The solvency rate of medical aids is down but, at 43%, is higher than the required minimum – except for three: Medihelp, Sizwe Hosmed Medical Scheme and Transmed Medical Fund, which all failed to maintain their solvency ratios at or above 25% in 2023, reports Moneyweb.
[More]
Brought to you by proven Medical Billing Software
As text table:
| Code | Description |
|——–|————————————————–|
| R10.9 | Unspecified abdominal pain |
| J22 | Unspecified acute lower respiratory infection |
| M54.9 | Dorsalgia, unspecified – covering back pain |
| M54.2 | Cervicalgia – for neck pain |
| R07.9 | Chest pain, unspecified |
| E11.9 | Type 2 diabetes mellitus without complications |
| Z00.00 | Encounter for general adult medical examination without abnormal findings |
| R51 | Headache |
| I10 | Essential (primary) hypertension |
| M25.50 | Pain in unspecified joint |
| M79.609| Pain in unspecified limb |
| I51.9 | Heart disease, unspecified |
| N30.00 | Cystitis without hematuria |
South Africans are no strangers to economic anxiety. Rising living costs, fuel price hikes, and uncertainty about the future weigh heavily. Imagine, then, the collective sharp intake of breath when whispers – or sometimes louder discussions – emerge about potential tax increases, like a hike in Value Added Tax (VAT). Recently, the idea of a 0.5% VAT increase, potentially earmarked for crucial services like the National Health Insurance (NHI), has entered the national conversation, only for such definitive proposals to seemingly evaporate or be officially walked back, leaving confusion and concern in their wake.
This policy uncertainty isn’t just an economic headline; it sends ripples, even shockwaves, through vital sectors. Perhaps none is more sensitive to these tremors than South Africa’s already strained healthcare environment.
But what exactly does a potential VAT hike, even one discussed and then shelved, mean for private healthcare providers and the ambitious goals of the NHI? Let’s unpack the complex relationship between VAT policy and the health of the nation.
Before diving into VAT specifics, it’s crucial to remember the landscape:
A Two-Tiered System: South Africa operates a starkly divided healthcare system. A well-resourced, but expensive, private sector serves a minority (around 16-20% of the population, primarily those with medical aid). The vast majority rely on the public sector, which faces significant challenges: underfunding, staff shortages, aging infrastructure, and often, long waiting times.
National Health Insurance (NHI): The government’s flagship policy aims to bridge this divide by creating a single, mandatory health insurance fund. The goal is universal access to quality healthcare for all citizens, regardless of their socio-economic status. However, the big question mark has always been: how will it be funded?
Funding the NHI adequately is a monumental task, estimated to require hundreds of billions of Rand annually. Government needs sustainable revenue streams. VAT is often considered because:
Broad Base: It’s levied on a wide range of goods and services, potentially generating significant revenue even with a small percentage increase.
Existing Infrastructure: The collection mechanism (via SARS) is already in place.
The logic follows that a dedicated portion of an increased VAT could be ring-fenced for the NHI fund, providing a predictable income stream to start tackling the public sector’s deficits and rolling out NHI services. A 0.5% increase might seem small, but it could translate into billions.
(Context Note: South Africa last increased its standard VAT rate from 14% to 15% in April 2018, a move that was also met with considerable debate about its impact on the poor).
The Ripple Effect: Potential Impacts of a VAT Increase (Even if Proposed and Retracted)
Even the discussion of a VAT hike, let alone its implementation, has consequences. If a 0.5% increase were implemented for healthcare funding, here’s how it could play out:
Medical Supplies & Equipment: While some basic foodstuffs are zero-rated for VAT, many essential medical supplies, pharmaceuticals, and sophisticated equipment are not. A VAT increase directly inflates the cost of these items for both public and private hospitals and clinics. This includes everything from bandages and syringes to MRI machines and chemotherapy drugs. Even zero-rated final products might see price increases if the inputs used to make them incur higher VAT.
Running Expenses: Utilities, maintenance services, administrative supplies – the day-to-day running costs of healthcare facilities would also rise, putting further pressure on already tight budgets, especially in the public sector.
