Youth are ditching medical aid as affordability crisis deepens

The rising cost of private healthcare has come under renewed scrutiny after it emerged that a growing number of young South Africans are opting not to join medical schemes when they enter the workforce.

Paresh Prema, the branch head of health actuarial services at Alexforbes, said the trend was placing pressure on medical schemes, which had traditionally relied on younger, healthier members to subsidise older members who make greater use of healthcare services.

For decades, medical schemes have operated on a risk-pooling model in which younger members, who generally have fewer chronic health conditions and lower healthcare use, help offset the costs of older members.

Prema said the dynamic was changing, contributing to escalating healthcare costs and above-inflation contribution increases.

Prema, who was speaking at the Hospital Association of SA’s Quality and Conference 2026 held in Sandton last week, noted that medical scheme coverage has stagnated and even declined slightly over the past decade.

In 2012, 15.9% of South Africans had access to medical aid, compared with 15.5% in 2024.

As a result, Prema said, legislative reform might be necessary to increase participation in medical schemes, including measures that would compel employed individuals to obtain medical cover while introducing covers that would be affordable for low-income earners.

His comments come after the Board of Healthcare Funders earlier this year failed in its court bid to compel the Council for Medical Schemes (CMS) to allow the introduction of low-cost benefit options, which are more affordable products that do not provide the full range of prescribed minimum benefits.

Prema said: “In terms of demographics, we have seen that the period from 2012 to 2024 the increase in average age has been gradual but the older members increase the chronic prevalence, service intensity.

“All of these have an effect in driving contribution increases. The effect is compounding overtime. That is quite an important aspect that we still monitor and that drives costs and we need to ensure what solutions we put in place to deal with that.”

Prema also highlighted the persistent trend of medical aid contribution increases outpacing consumer inflation.

According to reports, Discovery Health Medical Scheme has announced an average contribution increase of 8.2% for next year and Momentum Health 7.9%, both well above the CMS’s recommended 3.8%.

The increases are also far above and consumer inflation, currently running at 4.4%.

“We find that members are buying options that are cheaper … that is also due to rising costs and higher entry price.

“That results in declining participation and a narrow cross subsidy between the younger and older members, as well ageing pool.

“This cycle continues without there being any solution in between to try to deal with the affordability crisis.

“We see that the increase in membership is not in line with the increase in the population but an increase with the GDP. The more people get formal employment, the more they get to afford medical scheme cover,” he said.

Prema said it was becoming increasingly evident that private healthcare services were becoming less affordable and warned that, without intervention, the situation was unlikely to improve.

Breaking down medical scheme expenditure, he said hospitals accounted for 35.95% of costs, specialists 28.02%, medicines 14.05% and allied health services 8.47%.

“Affordability of one member’s response affects all the remaining members. That’s why retention is important in this space …and participation is very core to managing costs,” he said.

University of Cape Town Professor Susan Cleary said South Africa’s healthcare spending patterns highlighted the stark differences between the public and private sectors.

The private healthcare sector spent about R249-billion annually to serve the 15% of South Africans covered by medical schemes.

By comparison, the public healthcare system, which serves 85% of the population, receives about R243-billion in tax-payer funding.

Combined healthcare expenditure amounts to roughly R492-billion a year.

This translates into annual healthcare spending of about R23 000 per medical scheme beneficiary, compared with about R5 000 per person in the public healthcare system.

Cleary questioned whether universal private-sector healthcare coverage would be financially sustainable.

She said that if every South African were covered by a medical scheme, annual expenditure would rise to about R1.4-trillion, about 30% of GDP.

By comparison, universal coverage through the public sector would cost an estimated R299bn, or about 5.8% of GDP.

While a universal public healthcare system would require increased government spending and potentially higher taxes, Cleary said it would remain significantly more affordable than extending private medical scheme cover to the entire population.

“Then you have to ask: Does it make sense to spend 30% of GDP on healthcare?”

Cleary added that the level of expenditure would be exceptional by international standards.