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New medical aid changes announced for South Africa

The Council for Medical Schemes (CMS) has published a new circular in which it prohibits South African medical aids from offering Low-Cost Benefit Options (LCBO) to low-income market segments.

This decision is to align such products ‘with the broader health policy discussion that seeks to ensure adequate access to care, irrespective of the economic status of the population’, the regulator said.

“The concept of a Low-Cost Benefit Option intended to increase the affordability of medical schemes and membership through the development of a product targeted to a specific group of the population, mainly low-income households,” it said.

“These households cannot afford medical scheme premiums as coverage and benefit richness is generally correlated to income, therefore the higher the premium, the richer the benefits.”

However, the CMS said that it has observed that products targeted at lower-income earners present an opportunity for inferior benefits.

“Mainly, such products potentially use the State as a Designated Service Provider (DSP) without entering into the necessary agreements with the State and lack prescribed minimum benefits (PMB),” it said.

“The South African economy is currently under a lot of strain with higher levels of unemployment further suggesting that a LCBO for low-income earners could be difficult to realise.”


The regulator said that it has previously outlined two possible alternate models – both with more of an emphasis on primary healthcare (PHC) services than the current PMB package.

It has also developed a new PMB package (still to be costed) with a ‘strong focus on primary healthcare’.

The regulator said that it considers this new package ‘as a basis for the discussions that will lead to the development of an affordable and quality healthcare financing package to citizens of South Africa’.

BusinessDay reports that Treasury officials have been caught on the backfoot by the announcement which will take place with immediate effect.

It also potentially raises issues in that these low-cost products could leave hundreds of thousands of families without access to private healthcare.

Many of these services are subsidised by employers and cost substantially less than full medical-scheme cover.