The government, guided by the Health Market Inquiry (HMI), has introduced a draft block exemption to establish a multi-stakeholder framework for setting healthcare tariffs.

The move aims to tackle escalating costs of Prescribed Minimum Benefits (PMBs) and non-PMBs, driven by over-utilisation and co-payments, which have made private healthcare increasingly unaffordable.

The HMI found that the private health sector suffers from “high and rising costs of healthcare and medical scheme cover, declining benefits, and significant overutilisation of health services,” with no corresponding improvement in outcomes.

Health Minister Dr Aaron Motsoaledi and Trade, Industry and Competition Minister Parks Tau announced the proposals in a joint briefing on Monday, citing the absence of a tariff determination framework as a key driver of inefficiencies.

“There is a serious concern about access to private healthcare in the country, given the high levels of market concentration and high prices,” Tau said. “The cost of private healthcare should remain in check to ensure that majority of South Africans have access to affordable healthcare.”

The proposed multilateral negotiating forum excludes private hospitals, a sector dominated by three major groups controlling 80% of beds. The HMI deemed their market power too significant for inclusion, aligning with its recommended bargaining model.

Motsoaledi endorsed the HMI’s call for a standardised, obligatory base benefit package for all medical schemes, but cautioned it’s “very complex.”

He suggested starting with voluntary adoption, progressively building to mandatory status, with comprehensive Primary Health Care as the foundation, in talks with the Council for Medical Schemes (CMS).

Motsoaledi noted resistance from the National Treasury to creating new public entities, as recommended by the HMI. “After all, the NHI itself will be established as a 3A entity, and hence a large number of these structures will fall under its umbrella,” he said.

“We are implementing some of the HMI recommendations as a temporary stop-gap measure, which will be progressively upgraded. We need the interim to relieve the pressure people experience when seeking healthcare services.”

Tau explained that current practices see medical schemes unilaterally setting tariffs, leaving health professionals to either accept them or charge patients higher rates, leading to balance billing.

“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,” he said. This gap disadvantages patients, schemes, and smaller providers, fuelling cost hikes.

“There is an urgent need for a structured regulatory framework to guide tariff determination in the healthcare sector,” Tau added.

The draft exemption places Healthcare Capacity Planning within the National Department of Health (NDOH), including facility licensing.

Tau said the HMI’s finding that the Competition Commission’s 2003 ban on collective negotiations skewed market power and pricing. The HMI proposed a Supply Side Regulator for Health to oversee tariffs, but as a long-term fix—potentially under the National Health Insurance —it recommended interim measures like this exemption.

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