The media coverage of the Health Funders Association (HFA) investigation into the cost and funding of South Africa’s National Health Insurance (NHI) has left many questioning the country’s healthcare regulation roadmap.
The FIA hosted a ‘members only’ webinar to share insights on recent healthcare policy developments and what they might mean for clients and intermediary businesses. Gregory Setzkorn, chair of the FIA Healthcare Executive Committee, noted that the webinar was relevant to healthcare professionals and intermediaries navigating the evolving healthcare funding landscape.
Thoneshan Naidoo, CEO of the HFA, introduced his association before commenting on the HFA’s recent court challenge against NHI. Established in 2015, the HFA is a not-for-profit organisation that represents twenty medical schemes, three scheme administrators and 4.1 million medical scheme beneficiaries. The association seeks to promote the best possible healthcare outcomes for the medical schemes industry and the country.
To this end, it is involved with many healthcare-related engagements, including NHI, Low-Cost Benefit Options (LCBOs); and Prescribed Minimum Benefits (PMB) reviews through the Council for Medical Schemes (CMS). Other matters on the HFA radar include the PCR COVID-19 test, undesirable business practices regarding DSPs and networks, and the Road Accident Fund (RAF) versus medical schemes matter.
The NHI saga
In February 2025, there were reports that the ANC had reached an agreement with the DA to protect medical schemes through the NHI implementation. The Minister of Health quickly distanced himself from this informal deal, prompting private hospitals, through the Hospital Association of South Africa, to lodge a formal court challenge against NHI towards the end of February.
NHI draft regulations were published for comment in March, and shortly thereafter, on 1 April 2025, the South African Medical Association brought their court challenge against the legislation too. Through April, government sought to reassure the private medical sector, saying that it would take 10-15 years before medical schemes would be abolished. This was not enough assurance for the HFA, which held a media conference to announce its legal challenge to the NHI Act early in June.
The HFA court challenge is underpinned by the findings of a study by consulting economics firm, Genasis Analytics. The study, commissioned by the HFA, estimated that it would cost R941 billion to provide the level of comprehensive healthcare promised by the NHI to 61 million South Africans, leading to the HFA labelling the Act as “unaffordable, unworkable and unconstitutional.”
In its worst-case assessment, the report said personal income taxes would have to be increased 2.2 times (or VAT raised from 15% to 36%) to fund NHI. In the best case, which assumes the state can reduce current private sector healthcare costs by around 45%, the NHI will result in medical scheme members paying 1.5 times more for a 43% decrease in access to healthcare. The study also estimated that South Africa needed 431 000 additional healthcare professionals to extend the same level of care that medical scheme members receive today to the entire country.
The four grounds on which the HFA is challenging NHI include that the Act is irrational; the Act infringes on existing healthcare rights; the Act fails the ‘reasonable measure’ test under section 27(2) of the Constitution, and the Act unlawfully delegates sweeping powers to the Minister of Health. Members can read the Genesis Analytics report and documentation relating to the HFA court challenge against the NHI Act online.
The RAF matter
Naidoo advised that there were approximately 10 000 open, unresolved RAF claims totalling about R2.3 billion alongside approximately R250 million rand in judgments that must still be paid over to medical schemes by the RAF. He noted that the December 2024 court ruling against Discovery Health (DH) in favour of the RAF had caused huge confusion. On 9 April 2025, DH was granted leave to approach the Supreme Court to challenge that decision. “We have got to go through this process to get clarity for medical scheme members; in my view it is unfair that medical scheme members go to the petrol tank, pay their subsidy to the RAF, and are then prevented from claiming against the fund,” Naidoo said.
The PCR matter
“Some time in 2022, the HFA laid a complaint with the Competition Commission regarding excessive pricing of PCR COVID tests,” Naidoo said. It took until March 2025 for the Competition Commission tribunal to rule in favour of the HFA on eight of nine ‘exceptions’ raised by the pathology labs. The HFA will now proceed to a full hearing by the Competition Tribunal on substantive merits, hopefully before the end of 2025.
