According to the first report on the state of medical schemes, nearly nine million residents of South Africa whose income exceeds the tax threshold are opting out of medical insurance. The main reason for this is the issue of accessibility.
The first report on the state of medical schemes (SOMS) from the Health Funders Association (HFA), published this week, shows that about 8.79 million South Africans earn enough to join the system but remain outside it, preferring to pay for medical expenses out of pocket.
According to HFA, the average contribution to a medical scheme is approximately 2400 rand per month, which one analyst called a substantial sum. Loyanda Ndjilo, Senior Research Fellow at Nedbank Corporate and Investment Banking, explained this as pressure related to income distribution.
Data from the South African Revenue Service (SARS) indicates that in 2024, about 3.25 million assessed taxpayers utilized medical tax credits. Of these, approximately 1.69 million, or 52%, had an annual income between 200,000 and 500,000 rand, corresponding to a gross monthly income of approximately 16,700 to 41,700 rand.
Ndjilo noted that for a person with an annual income of 200,000 rand, a monthly contribution of 2400 rand amounts to about 14.4% of gross income; at an income of 350,000 rand—about 8.2%; and at 500,000 rand—approximately 5.8%, and this is before accounting for additional dependents or out-of-pocket healthcare expenses.
He added that the pressure intensified as contributions consistently rose faster than household incomes. The Council for Medical Schemes (CMS) reported an average industry contribution increase of approximately 10.1% in 2025, exceeding current inflation.
Ndjilo emphasized that if medical contributions rise by 8%–10%, while household incomes increase closer to general inflation, healthcare inevitably begins to take up a larger share of disposable income. He also noted that for a young, healthy consumer who visits a doctor only a few times a year, rationalizing the choice is clear: why pay 25,000–30,000 rand or more per year if expected routine healthcare costs are significantly lower?
Ndjilo stressed that the insurance system needs low-claim individuals in the pool to compensate members with significantly higher healthcare costs. He stated that opting out may be economically justifiable for an individual but simultaneously weakens the sustainability of the collective insurance fund.
HFA proposed mandatory membership for working people whose income exceeds the tax threshold. This could bring about 8.79 million additional people into the risk pool and reduce expected costs for Prescribed Minimum Benefits (PMB).
Ndjilo agreed with the economic logic of HFA's proposal: expanding the denominator will lead to a reduction in average risk. However, he warned that compulsion cannot be separated from accessibility. Requiring someone whose income is only slightly above the tax threshold to immediately purchase a standard medical insurance product costing several thousand rand per month simply turns the problem of healthcare accessibility into a problem of household affordability.
The most interesting takeaway from the HFA report, according to Ndjilo, was that debates on private health financing and debates on National Health Insurance (NHI), despite starting from very different institutional positions, are increasingly recognizing the same fundamental economic principle: healthcare systems depend on broad risk pooling and cross-subsidization.
Thoneshan Naidu, CEO of HFA, also pointed to accessibility as one of the biggest barriers preventing many working South Africans from obtaining coverage. He noted that the accessibility equation depends on the size and composition of the risk pool. Naidu added that HFA modeling showed that including this group in the medical insurance system based solely on age could reduce contributions by 30%.
He concluded that there is a potentially positive cycle: if coverage becomes more accessible and more people join the system, a larger and more balanced risk pool can, in turn, help make coverage more accessible for everyone.
Naidu acknowledged that medical scheme contributions tend to rise faster than general inflation, and one of the main reasons is the aging population within medical insurance, as older people generally require a greater volume of medical care. HFA analysis showed that about 10.2 million people earning between 7,726 and 30,000 rand per month could benefit from more affordable primary healthcare options with prepayment. Moreover, over 95% of this group came from previously underserved communities.