By Lehlohonolo Lehana.
Health Minister, Aaron Motsoaledi, has raised serious concerns over the affordability of private healthcare, describing the escalating costs as uncontrollable and a burden on majority of South Africans.
In a joint press briefing held on Monday by Motsoaledi and the Minister of Trade, Industry, and Competition, Parks Tau, Motsoaledi highlighted the inefficiencies in the healthcare sector, asserting that it has become an “uncontrollable expense”.
He argued that many blame the State for not taking action to control these runaway costs.
“Let us start this history by stating that Private Health Care was never structurally planned, and no Act of Parliament was ever passed to establish it. It just evolved on its own as time went on. Only later was a Statute passed in this regard, but this Statute controlled only one aspect of Private Health, including the financing of health but not the provisioning of healthcare.
“An Act of Parliament, the Medical Schemes Act, was passed in 1967 and amended in 1998 (Act No. 131 of 1998) to establish the Council for Medical Schemes (CMS).
“The Representative Association of Medical Schemes (RAMS) was set up out of necessity by Medical Schemes. They had a responsibility to negotiate service tariffs.”
He explained that the then Medical Association of South Africa (MASA), now the South African Medical Association (SAMA), introduced the ‘Doctors’ Billing Manual, which competed with the RAMS prices, with fees that exceeded the RAMS guideline prices. Schemes decided to pay whatever amount they considered appropriate, leaving patients to pay the difference between the reimbursed amount and the price charged.
“At the same time, the Hospital Association of South Africa (HASA), representing private hospitals, received permission from the competition authorities to publish a ‘Benchmark Guide to Fees for Medical Services’.
“In 2004, a Competition Commissiom found a collusion in how prices were agreed upon and passed a ruling prohibiting any collective negotiation of prices.
“The commission was of the view that fee guidelines, including the scale of benefits, used by the Board of Healthcare Funders (BHF), the fee guideline of HASA and SAMA Tariff Book, respectively, are fixing the prices of medical aid reimbursements, hospitals and doctors,” said Motsoaledi.
Tau, has emphasised the importance of regulating private healthcare costs to guarantee that affordable healthcare remains accessible to the majority of South Africans.
“There is a serious concern about access to private healthcare in the country, given the high levels of market concentration and high prices,” he said.
The Health Market Inquiry (HMI), conducted five years ago by the Competition Commission and chaired by former Chief Justice of South Africa, Justice Sandile Ngcobo, identified numerous factors that impede competition within the private healthcare sector.
Key issues highlighted include an unregulated supply side in service provision, a lack of transparency in pricing, exclusive contracts, and various anticompetitive practices that create barriers for new entrants.
In addition, the HMI noted that the absence of a tariff determination framework, among other factors, contributes significantly to these inefficiencies.
“Importantly, given the lack of a structured price determination framework, the HMI found that there has been abuse in the pricing of Prescribed Minimum Benefits, as well as non-Prescribed Minimum Benefits, in the form of overutilisation of services and co-payments, thus driving up the cost of healthcare.”
On 14 February 2025, Tau published the Draft Interim Block Exemption for Tariffs Determination in the Healthcare Sector after engaging in consultations with both the Competition Commission and the National Department of Health.
This exemption is designed to fill the regulatory gap in tariff determination, aligning with the recommendations put forth in the 2019 HMI.
Its primary objectives are to establish a collaborative multi-stakeholder framework for regulating healthcare tariffs, enhance price transparency, and ultimately drive down costs for consumers.
Currently, Tau said there is no structured and transparent framework for determining tariffs for healthcare services.
“Due to the lack of a formal tariff determination framework, consumers are faced with uncertainty on prices, potential balance billing, and tariffs which are not determined through a transparent process.