Healthcare experts caution against uninformed move from medical aid

Only one in seven South Africans is currently covered by a medical aid scheme. According to Statistics South Africa’s Income and Expenditure Survey 2022/23 report, just 14% of the country’s population belongs to a medical aid, even though South African households collectively spent R103.5bn on contributions during that survey period.

Data from the Marketing All Product Survey (MAPS) shows that medical insurance coverage has grown by 50% since 2023 as financially strained consumers increasingly downgrade or abandon traditional medical aid plans in search of more affordable monthly options. This rapid growth is reshaping the local healthcare funding landscape, creating a massive shift in how ordinary households manage their medical risks.

However, healthcare experts warn that consumers may not be making an informed choice due to a fundamental misunderstanding of how these two financial products differ.

“Many South Africans don’t fully understand the difference between medical aid and medical insurance,” says Lee Callakoppen, principal officer of Bonitas. “When you’re feeling the pressure on your budget, a cheaper monthly premium can look like a sensible move. However, you need to bear in mind that medical aid and medical insurance are totally different products.”

Ultimately, true affordability is measured by how well a policy performs when you are most vulnerable, not just when paying the monthly bill. — Lee Callakoppen, principal officer of Bonitas

The biggest difference is in their legal frameworks and regulatory obligations. Medical aid schemes are non-profit entities governed by the Medical Schemes Act. Legally, they are mandated to provide prescribed minimum benefits (PMBs). This statutory requirement guarantees full cover for 270 diagnosis-treatment pairs, 26 chronic conditions, and all emergency medical conditions, regardless of the member’s chosen benefit tier.

Medical insurance, on the other hand, is a for-profit product governed by short-term or long-term insurance legislation. These products are risk-rated based on an individual’s health profile and are entirely exempt from providing PMBs. Instead of covering the actual cost of hospital care, medical insurance typically pays out fixed cash benefits when specific health events occur. If a medical emergency falls outside the policy’s narrow definitions, the policyholder faces the risk of being left without any cover. This means that what initially looks like a big monthly saving can quickly disappear when a patient realises they must fund expensive surgical procedures out of their own pocket.

“The shift to medical insurance isn’t inherently wrong,” says Callakoppen. “But people need to understand what they’re trading away. PMBs exist to ensure that all members have access to a basic level of healthcare, regardless of the specific plan they choose.”

As medical insurance becomes a more visible alternative in a high cost-of-living environment, industry analysts point out that affordability should not come at the cost of essential healthcare rights. While medical aid premiums have risen steadily, open medical schemes such as Bonitas offer tiered options to accommodate various income levels without stripped-down statutory protections.

As the market evolves, the growing reliance on price-driven comparison makes consumer education vital. Selecting coverage based purely on a low-monthly premium, rather than clinical suitability, can result in large out-of-pocket expenses in the event of a severe health crisis, says Callakoppen.

“Ultimately, true affordability is measured by how well a policy performs when you are most vulnerable, not just when paying the monthly bill,” he says. “Before switching from a medical aid to an insurance product, it’s a good idea to carefully evaluate whether a fixed-benefit policy will genuinely protect you in a major medical emergency.”