BHF: Regulated South Africa Private Healthcare Tariffs Crucial

• The Board of Healthcare Funders (BHF) argues that a proposed 3.8% medical aid contribution increase for 2027 is insufficient to address rising private healthcare costs.
• The BHF advocates for structural reforms, including a regulated framework for collective tariff negotiations between medical schemes and providers.
• Despite a 2019 recommendation from the Competition Commission's Health Market Inquiry, a transparent tariff negotiation framework for South Africa private healthcare tariffs remains unimplemented.
• Delays in reforms like Prescribed Minimum Benefits review and tariff negotiations are partly attributed to the expectation that the National Health Insurance Act, signed into law in May 2024 and currently being phased in, would resolve all issues.
• Global medical cost projections for 2026 show increases of 10.3% worldwide and 11.3% across 91 countries, driven by new technologies, pharmaceuticals, utilization, and fraud.

Despite this clear recommendation, seven years have elapsed, and substantive tariff reform remains outstanding.

The Board of Healthcare Funders (BHF) has voiced concerns regarding the proposed 3.8% anchor for medical aid contribution increases in 2027, asserting that merely setting such a target will not inherently improve healthcare affordability. The organization contends that the primary drivers behind escalating costs are the increasing expenses associated with hospital and specialist services, coupled with a rise in healthcare utilization. These factors, according to the BHF, must be directly addressed to achieve any meaningful reduction in contributions.

Dr. Katlego Mothudi, the Managing Director of the BHF, has consistently advocated for comprehensive structural reforms to mitigate the rising costs within South Africa's private healthcare sector. He points to an "unexplained additional component" within the proposed increase, which he indicates is more substantial than the publicly stated 3.8%. Dr. Mothudi urges the relevant council to provide greater clarity on this element, particularly concerning its implications for a "relevant adjustment for utilisation," as such transparency is crucial for understanding the true financial burden on members.

A central tenet of the BHF's proposed reforms for South Africa private healthcare tariffs is the establishment of a regulated and transparent framework to facilitate collective tariff negotiations between medical schemes and willing healthcare providers. Dr. Mothudi highlights a significant structural deficiency in the current system: the absence of a standardized tariff for the industry and a dedicated platform where different stakeholders can negotiate these tariffs. This regulatory void contributes directly to the upward pressure on healthcare costs.

The necessity for such a transparent negotiation framework is not a new revelation. It was explicitly identified as a critical reform by the Competition Commission's Health Market Inquiry in its final report, published in 2019. Despite this clear recommendation, seven years have elapsed, and substantive tariff reform remains outstanding. Dr. Mothudi suggests that the prolonged delay in implementing crucial reforms, including a review of Prescribed Minimum Benefits (PMBs) and the establishment of multilateral negotiation forums for tariffs, stemmed from a widespread misperception that the National Health Insurance (NHI) Act, which was signed into law in May 2024 and is currently being phased in, would comprehensively resolve all existing issues within the healthcare landscape.

While South Africa grapples with its unique healthcare cost challenges, global trends indicate a broader upward trajectory in medical expenses. The 2026 Global Medical Trends survey by global advisory firm WTW (formerly Willis Towers Watson) projects a worldwide increase of 10.3% in medical costs for the current year. This follows an anticipated 10% increase for the Middle East and Africa region in 2025, with the survey forecasting an overall 11.3% rise across 91 countries for 2026.

The WTW survey attributes these global increases to several factors, including the introduction of new medical technologies, the rising cost of pharmaceuticals, increased utilization of services, and issues related to fraud, waste, and abuse. Although these global pressures are undeniable and provide context for local increases, Dr. Mothudi emphasizes that South Africa cannot view its situation in isolation. He asserts that while acknowledging international trends, the country still possesses specific requirements and opportunities for intervention that must be pursued to address its distinct healthcare affordability crisis, particularly concerning South African medical scheme reforms.

Lawyers advising medical schemes or healthcare providers in South Africa should note the ongoing regulatory vacuum regarding tariff negotiations, despite calls for reform. This necessitates careful review of current pricing practices for compliance risks and proactive monitoring of legislative efforts to establish a transparent bargaining framework.

Source: Original reporting via Briefly.co.za