Battle continues for medical schemes to offer low-cost benefit options

As South Africans struggle to access affordable healthcare, the Board of Health Funders (BHF) — which represents more than four million beneficiaries across about 40 medical schemes and healthcare funders in South Africa — on 28 January again took the Council for Medical Schemes (CMS) to court, seeking to compel the regulator to allow medical aids to offer low-cost benefit options (LCBOs).

Read more: Court orders Council for Medical Schemes to cough up source documents on low-cost benefit options

At the heart of the matter is the rising cost of medical scheme contributions, which have seen double-digit increases in the last year — more than twice the rate of inflation.

Read more: Medical scheme contribution increases are announced – and it’s not good news

This has led to employers and individuals struggling to keep up with the costs, resulting in medical schemes losing members who can no longer afford their products.

Dr Reinder Nauta, the managing director of National HealthCare Group, said: “The greatest need in these challenging times is for efficient, quality health cover that will not only stand businesses in good stead by reducing absenteeism and strengthening the bottom line, but also build morale, loyalty and good labour relations.”

The minister of planning, monitoring and evaluation, Maropene Ramokgopa, told the media recently that a new ministerial advisory council would be tasked with determining how national health insurance (NHI) funding would work.

She said: “The NHI is agreed upon, but the implementation part of it … is what will be ironed out. But we agreed we can’t cut the private sector out; we have to find a way of collaborating with them."

LCBO framework

According to the Health Funders Association (HFA), which represents 46% of SA medical scheme members, comprising 21 medical schemes and three administrators, including Discovery Health, their research indicates that LCBO packages could include:

• Primary care coverage: access to general practitioners for acute and chronic conditions;


• Medication: for acute and chronic conditions;


• Preventative and screening services: including health check-ups and vaccinations;


• Basic pathology and diagnostic tests;


• Emergency ambulance services; and


• Care co-ordination: enabling referrals to specialists when necessary

“A key purpose of the Medical Schemes Act is to provide for financial protection for members. This is why we believe that LCBOs should reside within the social solidarity framework of the Act,” the HFA told Daily Maverick.

The association estimates that at least six million South Africans who previously could not afford medical scheme membership would gain access to private healthcare through LCBOs.

Looking ahead to the broader healthcare landscape, the introduction of LCBOs is expected to have significant implications, particularly with regard to NHI.

HFA stated that while the NHI would take years to be realised, “LCBOs with the necessary political will, could come into effect before the end of 2025, addressing the already pressing healthcare demand in the public sector. Additionally, the LCBO framework can serve as a transitional framework towards improving health outcomes in South Africa, aligning with NHI objectives. Furthermore, enabling LCBOs within the medical schemes environment is a vital step towards universal healthcare, which is the stated intention of the NHI.”

A long-standing battle

The CMS passed a resolution in August 2015 to adopt a framework for  LCBOs offered by medical schemes.

However, the policy was not implemented because of a lack of support from the National Department of Health, which cited concerns that LCBOs were not comprehensive and did not account for national coverage priorities such as HIV and other diseases.

By 2022, the CMS was still developing and formulating guidelines on LCBOs, prompting the BHF to take the CMS to court. The BHF accused the CMS of delaying implementation because of the government’s preference for NHI.

The court action led to the CMS finalising guidelines for LCBOs in November 2023, and the guidelines were sent to the National Department of Health for approval.

The BHF has argued that the delay in implementing LCBOs is due to the government’s focus on NHI, which may eventually remove medical schemes from the picture. BHF also claims that LCBOs can be implemented immediately, providing essential primary private healthcare services to millions of low-income earners.

The background

In December 2016, demarcation regulations were published jointly by the ministers of health and finance, making it clear that certain insurance policies have elements of the business of a medical scheme and are classified as “health policies” and/or “accident and health policies” while excluding primary healthcare products and hospital indemnity products. These regulations came into effect in April 2017.

Read more: Medical schemes vs health insurance — be sure you know the difference

The Council for Medical Schemes, the National Department of Health, the Treasury and the then Financial Services Board (now the Financial Sector Conduct Authority) concluded an exemption framework, providing protection for existing policyholders of medical insurance products. However, the exemption has been extended every two years – most recently to 31 March 2025. DM