Private Healthcare Costs: Medical aid premiums would likely increase as insurers pass on the higher costs of services and supplies. Out-of-pocket expenses (co-payments, non-covered treatments) would also rise. This could make private healthcare even less affordable, potentially pushing more people towards the strained public system.
Direct Costs: Even in the public sector, patients might face slightly higher costs for any non-essential items or services that aren’t fully subsidised. More broadly, the general inflationary pressure from a VAT hike reduces disposable income, making it harder for families to afford transport to clinics, healthier food, or over-the-counter medications.
Intended Benefit: The core goal would be increased, dedicated funding for NHI, enabling investment in public facilities, hiring more staff, and expanding service availability.
Potential Drawback: If the VAT increase significantly dampens economic growth or disproportionately hurts the poor (VAT is regressive – it takes a larger percentage of income from low-earners), it could undermine the very socio-economic upliftment that improved healthcare aims to support. It also raises costs within the system it’s trying to fund.
When a potential policy like a VAT hike is floated and then seemingly withdrawn or lacks clear governmental backing, it creates a damaging environment of uncertainty:
Planning Paralysis: Hospitals, clinics, medical aid schemes, pharmaceutical companies, and suppliers struggle to budget and plan for the future. Should they factor in higher costs or not? This hesitation can stifle investment and innovation.
Erosion of Trust: Constant back-and-forth on critical funding mechanisms erodes public and investor confidence in the government’s ability to manage the economy and implement complex reforms like NHI effectively.
Delayed NHI Implementation: Funding uncertainty is a major roadblock for NHI. Without a clear, agreed-upon, and sustainable funding model, progress remains slow, leaving the structural problems of the current system unresolved.
Increased Anxiety: For ordinary citizens, particularly those reliant on the public sector or struggling to afford medical aid, this uncertainty adds another layer of stress regarding future healthcare access and affordability.
The debate around a VAT increase highlights the critical need for a transparent, stable, and economically sound funding model for South Africa’s healthcare ambitions. While VAT is one tool, relying solely on it, especially given its regressive nature, is problematic.
Other potential funding sources often discussed include:
Ultimately, the solution likely lies in a blend of sources, combined with demonstrable improvements in governance and efficiency within the Department of Health and the future NHI fund.
The discussion around a 0.5% VAT increase and its subsequent retraction (or lack of firm proposal) serves as a stark reminder of how sensitive South Africa’s healthcare system is to fiscal policy shifts and uncertainty. While the need for increased, sustainable funding – particularly for NHI – is undeniable, the method matters profoundly.
Any potential tax adjustments must be carefully weighed against their impact on the economy, household budgets, and the operational costs within the healthcare sector itself. Most importantly, South Africa needs a clear, consistent, and communicated long-term funding strategy for healthcare. Policy flip-flopping only serves to undermine confidence and delay the urgent task of ensuring quality healthcare access for all. The health of the nation literally depends on getting this right.
The future of healthcare funding affects every South African. Do you think a VAT increase is the right way to fund NHI? What are your concerns about healthcare costs and access?
Share this post and join the conversation. Stay informed, engage with policymakers, and let your voice be heard on this critical issue.
Fudley Bezuidenhout Pr.Eng.
Medinol – Champion Medical Billing Software
The partnership also reinforces Sanlam’s aim to offer an integrated healthcare, insurance and investment offering that delivers more value, affordability, and sustainability.
For Fedhealth, the agreement supports the medical aid provider’s objective of expanding its market share in the corporate market in South Africa which stands to bring in substantial new corporate members via Sanlam’s established client base.
Fedhealth will continue to operate as an independent entity run by a Board of Trustees consisting of scheme members.
Sanlam group CEO, Mr Paul Hanratty said: “We are pleased about the conclusion of our partnership agreement with Fedhealth, which supports our objective to significantly upweight our health focus. Many South Africans need affordable private healthcare delivered by a solid medical aid. Our partnership with Fedhealth demonstrates our commitment to enable accessible healthcare and reinforces our outlook to encourage our clients to live confidently, healthily and resiliently build wealth. We have already migrated most of our staff to Fedhealth and look forward to a mutually beneficial partnership.”
