Rising costs force consumers to downgrade

Health and well-being rank among South Africans’ top priorities and for the two most affluent of Eighty20’s National Segments, Heavy Hitters and Comfortable Retirees, medical aid penetration is 50% and 40%, respectively.

“Despite this, fewer than 10 million of the country’s 63-million citizens belong to a medical scheme. Resulting in roughly 15% having access to private healthcare, leaving the vast majority dependent on an over-burdened public health system,” says Andrew Fulton, Director at Eighty20.

Yet the financial weight carried by this small minority is striking when placed alongside public spending figures. Those 9.13m beneficiaries were responsible for R227bn in medical scheme contributions with a further R24.3bn in contributions to medical savings accounts, for a total of a quarter of a trillion rand. The government has increased health spending from R277 billion in 2024/25 to R329 billion by 2027/28, indicating a significant investment in health services.

It must also be noted that the total incomes of the minority who say they have medical aid in the MAPS data is about 35% of all incomes in South Africa. This segment is funding not only their own medical aid but also paying the taxes that pay for the public health service.

Data from MAPS and BrandMapp, both recently updated and available on the Eighty20 Data Portal, reveal the distinct demographic patterns behind medical aid coverage in South Africa.

The concept of ‘over-indexing’ provides a useful lens to understand the data. In a demographic analysis, when a particular group shows a significantly higher representation than their population share would suggest, they are described as over-indexing for that characteristic.

This over representation reflects the social-economic dynamic of South Africa. Along with a higher concentration of medical aid beneficiaries living in Gauteng and the Western Cape, the medical aid landscape shows stark over-indexing patterns in other demographics:

1. Eighty20 National Segmentation: In addition to Students & Scholars, Medical Aid is over indexed for 3 of the most affluent segments – Middle Class Workers, Heavy Hitters, and Comfortable Retirees. 50% of Heavy Hitters and 40% of Comfortable Retirees have medical aid coverage.
2. Education correlates with coverage: Those with post-matric qualification show markedly higher medical aid uptake, which reflects both earning potential and health literacy.
3. Life stages drive decisions: Marriage, and particularly parenthood emerge as inflection points, with people who are currently, or have been, married (i.e. divorced, widowed, or separated) as households prioritising health protection.
4. Economics determine access: Coverage becomes significantly over-indexed from LSM 8 and SEM 7 upward, showing that a specific level of disposable income is needed to be able to pay monthly premiums.
5. Race remains a predictor: Despite comprising 80% of South Africa’s population, Black South Africans represent just 56% of medical aid members.

What these patterns reveal, however is not only the correlations, but also the opportunities.

The Council for Medical Schemes (CMS) regulates 71 medical schemes serving more than 9.1 million beneficiaries and is an interesting source of insights into the industry. Most notably, the number of beneficiaries is not significantly larger than it was 5 years ago.

Post Covid South Africa has been characterised by economic volatility, rising unemployment, and ongoing financial pressures on household disposable incomes. Inflation, while showing signs of moderation across much of the economy, remains elevated for medical aid premiums, with inflation on medical insurance (which includes medical aid scheme contributions) the second highest category in 2025, surpassed only by meat.

❝ According to the CMS, private medical inflation usually exceeds CPI by 2 to 3 percentage points with contribution increases outpacing inflation by 7.1 percentage points in 2025, and by double digit inflation in 2024.

According to the CMS, private medical inflation usually exceeds CPI by 2 to 3 percentage points with contribution increases outpacing inflation by 7.1 percentage points in 2025, and by double digit inflation in 2024.

In this environment, consumers have been under pressure to trade down by either moving to lower cost cover, switching to medical insurance, or abandoning the product altogether. This is evident in the data: BrandMapp shows that 14% of consumers are considering downgrading their current medical aid as a cost-cutting measure, with more than 200,000 additional people feeling this way compared with 2024 data. The MAPS data shows medical insurance coverage has grown by 50% since 2023.

Discovery Health, the largest open Medical Scheme in South Africa with nearly 60% of the open medical scheme market, addressed this trend in their 2024 annual report. Nine of their 16 core plan options experienced membership declines, with four plans losing over 5% of members year-on-year. Members are not necessarily leaving medical aid entirely; however, they are trading comprehensive coverage for affordability.

❝ Discovery has launched lower-cost retention products to prevent complete member exit and entice younger professionals to take up medical aid.

Herein lies the opportunity in South Africa’s demographic dividend. Discovery has launched lower-cost retention products to prevent complete member exit and entice younger professionals to take up medical aid. Discovery introduced Active Smart in early 2025 to deliver a tailored solution at an affordable price, “that expands access to medical scheme cover for new entrants and young professionals who may have otherwise foregone medical scheme cover due to cost constraints,” stated Dr Ron Whelan, CEO of Discovery Health.

Assuming medical aid contributions consume approximately 7% of a young professional’s income, products priced similarly to Active Smart would require a minimum monthly income of R20,000. MAPS data reveals nearly 300,000 people under 35 fall within this income bracket, with over a third already covered by medical aid.

Discovery has not yet reported Active Smart–specific sales or uptake results but recorded 17% growth of the broader Smart Series. We will watch this space to see if the strategy works.

Discovery Health, GEMS and Bonitas, the three largest schemes representing more than half of all medical aid beneficiaries, all have strong reserves and good solvency ratios, but will need to address both expanding cover to people without benefits, but also the concerning trend of people downgrading or dropping out of the private health-care system.

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