South Africa’s medical aid industry is facing growing pressure as rising living costs and stagnant wage growth drive more consumers away from traditional medical schemes.
Recent data shows that medical aid membership has steadily declined over the past decade, with experts warning that the long-term sustainability of the industry’s funding model could come under increasing strain if the trend continues.
According to Statistics South Africa (Stats SA), the proportion of South Africans covered by medical aid fell from 18.1% in 2014 to 15.5% in 2024, despite continued population growth.
Speaking at the Board of Healthcare Funders conference, Dr Paula Armstrong said that if membership had expanded in line with the country’s population, South Africa would now have approximately 10.4 million medical aid beneficiaries.
Instead, there are only 9.17 million beneficiaries, leaving a shortfall of around 1.24 million members.
H3: Rising costs reshape consumer healthcare choices
Industry analysts say affordability has become the biggest reason many South Africans, particularly younger workers, are choosing not to join medical schemes.
Luyanda Njilo, Senior Equity Research Analyst at Nedbank CIB, said medical schemes depend on contributions from younger and healthier members to help fund healthcare costs for older beneficiaries.
However, with youth unemployment remaining high and salaries failing to keep pace with rising expenses, many younger adults no longer view medical aid as financially viable.
He noted that while medical aid contributions may increase by around 10% annually, wage growth has generally tracked inflation, making membership increasingly difficult to justify.
As a result, many people in their twenties are postponing joining medical schemes until later in their careers when their incomes improve or healthcare needs become greater.
H3: Alternative healthcare cover gains popularity
The changing economic environment is encouraging more South Africans to consider lower-cost healthcare options.
A traditional medical aid plan often costs around R2,000 per month for the principal member, and policyholders may still face additional out-of-pocket medical expenses depending on the treatment received.
Instead of paying for comprehensive medical aid, some consumers are choosing to self-fund routine healthcare while purchasing hospital plans or healthcare insurance that provides cover for major medical events.
Retail healthcare providers, including Dis-Chem, have expanded access to these products in recent years, offering more affordable options for people seeking private healthcare without the higher monthly cost associated with traditional medical schemes.
While these alternatives provide financial relief for many households, industry experts caution that a continued decline in medical aid membership could place increasing pressure on the long-term sustainability of South Africa’s private healthcare funding system.
Source: Adapted from Statistics South Africa, Business Day and CNBC Africa.