South Africa’s healthcare cover gap is not one problem but four

South Africa’s healthcare cover gap is often spoken about as a single problem. It is not.

Consider two households. One can usually pay for a GP consultation, medicine or basic pathology, but a scan, procedure or hospital admission would destabilise its finances. The other has cover for a defined serious event yet delays day-to-day care because each visit competes with food, transport and school costs. Both are under-protected, but not in the same way.

When these situations are treated as one segment, the usual response is to ask how cover can be made cheaper. The better question is: which healthcare cost is the household exposed to, how often could it arise, how severe could it become, and what shortfall remains after the benefit has paid?

Spending on care is not the same as protection

Statistics South Africa’s analysis of the 2022/23 Income and Expenditure Survey found that 14.1% of people were covered by medical aid. Households still spent R31.5 billion directly on healthcare, including R11.2 billion on medicines. People outside comprehensive medical scheme cover are therefore not outside the healthcare system. They often pay for care one account at a time.¹

That spending should not be confused with protection. Paying for predictable services does not mean a household can absorb an unexpected admission, specialist episode, co-payment or ongoing treatment cost. Equally, cover for a rare event does not help someone who cannot afford the consultation that detects illness early.

Day-to-day risk is the recurring cost of GP consultations, medicines, basic pathology and other primary-care needs. Each account may be manageable, but the frequency can strain household budgets and delay care. Episode risk arises when one health problem becomes a series of consultations, pathology, imaging, specialist care, treatment and follow-up. The burden sits in the accumulation, not in any single account.Major-event risk is the lower-frequency cost that overwhelms savings and forces a household to borrow, sell assets or go without care. This is where risk benefits and pooling matter most. Managing smaller bills is no evidence that a family can self-fund a major admission or procedure.Continuity risk follows the initial event. Chronic medicine, rehabilitation, monitoring and follow-up can continue long after diagnosis or discharge, leaving the household exposed to the cost of staying well.

Each of these risks needs a clear purpose, funding logic and measure of success.

When a product’s limits are unclear, the customer carries a risk they did not know they had. That responsibility sits with all of us in the healthcare-cover market. If we design limited products, we must be equally clear about their value and their boundaries. Otherwise, an ambiguous product can absorb scarce household income without reducing the risk that matters most.

The World Health Organization’s work on benefit design makes a useful point: a benefit is not merely a list of services. It must specify what is included, what is excluded and the conditions of access.² In South African terms, that means customers should understand the benefit option, authorisation requirements, exclusions, limits, designated service provider arrangements and possible out-of-pocket costs before they need to claim.³

Customers should not discover the boundary of cover only when an authorisation is declined or a claim is not paid as expected. A familiar label should not imply protection across a broader category of risk than the contract actually provides.

Product discussions usually begin with what will be paid, how much and how often. A stronger discipline begins with the shortfall: after the product performs exactly as promised, what cost still sits with the customer? Four tests can guide better design.

First, name the risk precisely. Is the arrangement intended to make day-to-day care affordable, fund a defined episode, absorb a major hospital event or support ongoing chronic care? Precision gives customers a basis for comparison and gives boards a basis for accountability.

Second, make boundaries as visible as benefits. Before committing money, a reasonable customer should be able to see the trigger, main exclusions, authorisation steps, co-payments and likely out-of-pocket exposure. Technically complete documentation is not enough if the limitation is hard to find.

Third, price and assess the product against the loss it claims to reduce. A low premium is not proof of affordability if common exclusions leave customers paying twice: once for the product and again for the cost they believed it addressed. Value lies in material risk transferred, not in the number of benefits listed.

Fourth, measure protection achieved rather than cover sold. Uptake and utilisation do not show whether unexpected costs fell or whether customers retained an exposure they thought had moved. Management information should show the size and pattern of shortfalls, including outcomes caused by misunderstanding.

This approach does not demand one product for every need. It demands an honest ladder of protection, with limited products presented as limited products and stronger pooling where the potential loss becomes unmanageable. Day-to-day benefits, defined-event cover, hospital protection and chronic care support can each be valuable without pretending to do the same job.

South Africa’s challenge is not merely that too few people have cover. It is that “covered” can mean very different levels of protection. The gap will narrow only when the market is more precise about risk, more candid about limits and more accountable for what households still carry.

* Teshlin Akaloo is the managing director of NetcarePlus

** The views expressed do not necessarily reflect those of IOL