Imagine a senior manager opening his monthly payslip and seeing a new line: a compulsory contribution to a private medical scheme. That is the scenario being floated for South Africans earning more than R60,000 a month.
Thoneshan Naidoo, chief executive of the Health Funders Association (HFA), told BusinessTech that making medical-aid membership mandatory for formally employed workers could be one way to bring down the price of private health cover. He said the idea is not a cure-all, but it would expand the risk pool, the group of members whose health costs are shared, and could lower per-person expenses.
Medical schemes are private health-insurance plans that pay for members’ treatment. A larger risk pool means younger, healthier people join, spreading the cost of care across more members. Naidoo claims that because membership is voluntary, schemes are “effectively 20% to 30% more expensive” than they would be if more employed people were enrolled.
Why the numbers matter
HFA data shows about 25 million South Africans use private health services, yet fewer than nine million belong to a medical scheme. Roughly 16 million people pay out of pocket for private care. Naidoo points to an estimated 200 000 individuals earning over R750 000 a year, about R62 500 a month, who are not currently members. He says targeting this group would be the “easier enrolment opportunity”.
HFA’s internal modelling suggests that expanding membership could cut expected benefit costs by 10% to 13% under conservative assumptions, and by 18% to 30% in more optimistic scenarios. Those percentages translate into potential savings of several billion rand for the schemes.
National Department of Health deputy director-general Nicholas Crisp pushed back. He warned that compulsory membership for all formally employed workers would inevitably pull in lower-income employees who could not afford the contributions without state help. Crisp estimated that at the current nine million scheme members, a mandatory rollout could add another R34 billion to R35 billion in subsidies that the fiscus would have to cover. Even a lower figure of R20 billion, he said, would mean diverting money from the public health budget.
Crisp also reminded listeners that South Africa’s long-term health-financing goal is the National Health Insurance (NHI) system, which aims to create a single risk pool covering the entire population. He argued that expanding private pools only works if new members can pay for themselves, otherwise the state ends up bearing the cost.
For owners of small and medium-size enterprises, the debate has practical implications. If the government adopts a policy that forces higher-income employees to join a medical scheme, payroll calculations will change and the cost of labour could rise. On the other hand, a larger, healthier risk pool might stabilise premium growth, which could benefit businesses that already offer medical aid as part of their employee packages.
The next steps are unclear. The health department has signalled resistance, while the HFA continues to lobby for a targeted, income-based approach. Until a formal policy is announced, employers and employees alike will have to watch the conversation closely and consider how any shift in private health-insurance rules could affect their bottom line.
What a risk pool is, and why size changes the price
Every insurance product, medical scheme membership included, works by spreading an uncertain cost across a group of people who pay in before anyone knows who will need to claim. The average cost per member in that group depends heavily on its composition. A pool skewed toward older or sicker members costs more per head, because claims are concentrated among fewer payers. A pool that includes a broad spread of healthy, typically younger contributors alongside those who claim more spreads the same total cost across more people, which lowers what any individual pays.
This is the standard actuarial logic behind mandatory participation in almost every country that relies on private or quasi private health cover, and it explains why voluntary schemes tend to drift toward adverse selection over time: healthy people are the ones most likely to opt out when membership is optional, since they perceive less immediate need for it, which leaves a progressively costlier pool behind and pushes premiums up further, encouraging more of the remaining healthier members to leave. Compulsory membership is the standard remedy proposed wherever this dynamic has taken hold.
South Africa’s two-track health financing debate
The tension in this story sits inside a much longer running national debate about how South Africa should fund healthcare at scale. On one side is the private medical scheme model, which currently covers a minority of the population and is regulated separately from the public system. On the other is National Health Insurance, a policy framework intended to eventually create a single national risk pool funded through the tax system rather than private contributions, with the state as the primary purchaser of care for the whole population regardless of income.
Those two models are not simply compatible extensions of each other. Strengthening the existing private scheme model, by making it compulsory for higher earners as proposed here, could be read either as a practical interim step that keeps private cover functional while NHI is built out, or as a competing claim on the same pool of contributors and political attention that NHI eventually needs. That tension, rather than the specific income threshold proposed, is why a government department pushed back publicly rather than treating the idea as a straightforward win.
What a modelled saving figure actually represents
A range like the one cited for potential cost reductions comes from an actuarial model: a set of assumptions about how many new members would join, how healthy they would be on average, and how their inclusion would change the pool’s claims experience, run through standard insurance mathematics to produce an estimate. The width of the range quoted, moving from a conservative to an optimistic scenario, is itself informative: it reflects how sensitive the outcome is to assumptions that cannot be verified until the policy is actually implemented and real enrolment data exists.
A modelled estimate commissioned or produced by an industry body advocating for a particular policy is not thereby wrong, but it is reasonable to expect it to sit toward the favourable end of what the underlying assumptions could support, which is a normal feature of policy advocacy on every side of a debate rather than a specific criticism of this figure.