Fedhealth’s Principal Officer, Mr Jeremy Yatt, said the partnership is a synergy of two core shared values: customisation and affordability. “Fedhealth is already unique in the medical aid landscape, thanks to our ability to offer customisable medical aid, which allows our members to craft the plan that suits them, so they do not have to pay for benefits they do not use. This leads to significant cost savings,” he says. “By partnering with Sanlam, we’ll now be able to offer even more money saving opportunities by means of integrated product offerings, an innovative rewards platform and wellness incentives to our members that encourage them to take further charge of their health.”
The partnership is about more than business – it is about making a meaningful difference in the lives of all South Africans. Says Yatt: “By combining Sanlam’s trusted reputation and extensive reach with Fedhealth’s clinical expertise, we are setting a new standard for health and wellness. Together, we aim to bring more benefits, greater access, and cutting-edge innovation to financial, physical, and mental well-being – all in one place. Our vision is clear: to become South Africa’s most trusted health brand by 2030, delivering real value every step of the way.” DM
About Sanlam
The Sanlam group is a leading pan-African financial services group listed on the JSE, Namibian Stock Exchange and A2X Markets Limited. The group provides comprehensive and bespoke financial solutions to institutional clients and consumers across all market segments, including life and general insurance, health, financial planning, retirement, investments, wealth management and credit.
Established in 1918 as a life insurance company, the Sanlam group has evolved into the largest non-banking financial services group in Africa through its diversification strategy achieved through strategic partnerships and acquisitions. Headquartered in South Africa, the Sanlam group operates in 31 countries including eight of the top ten largest economies in Africa.
For more information on Sanlam, visit www.sanlam.com
About Fedhealth
Fedhealth Medical Scheme has been in the healthcare business since 1936, with an unwavering commitment to providing South Africans with quality and affordable medical aid cover.
The Scheme has made it its mission to take excellent care of the changing health and wellness needs of members through innovative product design, whilst always ensuring the sustainability of the Scheme. Run by members for members, and with complete transparency, Fedhealth’s 100% member-elected Board of Trustees operates with one objective only: to put the interests of its members first.
Apart from a successful 88-year track record in healthcare, Fedhealth boasts a Global Credit Rating of AA- retained for 18 consecutive years, and a solvency rate of 31.5% (as at 31 December 2024 – unaudited).
For more information on Fedhealth, visit fedhealth.co.za
Introducing the 2025-Dental Tariffs Pack, an essential resource for dental practitioners, technicians, therapists, and oral hygienists looking to streamline their billing and claims processes. Priced at just R 1,295, this comprehensive compilation is designed to keep you informed and efficient in the ever-evolving landscape of dental healthcare. With over 100 PDFs and more than 1,000 pages of curated content sourced directly from medical aid schemes, the 2025-Dental Tariffs Pack is your go-to guide for accurate billing and coding information.
The pack includes detailed tariffs, rates, and coding protocols that are crucial for maximising your practice’s revenue. By utilising this all-in-one guide, you can reduce the time spent on administrative tasks, minimise errors in claims submissions, and ultimately enhance patient care. The cloud-based data repository allows for easy access from any device, ensuring that you have the information you need at your fingertips, whether in your rooms or on the go.
In addition to simplifying billing processes, the 2025-Dental Tariffs Pack helps you stay updated on the latest changes in the dental industry, ensuring that you are always pricing your services accurately. This not only optimises your cash flow but also reduces the stress associated with billing and claims management. With the 2025-Dental Tariffs Pack, you can focus more on providing exceptional patient care while ensuring the financial stability of your practice.
Join over 5,000 satisfied dental professionals who have already made the switch to the 2025-Dental Tariffs Pack. Say goodbye to billing headaches and hello to a more efficient, profitable practice. Grab your copy today for just R 1,295 and take the first step towards a stress-free billing experience!
Start winning. Visit www.dentaltariffs.co.za today.
|
