For most South Africans, private healthcare remains out of reach as medical schemes raise rates by 7% to 9% in 2027 — more than double the Council for Medical Schemes (CMS) guideline — making them increasingly unaffordable. Health insurance offers an entry point.
According to the CMS, medical scheme membership has held steady at nine million lives for more than a decade, slipping from about 17% of South Africans a decade ago to under 15% today.
Over the same period, health insurance has grown to approximately 1.5 to two million lives, according to industry estimates.
Health insurance demand rises
Depending on the options selected, health insurance may provide access to defined primary healthcare, medication, and specified accident or emergency benefits.
These insurance offerings differ from medical schemes, which must cover prescribed minimum benefits (PMBs) and offer additional benefits based on their rules and benefit options.
Jordan Bortz, actuary at Kaelo, which provides health insurance, gap cover, and other employee benefits primarily through employers, says demand has risen sharply.
“Health insurance and medical schemes are largely two distinct markets,” says Jordan Bortz, actuary at Kaelo.
“The typical health insurance member has never been on a medical scheme.
“Several of our largest clients are employers whose staff earn around R10,000 a month or less. Many cannot afford the monthly cost of medical scheme cover.”
He adds that health insurance does not replace medical scheme cover. Instead, it offers a first step into private healthcare for those who have never had it.
“For most of the people we cover, the choice was never medical scheme or health insurance,” says Bortz. “It was health insurance or nothing.”
Closing the affordability gap
For lower-income earners, the affordability gap keeps widening.
Health insurance products can cost as little as R300 per month, while entry-level medical scheme cover starts at approximately R1,500.
Because health insurance premiums have risen more slowly than medical scheme contributions, that gap grows each year.
“Every year, medical scheme cover moves a little further away from what many working South Africans can afford,” says Bortz.
“After the latest increases, the gap is wider than it’s ever been. Health insurance gives those employees a way into private healthcare that they otherwise wouldn’t have.”
As a result, group-based cover can cost up to half as much as individuals buying the same benefits. Employers can also subsidise all or part of the cost.
“Some of the employees may never buy private cover on their own, but when the employer provides it, or subsidises a portion of the cost, a significant number of people gain access to private healthcare for the first time,” says Bortz.
Bottom line
For employers, the business case goes beyond price.
Workers without cover often go untreated for everyday illnesses and chronic conditions, and lose working hours queuing for care.
As a result, employers face reduced productivity and increased absenteeism.
Access to primary healthcare and chronic medication supports improved attendance, wellbeing and workplace productivity.
“Based on Kaelo’s internal modelling, the value to employers may be many multiples higher than programme spend, depending on factors such as the industry and utilisation.
“Even if the employer subsidises only a portion of the premium, they get almost the full benefit,” says Bortz.
