bills or forced reliance on the public health system.
For small-business owners, the ripple effect is tangible. Payroll budgets already feel the pressure of higher wages and utility costs. Adding a steep rise in health-care contributions can force an employer to either cut staff, reduce other benefits or pass the cost onto employees. In a market where talent is scarce, losing the ability to offer competitive health cover can make recruitment and retention harder.
Aron warns that if schemes cannot attract members who can afford mid-range or comprehensive plans, the overall risk profile will continue to age. “If you don’t do that, those options are going to age, you’re going to have a higher claiming profile, and ultimately you will have to counter that with higher contribution increases,” he said.
Regulatory constraints are a key part of the problem. The requirement to fund PMBs means that even the cheapest medical aid plans carry a fixed cost floor that private insurers can avoid. This creates a structural disadvantage for schemes that want to compete on price while still meeting their legal obligations.
What can be done? Aron suggests that schemes need to find ways to attract younger members to higher-tier plans, perhaps through value-added services or flexible benefit designs that appeal to early-career professionals. Without a healthier mix of ages, the spiral is likely to continue, and contribution hikes will keep outpacing wage growth.
In the meantime, South African consumers face a stark choice: pay more for a medical aid that may not cover all their needs, or accept the risk of unaffordable out-of-pocket expenses. The outcome will shape the health-care landscape for years to come.
