South Africa's medical schemes are struggling to keep pace with escalating healthcare costs, leading to a sharp increase in gap cover claims. Data shows mega claims exceeding R50,000 have risen by over 500% in volume since 2020. This highlights growing financial burdens on patients as providers charge far above scheme rates.
Medical schemes in South Africa, numbering 71 with 16 open and 55 restricted, serve more than 9.1 million beneficiaries under a non-profit structure. These schemes pool benefits for members, but savings accounts for day-to-day expenses often deplete quickly, leaving individuals liable for further costs.
Gap cover insurance aims to bridge shortfalls, but it applies only to in-hospital treatments and certain outpatient procedures, contrary to common misconceptions. Michael Emery, marketing executive at Ambledown Financial Services, clarifies: “Gap cover is only applicable for in-hospital treatment or procedures and certain specified out-patient procedures.”
Specialists frequently charge up to 500% of scheme rates, particularly in fields like oncology, orthopaedics, and neurosurgery. Brian Harris, director of operations at Turnberry Management Risk Solutions, explains: “Most medical aid plans will cover 100% or 200% of the scheme rate, depending on the plan. This creates significant shortfalls, and the patient is responsible for the unpaid balance.” Medical inflation outpaces the consumer price index, exacerbating the issue.
Martin Rimmer, chief executive of Sirago Underwriting Managers, notes that schemes are reducing benefits due to affordability constraints, ageing memberships, and private healthcare consuming up to 20% of household income, rather than raising premiums to match provider cost inflation.
Sirago's data reveals a stark trend: mega gap claims over R50,000 surged 512% in volume and 437% in value from 2020 to 2024. In 2020, there were 89 claims totaling R6.2 million; by 2024, this reached 549 claims worth R34 million. The average large loss claim now stands at R63,000, up from R6,000 to R12,000 pre-2020. Claims over R60,000 occur daily, with 2021 seeing a 118% increase in value paid compared to 2020, and 2022-2024 averaging 35% annual volume growth. Highest claims exceed R200,000 for ischaemic heart disease in those over 50.
Notably, the under-49 age group accounts for 23% of large loss claims, per Rimmer, challenging assumptions about health risks. Common shortfall triggers include orthopaedic, gynaecological, and ENT surgeries; gastroscopies and colonoscopies; cancer treatments; and emergency admissions. Harris adds: “Most of the time, these are not one-off medical disasters but ongoing issues that result in hundreds of thousands of rands in out-of-pocket expenses.”
One Turnberry client, treated for a malignant ureter tumour over four years, faced R678,000 in shortfalls across 44 claims, all covered by gap insurance within annual limits. Harris emphasizes: “This highlights how gap cover, when used consistently and within policy limits, can offer long-term financial relief for ongoing medical needs.” Healthcare provider costs have outpaced inflation by more than double for years, without pricing regulations unlike pharmaceuticals.