Medical schemes’ reduction of benefits to contain premiums has shifted costs onto members, leading to a steep rise in large gap cover claims.
South Africa’s private healthcare funding system has come under mounting strain as medical schemes cut back on benefits rather than raise premiums, transferring more costs onto members and fuelling a sharp increase in gap cover claims.
Data over the past five years showed that claims exceeding R50,000 surged by 512% in volume and 437% in value between 2020 and 2024. Where 89 mega claims worth R6.2m were paid in 2020, this climbed to 549 claims in 2024, totalling R34m. The average large claim now sits at R63,000, compared with R6,000-12,000 before 2020.
Martin Rimmer, chief executive of Sirago Underwriting Managers, said medical schemes are under pressure from affordability constraints, ageing membership, and healthcare provider cost inflation.
‘Medical schemes are systematically reducing benefits and transferring more risk onto the member, rather than increasing premiums to match out-of-control healthcare provider cost inflation,’ he said in a media release.
Healthcare provider costs have outpaced inflation by more than double for years. With no pricing regulation on specialist tariffs, some charge more than 500% above scheme reimbursements. Members are left exposed as even comprehensive schemes impose co-payments, deductibles and reimbursement limits.
Age data further underlined the shift in risk. While most claims came from members aged 50 and older, younger groups were not spared: 23% of large loss claims were lodged by those under 49. Musculoskeletal conditions accounted for more than half of claims, while cancer and circulatory diseases each made up 10%.
Rimmer warned that exploitation is compounding the problem.
Healthcare providers increasingly ask patients upfront whether they have gap cover before setting fees. A R700 monthly policy might pay R130,000 towards a surgery shortfall, while the medical scheme with an R8,000 monthly premium contributes just R30,000.
‘If current trends continue, gap insurance premiums will inevitably rise, making this crucial protection unaffordable for many South Africans,’ he said.
He added that the sustainability of gap cover depends on addressing unregulated pricing, benefit erosion and exploitation by providers.
‘Without intervention, South Africa’s healthcare funding crisis will continue to deepen, leaving patients to bear an ever-increasing financial burden,’ he said.
