KATLEGO MOTHUDI: Structural solutions needed to manage healthcare costs

For many South Africans the cost of healthcare continues to place intense pressure on household budgets. That’s why the latest round of medical scheme contribution increases, which have largely stayed within single digits for 2026, is encouraging news.

However, the reality behind the numbers is more complex. To deliver these single-digit increases, some schemes have been forced to dip into their reserves, which is an unsustainable move that could jeopardise financial stability if left unaddressed.

Medical schemes are walking a tightrope where they are balancing the immediate need to relieve consumers while managing the cost pressures driving healthcare expenditure. These include rising hospital admissions, specialist-driven care, pharmaceutical costs and a prescribed benefit framework that is out of step with today’s healthcare needs.

The system is under strain. However, the Board of Healthcare Funders (BHF) believes there is an opportunity to fix it through bold, systemic action that could immediately expand access to affordable private healthcare for millions more South Africans.

One of the most immediate steps the government can take is granting medical schemes an exemption under the Competition Act to negotiate tariffs collectively with willing healthcare providers.

South Africa’s private healthcare market is fundamentally imbalanced.

South Africa’s private healthcare market is fundamentally imbalanced. Providers and large hospital groups act as price setters. Medical schemes, and ultimately their members, are price takers. This dynamic is unfair, unaffordable and unsustainable.

The assumption that schemes or consumers can negotiate fair prices is unrealistic. Healthcare is often accessed in emergencies, and patients typically don’t know what treatments they need, only that they are unwell. Expecting them to shop around effectively is simply not feasible.

Under the current model each scheme negotiates tariffs individually with provider groups. This fragmented process causes duplication, inefficiencies and inconsistent pricing. Allowing schemes to negotiate collectively, within a transparent and accountable framework, would rebalance the playing field and enable value-based purchasing at scale.

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It would also bring more discipline into the system. Collective negotiation could drive better contracting, referral pathways and a stronger focus on preventative care over today’s default to high-cost, specialist-driven treatment.

The BHF is not calling for price-fixing or collusion. Providers would still be free to charge above or below negotiated rates. We are advocating for a regulated exemption that allows schemes to jointly negotiate tariffs, with oversight and grounded in evidence. These tariffs would be published, giving patients clarity on costs and reducing out-of-pocket payments. This promotes transparency, empowers consumers, and strengthens the long-term sustainability of private healthcare.

South Africans need access to private healthcare that is affordable, fair and sustainable now, not years from now.

Tariff negotiation is only part of the puzzle. Two other longstanding issues must also be addressed, namely prescribed minimum benefits (PMBs) and low-cost benefit options (LCBOs).

PMBs, the set of healthcare services all medical schemes must cover, were last meaningfully updated in 2003. While they protect beneficiaries, they are now outdated, hospital-centric, inefficient and costly. Their static design limits innovation and benefit flexibility. Reforming PMBs to reflect modern clinical realities and cost-effective care models is urgently needed.

Meanwhile, LCBOs are a missed opportunity. These simplified packages are aimed at low-income earners, who often use private providers but have no financial protection, paying out-of-pocket. While insurers may offer low-cost products through exemptions, medical schemes have been denied the same opportunity. This entrenches inequality and causes confusion. Many only realise they don’t have scheme cover when denied hospital admission.

The BHF has long argued that schemes, as not-for-profit healthcare-focused entities, are well placed to offer LCBOs that balance affordability and value. They have the infrastructure, governance and experience to deliver a better product at a lower cost. Some beneficiaries would also qualify for medical tax credits. We estimate LCBOs could expand private cover to 10-million South Africans.

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We acknowledge the Council for Medical Schemes’ (CMS’) critical role in protecting members and ensuring a stable sector. However, as the health market inquiry found, regulatory inertia has led to inefficiencies and slowed innovation. The CMS has both the authority and opportunity to drive these reforms, all within its current mandate.

Crucially, these reforms don’t require new legislation or lengthy implementation. They can be introduced immediately under existing regulations and deliver tangible improvements. This is especially important given the uncertainty around National Health Insurance (NHI), which faces multiple constitutional challenges, including from the BHF, and will take years to implement. The department of health itself has acknowledged that full implementation is more than 15 years away. These improvements are also urgently needed to ensure the NHI succeeds if implemented.

In the meantime, South Africans need real relief. They need access to private healthcare that is affordable, fair and sustainable now, not years from now. These reforms are in the public interest. They would curb cost inflation, expand access for lower-income workers and deliver better value for every rand spent. Most importantly, they would strengthen the sustainability of medical schemes, which remain a vital pillar of our health system and a key enabler of universal health coverage.

Schemes have already demonstrated their commitment by limiting 2026 contribution increases. But they cannot continue absorbing rising costs by drawing down reserves. If the government is serious about equitable, high-quality care, it must act now to remove outdated constraints that stifle innovation and value.

• Dr Mothudi is MD of the Board of Healthcare Funders.