On prescribed minimum benefits (PMBs)
The CMS Health Policy Roundtable held in March 2025 signalled a possible review of prescribed minimum benefits (PMBs). “There are four different options on the table,” Naidoo said, ranging from a comprehensive package to a core primary healthcare solution. The HFA is keen to be part of the PMB Advisory Group that will take the discussion forward. Naidoo said that PMB changes should be subject to medicine-based evidence and consideration for the financial impact on medical schemes.
On LCBOs
The HFA believes that LCBOs are essential, and Naidoo suggested that medical schemes be allowed to participate in the current exemption process to provide primary healthcare cover. The goal is to enable the incremental transition of insurance products to medical schemes, with the proper regulatory collateral in place, and to make sure that no one is harmed by including (perhaps) a six-month-long ‘no underwriting’ transitionary period. “LCBOs can provide a practical and scalable pathway towards Universal Health Cover (UHC),” he said, adding that as many as 10 million people could benefit from a formalised LCBO solution.
Vernon Chorn, CEO of Unity Health took to the virtual podium to share more about the decades-long LCBO process. “The discussion really started way back in 2005 with the Low-Income Medical Scheme (LIMS), an initiative to consider a low-cost medical scheme option for low-income earners,” he said. This solution did not gain traction; instead, it took until December 2016 for the industry to finalise demarcation regulations to clear up what constitutes insurance versus a medical scheme.
“Primary healthcare products were not included as a product category in the demarcation regulations,” Chorn said. The CMS, Department of Health and National Treasury then put together a framework for insurers to apply for an exemption to do the business of a medical scheme in terms of Section 8(h) of the Medical Schemes Act, effective from April 2017, and still in force today. The intention was to allow primary healthcare type products to transition into the medical schemes space, but this never happened.
In 2020, the CMS set up an advisory committee under four workstreams namely market and affordability; benefits and pricing; compliance and legal governance; and risk and implementation. The CMS leveraged this process to publish a report on LCBOs, and based on that report, the Minister then published a general notice (GN 5872) in February 2025. This notice raised various concerns including that low-income earners had access to more benefits for free in the public sector than through LCBOs, and that it was unclear how these products aligned with NHI.
The South African Insurance Association (SAIA) Healthcare Committee conducted a survey of approximately 20 000 primary healthcare members and 400 primary healthcare GPs to explore the concerns raised by the Minister. Six questions were asked.
- How would you rate your primary health care insurance policy? 88% rated their primary healthcare policy as either very satisfied, satisfied, or neutral.
- Do you believe the benefit offering caters adequately for your needs? 81% believe their primary health care policy adequately caters for their needs.
- Do you believe you receive better care in a private healthcare setting compared to a state facility? 95% believe that they do.
- Are your policy benefits in line with what you expected when you originally took out the policy? More than 80% believe this to be the case.
- Would you recommend primary healthcare insurance to someone who currently can only access care via state facilities? 89% of existing members would recommend it.
- Do you spend less time away from work when receiving treatment in a private setting compared to a state facility? 92% believe this to be the case.
Providers were upbeat too, with 78% of GPS indicating that the benefit offering was sufficient to treat their primary health insurance patients, and 98% saying that patient outcomes were better in a private setting compared to a public facility.
Commenting on the overlap of NHI and primary healthcare insurance, Chorn focused on the affordability constraints raised by the HFA and others. “We do not have any room to increase taxes to fund the NHI,” Chorn said. He proposed a quick fix for the Minister of Finance being to add primary healthcare products as a product category in the demarcation regulation. This will open the way for affordable LCBO solutions in South Africa’s healthcare provisioning mix.
The good news for intermediaries is that there is a primary healthcare insurance solution that enjoys broad support, as evidenced by the SAIA Healthcare Committee survey. That said, it remains unclear whether these products will transition into the medical scheme space or be added as a category in the demarcation regulations.
“The future is not noticeably clear. NHI is unlikely to materialise in any significant form, due to the cost and funding challenges around that,” Chorn concluded. “In contrast, there are probably about 800 000 to a million lives currently on primary healthcare insurance.” He said it would be unwise if not impossible to discontinue cover for these lives.
