BHF: South Africa Medical Aid Reform Proposals Urgently Needed

• Medical aid costs are consistently rising above inflation, prompting the Board of Healthcare Funders (BHF) to call for structural reforms to make schemes more affordable.
• A key reform proposal involves overhauling Prescribed Minimum Benefits (PMBs), which have not been updated since 2003 and are contributing to escalating costs, particularly for older beneficiaries.
• The BHF advocates for PMBs to shift focus towards primary healthcare, prevention, and essential diagnostics to enhance affordability and facilitate earlier medical intervention.
• Another significant proposal seeks to reintroduce collective tariff bargaining between medical schemes and healthcare providers, a practice prohibited by the Competition Act since 2003.
• The competition regulator is reportedly considering allowing such collective negotiations, which could rebalance bargaining power between schemes and large hospital groups.

Compliance officers and legal counsel for medical schemes and healthcare providers in South Africa should closely monitor the ongoing discussions and proposals from the BHF and CMS regarding healthcare reforms, particularly those concerning Prescribed Minimum Benefits and collective tariff bargaining, as these could lead to significant regulatory changes impacting scheme design, pricing, and operational compliance.

South African households are facing an unsustainable trajectory of rising medical scheme costs, with annual increases consistently outpacing consumer price inflation. The Board of Healthcare Funders (BHF), representing a significant portion of medical schemes, has voiced concerns that members cannot indefinitely absorb these escalating expenses or continually downgrade to lower benefit options. This situation underscores an urgent need for fundamental structural reforms within the healthcare funding landscape, aimed at enabling medical aids to reduce their expenditures and, consequently, their charges to members.

In response to these pressures, the BHF has formally engaged the Council for Medical Schemes (CMS), the industry regulator, advocating for comprehensive reforms. While the BHF has received an initial response and anticipates a meeting, the CMS's own 2025/26 annual report acknowledges the challenge, projecting that "higher contribution increases will continue in the foreseeable future to address the misalignment between the benefits provided and their pricing." This ongoing cost escalation is attributed not only to general inflation but also to increasing utilization, particularly as scheme members age and their healthcare needs become more complex, leading to greater reliance on hospitals and doctors.

A central component of the proposed reforms focuses on the Prescribed Minimum Benefits (PMBs), a framework that mandates medical schemes to cover the full cost of treatment for 271 specified medical conditions, emergencies, and 26 chronic conditions, although schemes retain the right to specify certain generic drugs or procedures. Despite a legal requirement for biennial review, these regulations have remained unchanged since their inception in 2003, contributing to their escalating costs.

The BHF is urging the conclusion of a long-running review of PMBs, which commenced in 2017. The CMS's 2023 review was notably rejected by the Health Minister due to its omission of a primary healthcare component, which would have addressed coverage for general practitioners and basic healthcare services. The latest CMS report highlights the financial burden of PMBs, noting an average cost of R1,242 per beneficiary in 2024, representing a 9% increase from the previous year. This expenditure is disproportionately concentrated among beneficiaries aged 85 and above, indicating a growing allocation of resources towards a smaller, older demographic.

To address these structural issues, the BHF advocates for a reorientation of PMBs to prioritize primary healthcare, prevention, essential medicines, and diagnostics. Such a shift, they argue, would create a more affordable medical aid package, facilitate earlier intervention in health issues, and potentially reduce the need for costly hospital care. This perspective is echoed by industry experts, who emphasize that any reform of the PMB framework must carefully balance the critical principle of protecting members against catastrophic health events with the imperative of ensuring the financial sustainability of medical schemes. Furthermore, reforms should actively encourage preventative measures and early intervention, moving beyond a sole focus on treating advanced illnesses.

Another significant area of reform concerns the negotiation of healthcare tariffs between medical schemes and providers. Historically, until 2003, the South African Medical Association and the BHF engaged in central tariff negotiations. However, this practice was subsequently prohibited by the Competition Commission under the Competition Act, which deemed it anti-competitive. As a result, tariffs are now individually negotiated between hospitals, doctors, and each medical aid scheme.

The BHF's managing director, Katlego Mothudi, has identified the reintroduction of collective tariff negotiation as a key priority. The proposal advocates for allowing medical schemes to collectively negotiate tariffs with willing providers, provided such negotiations are conducted under clear regulatory oversight and with transparent pricing mechanisms. The current fragmented negotiation environment, according to Mothudi, grants significant influence to providers, particularly large hospital groups, thereby limiting the bargaining power of individual schemes and their members. Encouragingly, the South African competition regulator is reportedly now moving towards allowing healthcare funders and providers to engage in such collective negotiations, potentially leveling the playing field and fostering more equitable pricing.

The ongoing discussions and **South Africa medical aid reform proposals** represent a critical juncture for the nation's healthcare sector. The proposed **Board of Healthcare Funders reforms** and the **Council for Medical Schemes PMB review** have the potential to fundamentally reshape how medical schemes operate, how benefits are structured, and how costs are managed. The emphasis on **South Africa medical scheme cost regulation** through PMB reorientation and the reintroduction of **medical aid collective bargaining ZA** under the **Competition Act healthcare tariffs** framework could lead to a more affordable and sustainable healthcare funding model.

Compliance officers and legal counsel for medical schemes and healthcare providers in South Africa should closely monitor the ongoing discussions and proposals from the BHF and CMS regarding healthcare reforms, particularly those concerning Prescribed Minimum Benefits and collective tariff bargaining, as these could lead to significant regulatory changes impacting scheme design, pricing, and operational compliance. These developments will necessitate a thorough understanding of new regulations and a proactive approach to adapting operational frameworks to ensure adherence and strategic positioning within an evolving regulatory landscape.

Compliance officers and legal counsel for medical schemes and healthcare providers in South Africa should closely monitor the ongoing discussions and proposals from the BHF and CMS regarding healthcare reforms, particularly those concerning Prescribed Minimum Benefits and collective tariff bargaining, as these could lead to significant regulatory changes impacting scheme design, pricing, and operational compliance.

Source: Reporting based on insights from Moneyweb.