Redefining broking under state-funded healthcare
The 9.13 million South Africans who still belong to private medical schemes are caught in a legislative death spiral that will lead to a significant shift from private to state healthcare funding. Government is already turning the screws on healthcare brokers and their medical scheme member clients by pushing for the dismantling of medical scheme tax credits, even as court battles loom over the implementation of the National Health Insurance (NHI) framework.
The Council for Medical Schemes (CMS) does not explicitly address the medical scheme tax-credit system in its 2024-25 annual report, but industry commentary confirms the pressure is real. An article published on Business Tech reveals that the National Department of Health (NDoH) is actively discussing the phasing-out of the medical?aid tax credit with National Treasury. This move is described as necessary to avoid “double funding” of health services once the NHI kicks in, and will add to the financial pressures in the private medical scheme environment.
Advising through a health insurance transition
This is tough news for the 33 administrators, 43 managed care organisations and 7773 accredited healthcare brokers that are servicing the sector through its transition. Your writer paged through the latest CMS Annual Report to learn more about the state of the country’s 16 open and 55 restricted medical schemes, and the future for beneficiaries and brokers. Early on, the CMS noted a stagnation in scheme membership, reporting coverage as a percentage of the population at between 15.2% and 17.7% annually since 2002.
In her foreword, CMS Chairperson, Dr Thandi Mabeba, said the Council’s overarching goal of providing medical scheme members with access to quality medical scheme cover was underpinned by the imperative of well-governed entities. She added that the Council’s five-year strategic plan was aimed at “improving the effectiveness and efficiency of the organisation and positioning it as a formidable player in the NHI environment”. It seems, therefore, that the CMS’ focus is on consumer protection and policing its members in the NHI context, with a secondary focus on medical scheme sustainability as the scope of cover continues to narrow.
The mistake many industry stakeholders make is to view the CMS as the de facto guardian of medical schemes when it actually exists to enforce regulation. And as the NHI implementation gathers pace, its focus inevitably turns from the old Medical Schemes Act (MSA) to the new NHI Act. Per the 2024-2025 report, the MSA will be significantly diluted and repositioned to serve as a complementary regulatory framework under the NHI regime. This aligns with one of the main tenets of the NHI, namely that medical schemes can only fund treatments not funded by NHI.
We are still in the dark as to what these treatments might be
“As the NHI legislation progresses, the CMS is positioned to define the depth of complementary cover for medical scheme members and advising its entities on sustainable business models in the NHI environment,” said Mabeba. At the same time, the CMS wants to ensure that its powers are not interfered with elsewhere. It is monitoring regulatory shifts that could threaten its autonomy, including provisions in the Financial Sector Regulation (FSR) Act and Conduct of Financial Institutions (COFI) Bill.
Healthcare brokers will be watching with interest as the CMS and NDoH thrash out what future Prescribed Minimum Benefits (PMBs) and Primary Health Care (PHC) look like under NHI. “The CMS together with the NDoH, considered various approaches to PHC, in the quest of finding the most appropriate for the country’s disease burden, through the multi-stakeholder PMB Review Advisory Committee,” the Chairperson explained. The eventual base benefits package will also reflect Health Market Inquiry (HMI) findings.
The same brokers will be unsurprised to learn that the demarcation and Low-Cost Benefit Option (LCBO) matters remain unresolved, with yet another two-year extension for insurers conducting the business of a medical scheme until 31 March 2027. The CMS handed its LCBO Guideline Report to the NDoH back in 2023, and the department has since gazetted the guideline for public comment and stakeholder consultation. Once this process is completed, a policy determination on LCBO will be made, though there would appear to be little need for it under NHI.
AI and digital tech in healthcare reporting
CEO and Registrar of the CMS, Dr Musa Gumede, said the Council was intensifying its efforts to improve data collection mechanisms within the medical schemes industry. “By adopting digital technologies and fostering strategic partnerships, the CMS aims to enhance the reporting of key health and performance indicators,” he said. “The focus is on real-time data capture from both medical scheme members and healthcare service providers, which will support improved regulatory oversight.”
Later in the report, the CMS commented on how the rapid growth of artificial intelligence (AI), digital health tools and telemedicine were reshaping healthcare delivery. “As medical schemes invest in digital infrastructure to improve member engagement and efficiency, we recognise both the opportunities and regulatory challenges that accompany this transformation,” the CMS wrote. “Effective regulation of digital health requires collaboration between healthcare providers, medical schemes and technology providers.”
Commenting on the Council’s future, the CEO noted there were no plans to liquidate or cease operations. “The CMS remains a statutory body governed by the MSA and primarily funded through the Levies Act, with no indication of repeal of this law,” he said. He also acknowledged that the introduction of NHI would alter the regulatory landscape, shifting the CMS’ function from direct regulation of medical schemes to a more complementary oversight role.
This behemoth is fait accompli
And here is the clincher for those healthcare brokers and scheme members who believe NHI will be thwarted in the courts: even the CMS believes the transition is fait accompli. “Risk management frameworks will also be enhanced to address strategic and financial risks arising from the NHI transition,” Gumede said. Per the CMS, healthcare brokers will remain under licence, but their advisory and distribution functions will be standardised and confined within a centrally managed healthcare funding model.
For now, you continue to earn a capped commission of R121.84 (from 1 January 2025) per member per month from medical schemes, but that fee rests on a shrinking base. As NHI advances, medical schemes will be limited to offering complementary or top-up benefits, eroding the pool from which your income is drawn. The NHI Fund itself will not employ or remunerate brokers, meaning those who stay in the sector will have to pivot towards fee-for-service advice, employer consulting or member education roles.
The CMS’ regulatory role is increasingly defined by the courts. From defending its authority against the Board of Healthcare Funders’ LCBO challenge to managing the fallout of the Section 59 investigation into alleged racist practices by schemes, the Council finds itself balancing legal reform with operational strain. These disputes underline how contested the healthcare landscape has become and how crucial judicial clarity will be as South Africa moves towards universal healthcare.
Little room for hurrahs
The combination of shrinking membership, rising medical inflation and economic stagnation leaves little room for optimism. Beneficiaries, brokers and medical schemes are being swept up in the landslide of NHI which will press all but the dwindling pool of middle- and high-income families wholly into the state health insurance behemoth. As Mabeba warned, “These challenges threaten the long-term sustainability of the industry and require coordinated interventions to protect beneficiaries and preserve access to private healthcare.”
Writer’s thoughts:
As the plan to centralise healthcare funding gathers momentum, brokers are caught in a system that replaces advice and consumer choice with regulation and control. How confident are you in the sustainability of your career in the NHI framework? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
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