South Africans facing sharply rising private health-care costs are increasingly downgrading cover, delaying joining medical schemes or turning to cheaper insurance products — a trend experts say will worsen unless regulators allow new, affordable benefit designs.
Cost pressures push members away from comprehensive cover
Recent reporting estimates that the cost of private health insurance is rising by about 14–16% a year. Under those pressures, consumers who previously relied on medical schemes are seeking lower-cost alternatives or opting for products regulated under the Insurance Act that offer limited, event-driven payouts.
At the centre of the debate are the so-called demarcation regulations introduced by National Treasury and the Department of Health. These rules draw a legal line between medical schemes — governed by the Medical Schemes Act and required to provide comprehensive clinical cover and prescribed minimum benefits (PMBs) — and health insurance products, which are permitted to pay fixed amounts for specified events and are explicitly not a substitute for full scheme membership.
What Low-Cost Benefit Options would do
Proponents say Low-Cost Benefit Options (LCBOs) would offer an affordable, primary-care-focused alternative for lower-income households that cannot afford conventional scheme membership. Rather than covering the full suite of PMBs — a principal driver of minimum scheme costs — LCBOs would provide a defined basket of essential services aimed at prevention and basic treatment.
- Potential LCBO services could include GP consultations, a restricted list of essential medicines, basic pathology and radiology, and preventive care.
- LCBOs are intended to extend financial protection to people currently priced out of medical schemes, not to replace comprehensive cover for those with chronic conditions or serious health needs.
- Implementation would require changes to demarcation rules and clear consumer protections to prevent mis-selling and to preserve continuity of care.
Supporters argue LCBOs would help retain people within the regulated medical scheme environment rather than having them rely on insurance products that may provide limited, event-only payouts and little linkage to actual health service costs.
| Feature | Medical schemes (current) | Health insurance |
|---|---|---|
| Legal framework | Medical Schemes Act | Insurance Act |
| Obligation | Comprehensive clinical cover, PMBs | Specified event payouts; gap cover |
| Payment model | Benefits related to cost of care | Fixed payouts not linked to actual care cost |
Policy and consumer-protection implications
Advocates for LCBOs say the current regulatory stance prevents schemes from offering affordable, scaled-down options that could reach lower-income households. They warn that, without change, more people will either be uninsured against everyday health needs or purchase insurance products that do not cover the cost of care.
Regulatory change would need to ensure LCBOs do not undermine the financing of PMBs for those who need them, that member expectations are clear, and that product labelling prevents misleading comparisons with full scheme benefits.
Consumer groups have emphasised the need for strict oversight so LCBOs remain genuinely affordable and effectively delivered, while health experts urge that primary care and preventive services be a central focus to reduce long-term costs and improve population health outcomes.
As the debate continues, households facing rising premiums should seek advice from accredited scheme advisers or their nearest clinic rather than making rapid decisions based on short-term affordability alone. For individual health concerns and treatment choices, consult a doctor or public clinic rather than self-diagnosing or relying solely on product literature.
